Ahmedabad: The Gujarat high court quashed all actions initiated by the customs department against a company that purchased goods from an importer under investigation for alleged irregularities.
The case involved Pacific Powertech Solutions, which deals in cold rolled grain oriented (CRGO) strips, sheets, etc. In 2023, it purchased material from a company named ST Electricals, which imported the goods.
The commissioner of customs preventive in Jaipur initiated an inquiry against ST Electricals regarding its import made in April 2023. In May 2024, at the behest of the commissioner, the bank accounts of Pacific Powertech and its proprietor were provisionally frozen. In June 2024, the superintendent of customs preventive issued summons to the company, seeking documents related to the sale/purchase of goods with the importer, such as books of accounts, ledger and bank account details. The authority issued a second summons a month later.
Pacific Powertech approached the HC through Advocate Sujay Kantawalla, seeking a declaration that the customs department’s investigation against the purchaser company was not just and proper. It demanded the defreezing of bank accounts and withdrawal of the summons. It urged the HC to stop the authorities from issuing further summons in this regard.
The company claimed that customs officials had overstepped their authority by investigating its local purchases, which were properly invoiced and taxed. It also contended that the authorities could not continue the provisional attachment of bank accounts after the expiry of one year.
The customs authorities opposed the petition, arguing that the company was not cooperating, but the company submitted that the summons issued in July 2024 were duly complied with.
After hearing the case, a division bench stated, “When the petitioner has filed the detailed reply in response to the summons issued under Section 108 of the Customs Act, no further purpose would be served to continue the investigation qua the petitioner by the respondent-authorities.”