Supreme Court Intervenes Against Arbitrary Rs 149-Crore Customs Demand: The Pragati Gold Precedent on Tax Overreach, Presumptive Extrapolation, and the Vital Shield of Interim Relief:
Senior Advocate Dr. S. Muralidhar, assisted by Advocate Anurag Abhishek and Advocate Deepa Sinha, of Prasad and Sinha, Advocates, successfully represented M/s Pragati Gold Pvt. Ltd. before the Hon’ble Supreme Court of India, securing significant interim protection against an arbitrary Rs 149-Crore customs demand.
The Apex Court issued notice and stayed coercive recovery proceedings against the Mumbai-based exporter in a Special Leave Petition challenging the judgment of the Hon’ble Bombay High Court. The ruling provides crucial commercial relief against revenue overreach grounded in administrative extrapolation.
The matter arose from an Order-in-Original dated 24.08.2023 passed by the Commissioner of Customs (II), Airport Special Cargo, Mumbai. Following an alleged gold weight discrepancy detected in a single export consignment dated 30.06.2022, the adjudicating authority retroactively reopened 167 past export consignments (2018–2022) that had been previously inspected, cleared, and granted No-Objection Certificates. Presuming an identical gold shortage across all past transactions without direct evidence, the department-imposed duties and penalties exceeding Rs 149 Crores.
When the petitioner challenged this order before the Bombay High Court, the writ petition was dismissed on 16.12.2024 on the grounds of availability of an alternate statutory remedy before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). However, filing a statutory appeal required a mandatory 7.5% pre-deposit under Section 129E of the Customs Act, amounting to over Rs 11.18 Crores on the extrapolated demand, creating an oppressive financial barrier.
The Supreme Court Bench comprising Hon’ble Mr. Justice Sanjay Kumar and Hon’ble Mr. Justice Sanjeev Sachdeva, after condoning the delay in refiling and granting exemption from filing a certified copy, directed: “In the meanwhile, no coercive steps shall be initiated or taken against the petitioner, Pragati Gold Pvt. Ltd.”.
The petitioner’s defense successfully demonstrated that forcing an enterprise to fulfill an unaffordable pre-deposit on a speculative, extrapolated demand renders statutory remedies illusory and threatens corporate survival.
Legal experts note that the Supreme Court’s interim protection plays a vital role in safeguarding business continuity. Without a stay, unstayed administrative orders allow revenue authorities to freeze operational bank accounts, attach working capital, and disrupt trade licenses before a court can evaluate the merits.
This interim order serves as a crucial precedent for cross-border traders and corporate litigators, underscoring that administrative agencies cannot penalize past cleared transactions based on mere assumptions. The experienced duo of Advocate Anurag Abhishek and Advocate Deepa Sinha, of Prasad and Sinha, Advocates in securing this “no coercive steps” direction ensures that Pragati Gold can meaningfully pursue justice without facing operational destruction.
