Supreme Court Reinstates DRI's Authority, Revives ₹23,000 Crore Tax Recovery Notices Against Major Corporations

𝗦𝘂𝗽𝗿𝗲𝗺𝗲 𝗖𝗼𝘂𝗿𝘁 𝗥𝗲𝗶𝗻𝘀𝘁𝗮𝘁𝗲𝘀 𝗗𝗥𝗜'𝘀 𝗔𝘂𝘁𝗵𝗼𝗿𝗶𝘁𝘆, 𝗥𝗲𝘃𝗶𝘃𝗲𝘀 ₹𝟮𝟯,𝟬𝟬𝟬 𝗖𝗿𝗼𝗿𝗲 𝗧𝗮𝘅 𝗥𝗲𝗰𝗼𝘃𝗲𝗿𝘆 𝗡𝗼𝘁𝗶𝗰𝗲𝘀 𝗔𝗴𝗮𝗶𝗻𝘀𝘁 𝗠𝗮𝗷𝗼𝗿 𝗖𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗶𝗼𝗻𝘀

The Supreme Court of India has made a pivotal ruling that reinstates the authority of the Directorate of Revenue Intelligence (DRI) to issue tax recovery notices, potentially impacting an estimated ₹20,000 to ₹23,000 crore in pending cases against major corporations. This judgment, delivered on November 7, 2024, effectively overturns a previous 2021 decision that had restricted the DRI's powers under the Customs Act.

𝗞𝗲𝘆 𝗗𝗲𝘁𝗮𝗶𝗹𝘀 𝗼𝗳 𝘁𝗵𝗲 𝗥𝘂𝗹𝗶𝗻𝗴

𝗝𝘂𝗱𝗶𝗰𝗶𝗮𝗹 𝗕𝗲𝗻𝗰𝗵: The ruling was made by a three-judge bench led by Chief Justice D.Y. Chandrachud, alongside Justices J.B. Pardiwala and Manoj Misra.

𝗕𝗮𝗰𝗸𝗴𝗿𝗼𝘂𝗻𝗱: The court's decision reverses its earlier stance from the Canon India Pvt Ltd case, which had declared that only customs officers responsible for clearing goods could issue recovery notices. This limitation had resulted in numerous DRI-issued notices being quashed across various courts and tribunals in India.

𝗜𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀: With this ruling, DRI officers are now recognized as "proper officers" under Section 28 of the Customs Act, allowing them to issue show-cause notices and recover customs duties without needing consultation from other customs departments. This is particularly significant given the backlog of about 800 cases pending in Delhi alone.

𝗜𝗺𝗽𝗮𝗰𝘁 𝗼𝗻 𝗠𝗮𝗷𝗼𝗿 𝗙𝗶𝗿𝗺𝘀

The companies facing these revived notices include prominent names like hashtag#vedanta hashtag#vodafoneidea hashtag#adanienterprises hashtag#samsung hashtag#sony.

These firms have been under scrutiny for customs duties dating back to amendments made in 2006 that expanded DRI's powers. The recent Supreme Court decision is seen as a major victory for the Union Finance Ministry, enabling it to pursue long-stalled revenue recovery efforts.

𝗟𝗲𝗴𝗮𝗹 𝗖𝗼𝗻𝘁𝗲𝘅𝘁

The Supreme Court's latest judgment comes after a review petition filed by the government highlighted flaws in the 2021 ruling. The Additional Solicitor General argued that limiting DRI's powers undermined its ability to enforce customs laws effectively, especially in light of its mandate against smuggling and tax evasion. The court's decision clarifies that while it has addressed issues stemming from the Canon judgment, it does not express any opinion on other pending challenges related to amendments made in 2022.

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