A. KUMAR versus UNION OF INDIA

Citation: [1996] SUPP. 7 S.C.R. 580 · Decided: 11-10-1996 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Disposed off

Judgment (excerpt)

A 
B 
A. KUMAR 
v. 
UNION OF INDIA 
OCTOBER 11, 1996 
[B.P. JEEVAN REDDY AND K.S. PARIPOORNAN, JJ.] 
Customs Act, 196~Section 124-lmport of Goods-Wrong descrip-
tio1t-Confiscation and Penalty-Scope of-Claims of Port Trust, Purchaser 
C and Income Tax Department-Directions for auction sale of the imported 
goods-Proceeds to be kept in fixed deposit-Directions for payment to Port 
Trust and Income tax Department-Issued Reserve Bank to inquire and find 
out whether the officials of the Bank concerned colluded with the party in the 
fraud-Notices issued to a persons against whom Income tax Department 
alleged cheating, fraud etc.-lncome tax Act, 1961-Sec. 132-A. 
D 
Some Bills of Entry were filed by a firm for the clearance of "stainless 
steel circles defective." The firm ISC was said to be a proprietary concern 
of one 'K'. On examination by customs authorities, it was found that the 
imported goods were of prime quality, whereas the licence of the importer 
was only in respect of "defective stainless steel circles''. It was also found 
E that the import licence had also not been validly transferred in favour of 
ISC or its proprietor. A show cause notice was issued under Section 124 
of the Customs Act, 1962 proposing confiscation of the said goods and for 
levy of penalty. Appellant filed a writ petition before the High Court 
challenging its validity. He also filed a writ petition before this Court for 
F a declaration that the "scale of rates" prescribed by the Port Trust were 
unconstitutional. He also filed writ petitions before the Delhi High Court 
challenging the order passed under Section 132-A of the Income Tax Act 
proposing to seize the goods lying with the Custom~ Department and 
questioning the rate of customs duty and valuation of goods imported by 
him. These two writ petitions were dismissed by the High Court. 
G 
In the appeal/writ proceedings before this Court, it had come to light 
that a nomber of demands and proceedings had been pending against 'K' 
by various 1;tffected parties. In the face of these rival claims, this Court 
directed the sale of imported goods by auction and the sale proceeds to 
H be put in fixed deposit in bank. 
580 
c 
AKUMAR v. U.0.1. 
581 
Three statements of'K' have been brought to the notice of this Court, A 
in which he denied that he has anything to do with ISC or with the import 
of the goods. Even in the counter- affidavit filed on behalf of the Union of 
India, it was stated that the petitioner-appellant was merely a salaried 
employee and did not have the means to import the goods in question and 
that he signed the relevant papers at the instance of his employer 'V'. 
B 
Counsel for the Port Trust stated that the Port Trust was entitled to 
a specified sum towards demurrage charges, Counsel for the Bank stated 
that the Bank has filed a suit for recovery of the amount due to it. 
Counsel for the purchaser of the said imported goods in auction, C 
had also put forward a claim on three counts, viz., (1) As there had been 
inordinate delay in confirming the sale and delivering the goods to him, 
he was entitled to interest on the said earnest money for the period it was 
locked up; (2) that he was entitled to get the demurrage charges reim-
bursed; and (3) that he was also entitled to reimbursement of the sales tax 
~-~ 
D 
Disposing of the appeals and the writ petitions, this Court 
HELD : 1.1. The claims of the purchaser of the goods in auction, are 
not acceptable as they could not tell whether the goods in question were 
taxable at sale-point or purchase-point. They failed to bring to the notice E 
of this Court the terms and conditions of the auction sale. They even failed 
to satisfy this Court why the burden of sales tax could not be passed on to 
it. Therefore its claim for reimbursement of sales tax is rejected. Jts claim 
for interest on earnest money is equally unsustainable in law. It had also 
failed to explain in what circumstances demurrage was charged. Accord-
p 
ingly its claim for interest on earnest money is rejected. [586-B-D] 
2. The claim of the Port Trust is found to be just and proper. It has 
to be honoured and paid from the auction sale proceeds lying with the 
State Bank of India, Madras. [586-F] 
3. There is no reason not to accept the claim of the Income Tax 
Department. A sum of Rs. 1,23,86,591 shall be paid over to the Commis-
sioner of Income Tax, Madras, towards the claim of the tax-arrears due 
from 'K' for the Assessment years 1982-

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