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2025 Supreme(Online)(Mad) 63561
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. ANAND VENKATESH, J
M/s. National Association of Container Freight Stations, Rep by its Secretary, NACFS- Chennai Chapter – Appellant
Versus
The Joint Commissioner of Customs (CH-IV) – Respondent
WP No. 11222 of 2022 | WP No. 149 of 2022 | WP No. 152 of 2022
For the Appellants/Petitioners: Mrs.Radhika Chandra Sekhar, Mr.P.Giridharan
For the Respondents: Mr.K.Mohanamurali Senior Panel Counsel for R1 to R3, Mr.R.Ragavendran for R4
Public Notice invalid as it imposed GST improperly on auctioned goods, conflicting with established customs and taxation laws.
Headnote:(A) Customs Act, 1962 - Sections 3, 7(1), 9(1), 157, 158, 159 - CGST Act, 2017 - Interpretation of GST levied on auction procedures for uncleared cargo - Court emphasized that customs duty and GST are distinct transactions and cannot be subject to double taxation. (Paras 26 and 27)
(B) Jurisdiction - Legality of Public Notices - Court questioned the authority of customs officers to issue directions regarding GST on auctioned cargo, affirming only designated authorities could regulate GST under the CGST Act. (Paras 24 and 25)
Facts of the case:
Writ petitions were filed challenging the Public Notice addressing the GST implications on auctioned in-custody cargo, asserting the lack of jurisdiction of the customs authority that issued it.
Findings of Court:
The Public Notice was found to be beyond jurisdiction and inconsistent with both the CGST and Customs Acts, leading to all writ petitions being allowed.
Issues: Whether the Public Notice lacked jurisdiction and unlawfully prohibited GST collection on auctioned goods.
Ratio Decidendi: The Court ruled that the Public Notice issued was not legally enforceable as it breached the provisions outlined in the CGST Act and customs regulations, confirming the liability to collect GST. (Paras 18 to 20)
Result: All writ petitions allowed.
| Table of Content |
|---|
| 1. petitioners challenge public notice issued regarding gst on auctioned cargo. (Para 1 , 2 , 3) |
| 2. discussion on legality and jurisdiction of gst related to customs auction. (Para 18 , 19) |
| 3. public notice quashed for lack of jurisdiction and conflicting regulations. (Para 26 , 27) |
ORDER
W.P.No.11222 of 2022 has been filed by an Association and W.P.No.149 of 2022 has been filed by a Company challenging the impugned Public Notice issued by the 1st respondent dated 12.02.2021 and to quash the same on the ground that it runs contrary to the provisions of the Customs Act and it has been issued wholly without jurisdiction or authority.
2.W.P.No.152 of 2022 has been filed by the Company challenging the impugned letter issued by the 2nd respondent dated 22.12.2021, as a consequence of the Public Notice issued by the 1st respondent dated 12.02.2021.
3.The case of the petitioners is that they are Container Freight Stations governed by the handling of cargo in Customs Area Regulations, 2009, which is a guideline issued by the Customs Department through Notification No.26/2009.
4.Section 48 of the Customs Act, 1962 (for the sake of brevity, hereinafter referred to as 'the Act') provides the procedure in case where import cargo is not cleared, warehoused or transhipped within 30 days after unloading. If the consignee fails to clear the cargo within the time frame, a notice has to be issued to the consignee. The person in custody of the goods, with the permission of the appropriate Officer is entitled to sell the goods in their custody. In other words, Container Freight Station is entitled to auction any uncleared or unclaimed cargo after issuance of notice if goods imported for home consumption are not cleared within 30 days from the date of import.
5.Section 150(2) provides for the sequence of utilisation of proceeds and sub clause(c) refers to payment of duty if any on the goods sold. The duty referred to is the customs duty payable. Rule 2 of the Uncleared Goods (Bill of Entry) Regulations, 1972 also deals with a Bill of Entry to be submitted in the form appended to the Regulations for the goods to be sold in auction.
6.Rule 3 of the said Regulations provides that the Bill of Entry prepared under Regulation 2 shall be deemed to be a bill of entry under Section 46(1) of the Act and presented to the proper Officer.
7.By undertaking the process of selling the goods by way of auction, the Contained Freight Stations (CFS) will have to pay all the statutory dues including Integrated Goods and Services Tax (IGST) and basic customs duty. The payment of IGST is on the transaction of import of goods. However, when the goods are sold through the auction, it is the supply of goods to the successful bidder, falling under Section 7(1) of the CGST Act and it is liable to GST in terms of Section 9(1) of the CGST Act read with Section 15 which deals with the value and the GST at applicable rates is payable on the sale price. 8.The 1st respondent issued the Public Notice dated 12.02.2021, regarding the applicability of GST on the clearance of uncleared/unclaimed cargo. The impugned notice states as follows:
2. In respect of the clearance of Uncleared/Unclaimed cargo under section 48 of the Customs of Act, 1962, after identifying the H1 bidder, the BE is filed by the custodian in the name of the bidder and the same is then assessed by the proper officer as per Regulation 3 of Uncleared Goods (Bill of Entry) Regulation. 1972 and the assessed customs duty along with IGST is being paid by the custodian in the name of the bidder for the subject cargo. On payment of applicable duty, out of charge and delivery order will be issued by the Customs.
3. As per Section 150(2)(C) of the Act, the sale proceeds for an UCC cargo is Cum-Duty value of the goods as the Duty Portion for the cargo is appropriated from the sale proceeds of an UCC Cargo. The same is reiterated in Para No.3 (viii) of the CBIC circular No.50/2005-cus., dated 01.12.2005. Hence, the bid amou
