Facts of the Case

The petitioners, M/s Atlantic International Trading Pvt. Ltd. and Ors., along with petitioners in the connected matters concerning M/s Blue Star International Pvt. Ltd. & Ors. and M/s Sunflame Trading Pvt. Ltd. & Ors., approached the Delhi High Court in relation to proceedings arising from a show cause notice dated 16.08.2022.

Pursuant to the Court’s earlier order dated 12.10.2022, counsel appearing for the respondent/Revenue returned with instructions regarding the documents and electronic devices connected with the proceedings.

The Revenue stated that the relied-upon documents (RUDs), namely the seized documents appended to the subject show cause notice, had already been furnished to the petitioners.

With regard to documents that were not on record but remained in the custody of the respondent/Revenue, the Revenue agreed to furnish photocopies. Such photocopies were to carry an endorsement clarifying that the relevant photocopy was backed by a seized document in the custody of the Revenue.

The Revenue further stated that the electronic devices would be cloned and thereafter returned to the authorised representative of the petitioners.

Issues Involved

The principal issues arising from the proceedings were:

  1. Whether the petitioners had been furnished the relied-upon documents/seized documents appended to the show cause notice.
  2. How access should be provided to documents that were not on record but remained in the custody of the Revenue.
  3. Whether photocopies supplied by the Revenue should carry an appropriate endorsement establishing their connection with seized documents in Revenue custody.
  4. Whether the electronic devices could be cloned and thereafter returned to the authorised representative of the petitioners.
  5. What reasonable time should be granted to the petitioners to file their reply to the show cause notice after completion of the document-supply and electronic-device cloning exercise.

Petitioners’ Arguments

The order does not reproduce a detailed, independent set of substantive arguments advanced by the petitioners on the merits of the underlying show cause notice. Accordingly, no argument should be attributed to them beyond what is expressly reflected in the order.

The proceedings, however, concerned the practical availability of documents and electronic material connected with the show cause notice. After the Court recorded the Revenue’s statements and issued consequential directions, learned counsel for the petitioners submitted that, having regard to the directions issued by the Court, the writ petitions could be closed.

This indicates that the directions concerning documents, cloning and return of electronic devices, and the subsequent opportunity to file replies addressed the immediate procedural grievance raised in the writ proceedings.

Respondent’s Arguments / Statements

The respondent/Revenue, through its counsel, made the following material statements before the Court:

  • The relied-upon documents (RUDs), i.e., seized documents appended to the subject show cause notice, had already been furnished to the petitioners.
  • For documents not on record but in the custody of the Revenue, photocopies would be supplied.
  • The photocopies would carry an endorsement clarifying that the relevant photocopy was backed by a seized document in the custody of the Revenue.
  • The electronic devices would be cloned and thereafter returned to the authorised representative of the petitioners.
  • The date and time for carrying out the cloning exercise would be fixed and communicated to the petitioners in writing through email.
  • The Revenue also stated that an email would be sent to counsel for the petitioners.
  • The entire exercise would be concluded within the stipulated period recorded by the Court.

The Court expressly took the statement of the Revenue’s counsel on record.

Court Order / Findings

The Delhi High Court disposed of the writ petitions by recording and acting upon the statements made on behalf of the Revenue. The Court directed and clarified as follows:

  1. Documents not on record but in the custody of the Revenue were to be furnished in photocopy form.
  2. The relevant photocopies were to contain an endorsement clearly indicating that they were backed by seized documents in the custody of the Revenue.
  3. The electronic devices were to be cloned and thereafter returned to the authorised representative of the petitioners.
  4. The date and time for conducting the cloning exercise were to be fixed and communicated to the petitioners through email.
  5. The Court took the statement made on behalf of the Revenue on record.
  6. The entire exercise was to be completed within four weeks.
  7. After completion of the exercise, the petitioners were to file their reply to the show cause notice dated 16.08.2022 within six weeks thereafter.
  8. In view of these directions, counsel for the petitioners stated that the writ petitions could be closed, and the Court ordered accordingly.
  9. The petitioners were directed to bear the costs of photocopies as well as cloning.

Important Clarification

A significant procedural clarification emerging from the order is that where relevant documents remain in the custody of the Revenue, photocopies may be furnished with a clear endorsement that the copy is backed by a seized document held by the Revenue. The order also records a practical mechanism for handling seized electronic devices: cloning first, followed by return to the authorised representative of the petitioners.

Equally important, the petitioners’ time to reply to the show cause notice was linked to completion of the document-supply and cloning exercise. The Court provided six weeks after completion of that exercise for filing the reply to the show cause notice.

The order should not be overstated as laying down a broad final ruling on the merits of the tax allegations in the show cause notice. The High Court primarily recorded the Revenue’s statements, fixed timelines, protected the petitioners’ opportunity to respond, and closed the writ proceedings in view of the directions issued.

Sections Involved

Specific statutory section: Not expressly mentioned in the order.

Procedural matters involved:

  • Show cause notice dated 16.08.2022
  • Relied-Upon Documents (RUDs)
  • Seized documents
  • Documents in custody of the Revenue
  • Supply of photocopies with appropriate endorsement
  • Cloning of electronic devices
  • Return of electronic devices after cloning
  • Opportunity and timeline for filing reply to show cause notice
  • Procedural fairness and effective opportunity to respond

Important accuracy note: Since the order itself does not expressly specify a particular section of the Central Excise Act, CGST Act, or any other enactment, inserting a specific section would risk changing the legal meaning and scope of the judicial order.

 Link to download the order - https://mytaxexpert.co.in/uploads/1783152960_864compressed.pdf

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