Kiran Raj

The Meghalaya High Court has ruled in favor of the respondent, directing the Customs Department to return seized gold, citing non-compliance with the statutory requirement under Section 110(2) of the Customs Act, 1962. The division bench comprising Chief Justice I.P. Mukerji and Justice W. Diengdoh held that the show cause notice, issued beyond the prescribed period, was ineffective and that the respondent was entitled to the return of the confiscated goods.

On April 4, 2023, the Customs authorities seized gold from Bikash Soni. The seizure was conducted under Section 110(1) of the Customs Act, which empowers a proper officer to confiscate goods suspected of being liable for seizure. As per Section 110(2), a show cause notice under Section 124(a) must be issued within six months of the seizure, failing which the seized goods must be returned to the person from whom they were confiscated. This period may be extended by another six months at the discretion of the Principal Commissioner of Customs or Commissioner of Customs, provided reasons are recorded in writing.

The Customs Department prepared a show cause notice dated October 3, 2023, but it was not dispatched immediately. It was physically posted on October 5, 2023, and received by the respondent on October 10, 2023—beyond the mandatory six-month period.

The respondent challenged the delay, arguing that since the notice was not “given” within the statutory period, the goods must be returned. The Customs authorities, however, contended that the notice was electronically signed within the required timeframe and that political unrest in Manipur had delayed its physical service. The department urged the court to interpret the word “given” flexibly, considering the exigencies of the situation.

The division bench examined the statutory framework, judicial precedents, and the facts of the case before arriving at its decision. Key observations included:

1. Strict Interpretation of Section 110(2):

The court held that the provisions of the Customs Act relating to seizure and confiscation must be interpreted strictly. Section 110(2) unambiguously states that if a show cause notice is not “given” within six months, the goods must be returned. There is no discretion available to extend this period beyond the statutory limit, except through the prescribed extension mechanism, which was not invoked in this case.

2. Meaning of ‘Given’:

• The court referred to K. Narsimhiah v. H.C. Singri Gowda (1966), where the Supreme Court distinguished between “sending” and “giving” a notice. It held that dispatching a notice does not amount to “giving” unless it is received.

• In Ambalal Morarji Soni (1972), the Gujarat High Court had ruled that a show cause notice must be received by the recipient within the prescribed period for it to be valid under Section 110(2). The court found this ruling applicable to the present case.

• The Delhi High Court in Purushottam Jajodia (2014) reinforced this view by stating that service of a show cause notice must be completed within the statutory period.

3. Rejection of the Customs Authorities’ Contentions:

• The court rejected the argument that electronic signing of the notice constituted “giving” it. The law requires actual service, not mere preparation or signing.

• The court took note of the Manipur unrest but held that the Customs Department had the option to extend the period by another six months through the statutory mechanism. Since this was not done, the delay could not be excused.

• The court clarified that there was no provision in the Customs Act permitting retrospective validation of a notice that was not served in time.

4. Effect of Non-Service of Notice:

• The bench stated that failure to serve the notice within time did not invalidate the adjudication process but did mandate the return of the seized goods.

• The court acknowledged that while the Customs authorities had the right to confiscate the goods through adjudication, they could not retain possession beyond the statutory timeline.

The Meghalaya High Court upheld the respondent’s claim and ruled that:

• The show cause notice under Section 124 was not “given” within the six-month period as required under Section 110(2).

• The Customs authorities had no legal ground to retain the seized goods beyond the statutory period.

• The seized gold must be returned to the respondent within four weeks of communication of the court’s order.

• The Customs authorities remain free to proceed with adjudication under Section 124, but only after restoring possession of the goods to the respondent.

• The appeal by the Union of India and the Customs Department was dismissed.

Case Title: Union of India & Ors. vs. Bikash Soni
Case Number: WA No. 20/2024 with MC (WA) No. 14/2024
Bench: Chief Justice I.P. Mukerji and Justice W. Diengdoh

[Read/Download order]