Hyderabad. In a setback to Hyderabad-based Shri Krishna Jewellers and Exim LLP, the Telangana High Court on Saturday refused to quash the show cause notices issued by the Central Revenue Intelligence Department to jewellers and exporters on charges of misuse of duty free gold bullion received under the Special Economic Zone scheme by the Shri Krishna Group of Companies for manufacturing and export of studded gold jewellery.
The Telangana High Court division bench of Justice P. Sam Koshy and Justice N. Tukaramji made it clear that the writ court cannot exercise its discretionary jurisdiction in entertaining writ petitions questioning show cause notices issued by statutory bodies such as Customs, Central Excise, Indirect Tax and such regulatory bodies. The court also said that the writ court can interfere unless the show cause notice is ultra vires or ultra vires the jurisdiction or in violation of principles of natural justice.
The bench was dealing with two petitions filed by Shri Krishna Exim LLP and its group companies challenging the show cause notices issued to them under Section 28(4) of the Customs Act by the Directorate of Revenue Intelligence after receiving certain information regarding misuse of duty-free gold. The DRI had conducted searches at the premises of Shri Krishna group companies and other entities along with directors/partners, and the DRI officers had come to know that huge quantity of gold bullion imported by the firms was being fraudulently sent to the local market for delivery to shops in Hyderabad and where the petitioners were required to export gold bullion jewellery prepared by them from the imported gold bullion. They were found to be sending fake gold jewellery showing export of gold jewellery manufactured by them from the imported gold bullion. Similarly, during the investigation it was also found that these gold bullion were being sent to the local market by giving it to various dealers operating in Hyderabad.
Based on all these fraudulent acts on the part of Shri Krishna Exim, DRI issued show cause notices dated 31.10.2022 and 29.11.2022 and these have been challenged by the firm in two writ petitions. Senior counsel for the petitioner Atul Chaudhary argued that the show cause notices are not sustainable as they are barred by limitation and if the show cause notices are issued under Section 28(4) of the Act, the limitation prescribed under the said provision is five years from the relevant date. Senior standing counsel for Central Board of Indirect Taxes and DRI Dominic Fernandes argued that the nature of allegations levelled against the petitioners is quite serious. According to senior standing counsel for CBIC, nothing can prevent the petitioners from appearing before the authorities and submitting their detailed replies and based on their replies, the authorities should be left to take an appropriate decision. ALSO READ – Godavari-Cuvery link plan expected to move ahead in July
Fernandes also said that after carefully going through the explanations and replies of Shri Krishna Jewellers, the authorities will take a decision on whether to end the proceedings or go ahead with the show cause notice after due deliberation on it and take it to its logical conclusion.
The bench considered the arguments of Fernandes and made it clear that it is not appropriate to interfere with the show cause notice.
