The Gauhati High Court has held that the Managing Director(s) of a company should not be directly summoned by authorities under Section 108 of the Customs Act. It clarified that ordinarily, authorized representatives of a company are to be summoned and Managing Directors can only be summoned if the former are not cooperating or if investigation is to be completed expeditiously, as the case may be.
A Single Judge Bench of Justice Achintya Malla Bujor Barua observed,
"…it is the practice of the Department not to issue the summons to the Managing Director or the other Directors without any justification and secondly, the summoning of the Managing Director or Director should be undertaken only as a last resort in cases where assesses are not cooperating or the investigations are to be completed expeditiously."
In furtherance of an enquiry in connection with import of EPCG Licenses by the petitioner Star Cement Meghalaya Limited, a summon dated 27.04.2022 under Section 108 of the Customs Act, 1962 had been issued to the Managing Director of the petitioner company by name. The summon was directly issued to the Managing Director of the petitioner Company without the same being issued to an authorized representative.
Dr. A Saraf, senior counsel for the petitioner relied upon a circular dated 13.10.1989 of the Central Board of Excise and Customs, which provided for an instruction to the departmental authorities not to summon the Managing Director/Directors of any Company for enquiry. Therefore, he urged the Court to quash such summon issued in the instant case.
The Court held that in the case at hand, there is no material available which shows that there is a reasoned view formed by the Department that the petitioner assessee was not cooperating or that the presence of the Managing Director specific was required for the investigation for any reason.
Therefore, under such circumstances, the Court deemed it fit to dispose the writ petition by directing the departmental authorities, who issued the summons under Section 108 of the Act of 1962, not to issue summons directly to the Managing Director of the petitioner company and on the other hand, to issue it to an authorized representative of the company in terms of the provisions of the Circular dated 10.10.1989.
It directed the Board of Directors of the petitioner company to authorize a competent person for the purpose to facilitate the process and it required the authorities to issue further summons only to such authorized person. In view of the above, the summon dated 27.04.2022 was set aside and in that place modified summons were directed to be issued.
Case Title: Century Plyboards (India) Ltd. & Anr. v. The Union of India & Ors.
Case No.: WP(C) 3210 of 2022
Order Dated: 18th May 2022
Coram: Justice Achintya Malla Bujor Barua
Counsel for the Petitioners: Dr. A. Saraf, Senior Advocate
Counsel for the Respondents: Learned Asst. SGI
Citation: 2022 LiveLaw (Gau) 39