200% customs hike for goods from Pakistan not applicable for imports prior to govt notification in wake of Pulwama attack: Supreme Court

The Supreme Court has held that a notification issued by the Government of India increasing the import duty of goods from Pakistan by 200 percent in the wake of the Pulwama attack last year, does not date back to the midnight of the previous day..The Court held that the notification published under Section 8A of the Customs and Tariff Act, 1975, late in the evening of February 16, 2019, would not have retrospective effect..The judgment was passed by a three-judge Bench of Justices DY Chandrachud, KM Joseph, and Indu Malhotra. Justices Chandrachud and Joseph wrote separate but concurring opinions..As per the judgment authored by Chandrachud J,."The purpose of the notification being to discourage the import of goods from Pakistan, it has prospective effect: the object and purpose is not to penalize Indian importers who had completed their imports, presented bills of entry for home consumption and had completed self-assessment in terms of the provisions of the Customs Act and the Regulations, prior to the issuance of the notification."Supreme Court.The case before the Court is linked with India's response to Pakistan in the aftermath of the Pulwama terror attack that claimed the lives of over 40 security personnel.Two days after the February 14 terror attack, the Union Government issued a notification under Section 8A of the Customs Tariff Act 1975. The notification introduced a tariff entry by which all goods originating in or exported from Pakistan were subjected to an enhanced customs duty of 200%..The notification was uploaded on the e-Gazette at 8:48 pm. Customs authorities at the land customs station at Attari sought to enforce the enhanced rate of duty on importers who had already presented bills of entry for home consumption before the enhanced rate was notified in the e-Gazette. The import goods entered Attari at around 6 pm on that day, two hours before the notification was published.This prompted the importers to file petitions before the High Court of Punjab and Haryana..On August 26, 2019, a Division Bench of the High Court held that since the importers, who had imported goods from Pakistan, had presented their bills of entry and completed the process of “self-assessment” before the notification was issued and uploaded, the enhanced rate of duty was not attracted.The High Court held that the importers were liable to pay the duty applicable at the time the bills of entry for home consumption were filed under Section 46 of the Customs Act, 1962..One of the importers of cement had contended before the Court that though his goods arrived at 6 pm, two hours before the government notification, his customs duty was hiked from Rs 73,342 to Rs 8,10,952..The High Court had directed the Centre to release the goods within seven days on the payment of duty ‘as declared and assessed’ without applying the notification enhancing the rate of duty on goods originating in Pakistan. The Union of India thereafter appealed this order before the Supreme Court..The Centre argued that since the notification was issued on February 16, 2019, the Court must, regardless of the time at which it was uploaded on the e-Gazette, treat it as being in existence with effect from midnight or 0000 hours on February 16..However, the Court held,."The consequence of this interpretation would be to do violence to the language of Section 8A(1) of the Customs Tariff Act, and to disregard the meaning, intent and purpose underlying the adoption of provisions in the Customs Act in regard to the electronic filing of the bill of entry and the completion of self-assessment."Supreme Court.While dismissing the appeal, the Court noted that the the imposition of a tax encompasses three stages. First, the declaration of liability which determines “what persons in respect of what property are liable”. The second is the stage of assessment as it specifies the exact sum which a person is liable to pay and third, methods of recovery if a person who is taxed does not voluntarily pay. The verdict reads,.“In the present case the twin conditions of Section 15 stood determined prior to the issuance of Notification 5/2019 on 16 February 2019 at 20:46:58 hours. The rate of duty was determined by the presentation of the bills of entry for home consumption in the electronic form under Section 46. Self-assessment was on the basis of rate of duty which was in force on the date and at the time of presentation of the bills of entry for home consumption. This could not have been altered in the purported exercise of the power of re-assessment under Section 17 or at the time of the clearance of the goods for home consumption under Section 47.”.The Court further held that the rate of duty which was applicable was crystallized at the time, on the date of the presentation of the bills of entry in terms of the provisions of Section 15 read with Regulation 4(2) of the Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018.The possibility of re-assessment of the duty was also ruled out, with the Court holding,"The power of re-assessment under Section 17(4) could not have been exercised since this is not a case where there was an incorrect self-assessment of duty. The duty was correctly assessed at the time of self-assessment in terms of the duty which was in force on that date and at the time. The subsequent publication of the notification bearing 5/2019 did not furnish a valid basis for re-assessment.".Justice KM Joseph authored a concurring judgment where he has agreed with Justices Chandrachud and Malhotra.Addressing the contention of the Centre that the notification would date back to the midnight of the previous day, Justice Joseph held,"There is no merit in the contention of the Union of India that by virtue of Section of 5(3) of the General Clauses Act, the notification must be treated as effective from the point of time immediately after mid night on 15/16 February, 2019.".Finding no merit in the appeals, the Court dismissed them..The Centre was represented by Additional Solicitor General of India KM Nataraj. Senior Advocate PS Narasimha appeared for the respondent importers..[Read judgment]