A taxpayer who elects settlement cannot indirectly challenge the underlying show-cause notice in writ jurisdiction.

The Directorate of Revenue Intelligence investigated M/s Nitco Ltd. for alleged misuse of an EPCG authorisation and evasion of customs duty.

Thereafter, a show-cause notice dated 18.06.2018 was issued demanding customs duty of Rs.10,29,81,146/- with interest. The notice was adjudicated by the Commissioner of Customs on 13.03.2019.

Instead of pursuing an appellate remedy, the Petitioners approached the Settlement Commission for settlement.

By order dated 14.11.2019, the Settlement Commission settled the duty liability at Rs.6,69,57,333/-, allowed credit for Rs.1,41,49,366/- already paid, and determined the balance duty at Rs.5,28,07,967/-.

The Commissioner subsequently quantified interest at Rs.15,16,65,821/- by communication dated 02.01.2020.

Whether the Petitioners could, in proceedings under Article 226 of the Constitution, challenge the limitation and validity of the show-cause notice dated 18.06.2018 after voluntarily submitting the proceedings arising from that notice to the Settlement Commission and obtaining a settlement order?

Whether Clause (e) of paragraph 51(ii) of the Settlement Commission’s order, directing the jurisdictional Commissioner to verify and quantify interest, was legally infirm merely because the quantified interest exceeded the amount initially computed by the Petitioners?

Whether the Settlement Commission’s order disclosed any jurisdictional error, statutory contravention, prejudice, fraud, bias, or malice warranting interference under Article 226?

The Court applied Article 226 of the Constitution and held that judicial review of an order of the Settlement Commission is narrow and does not permit the High Court to reassess the sufficiency of material or substitute its own view for that of the Commission.

Relying on Jyotendrasinhji v. S.I. Tripathi, 1993 Supp (3) SCC 389, and Kotak Mahindra Bank Ltd. v. Commissioner of Income Tax, Bangalore, MANU/SC/1052/2023, the Court held that interference is ordinarily justified only where the order contravenes the statute, causes legally cognisable prejudice, or is vitiated by fraud, bias, or malice.

Section 28 of the Customs Act, 1962 governs limitation for recovery of customs duty, while Section 127J makes a Settlement Commission order conclusive as to the matters covered by the settlement.

Interest on customs duty is a statutory consequence of the duty liability and may be verified and quantified even where the principal duty has been settled.

The Court held that the Petitioners had consciously abandoned the ordinary appellate route against the adjudication order dated 13.03.2019 and had invoked the Settlement Commission’s jurisdiction in respect of the very show-cause notice whose limitation they subsequently sought to challenge.

Determining whether the notice dated 18.06.2018 was time-barred would require the Court to examine the validity of the underlying proceedings and calculate the relevant date under Section 28, effectively exercising appellate review over the settled dispute.

Such review was impermissible in light of the restricted scope applicable to Settlement Commission orders.

The Court separately treated interest quantification as a consequential exercise.

The Commission had not accepted the Petitioners’ figure of Rs.1,10,04,634/- as final; it had expressly directed verification and quantification by the jurisdictional Commissioner.

Accordingly, the subsequent figure of Rs.15,16,65,821/- could not, merely because it was higher, invalidate the Commission’s direction.

It further held that the direction requiring independent verification and quantification of statutory interest was valid, and that the higher interest amount by itself did not warrant interference.

Finding no jurisdictional error, statutory violation, prejudice, fraud, bias, or malice, the Court dismissed the writ petition and the pending application.