Union of India vs Jatin Ahuja- Customs Act

Case Name and Neutral Citation

• Case Name: Union of India & Ors. vs. Jatin Ahuja
• Neutral Citation: Not explicitly provided in the document, but the Supreme Court Civil Appeal No. 3489 of 2024, decided on 11 September 2025.

Coram

• Hon’ble Mr. Justice J.B. Pardiwala
• Hon’ble Mr. Justice Sandeep Mehta

Judgment Date

• Date of Judgment: 11 September 2025

Caselaws and Citations Referred

• Assistant Collector of Customs v. Charan Das Malhotra
• • AIR 1972 SC 689; (1971) 1 SCC 697
• Jayant Hansraj Shah v. Union of India
• • 2008 (229) E.L.T. 339 (Bom.)
• Baru Ram v. Parsarnni
• • AIR 1959 SC 93
• Maqbool Ahmad v. Onkar Pratap Narain Singh
• • AIR 1935 PC 85
• Jagan Nath v. Jaswant Singh
• • AIR 1954 SC 210
• Manilal Mohanlal Shah v. Sardar Sayed Ahmed Sayed Mahmad
• • AIR 1954 SC 349
• M.I Builders v. Radhey Shyam Sahu
• • 1999 (6) SCC 464
• Haresh S. Bhanushali v. Union of India
• • (2021) 17 GSTR-OL 84 (Bom); (2021) 376 ELT 232 (Bom)

Statutes/Laws Referred

• Customs Act, 1962
• • Section 110: Seizure of goods, documents and things
  • Section 110A: Provisional release of goods, documents and things seized or bank account provisionally attached pending adjudication
  • Section 124: Issue of show-cause notice before confiscation of goods, etc.
• Finance Bill, 2018 (as it amends Section 110 of the Customs Act, 1962)

1. What is the central legal issue addressed in this Supreme Court case?

The central legal issue revolves around the interpretation and application of Sections 110(2) and 110A of the Customs Act, 1962, specifically concerning the timely issuance of show-cause notices after goods have been seized by customs authorities. The core question is whether the provisional release of seized goods under Section 110A extends or nullifies the statutory six-month (or extended one-year) period within which a show-cause notice must be issued under Section 110(2), failing which the seized goods must be returned.

2. What are Sections 110, 110A, and 124 of the Customs Act, 1962, and how do they relate to each other?

• Section 110: Seizure of goods, documents and things outlines the power of a proper officer to seize goods believed to be liable for confiscation and the conditions under which goods can be held. Crucially, Section 110(2) mandates that if no show-cause notice under Section 124(a) is issued within six months (extendable to one year) of seizure, the goods shall be returned to the person from whom they were seized. It also includes provisions for provisional attachment of bank accounts.
• Section 110A: Provisional release of goods, documents and things seized or bank account provisionally attached pending adjudication allows for the interim release of seized goods or attached bank accounts to the owner or account holder, pending a final adjudication order, upon taking a bond with security and conditions.
• Section 124: Issue of show-cause notice before confiscation of goods, etc. establishes the procedural requirement for customs authorities to issue a written show-cause notice, detailing the grounds for proposed confiscation or penalty, and providing the owner or person an opportunity to make a representation and be heard, before any final order of confiscation or penalty can be made.

These sections interconnect as 110 sets the initial seizure and its time limit for notice, 110A provides for temporary release during that period, and 124 dictates the formal notice required for permanent confiscation or penalty, which triggers the time limit in 110(2).

3. What was the specific case involving Jatin Ahuja, and what was the Delhi High Court's ruling?

Jatin Ahuja, engaged in trading luxury cars, had a brand new Maserati car seized by the Directorate of Revenue Intelligence (DRI) under Section 110 of the Act. Despite an extension of the period for issuing a show-cause notice by six months, no such notice was issued within the stipulated time. Ahuja filed a Writ Petition seeking the release of his car. The Delhi High Court ruled in his favor, declaring that the failure to issue a show-cause notice under Section 124 within the prescribed period under Section 110(2) entitled Ahuja to the release of his seized car. The High Court specifically disagreed with the Revenue's argument that a provisional release under Section 110A would exempt or override the mandatory time limits of Section 110(2).

4. How did the Delhi High Court interpret the "mandatory" nature of Section 110(2) regarding the time limit for issuing a show-cause notice?

The Delhi High Court unequivocally held that the time limit prescribed in Section 110(2) for issuing a show-cause notice is mandatory. It clarified that the consequence of not issuing the notice within the specified period (or the extended period) is clearly stated: "the goods shall be returned to the person from whose possession they were seized." The court emphasized that this consequence of statutory dissolution of the seizure operates independently and is not negated by a provisional release under Section 110A. It viewed Section 110A as merely an interim order for releasing goods, especially perishable or fast-moving ones, and found no internal indications in Section 110A to curtail the amplitude or mandatory effect of Section 110(2).

5. What was the "Bombay view" in Jayant Hansraj Shah and why did the Delhi High Court and Supreme Court disagree with it?

The "Bombay view," as expressed in Jayant Hansraj Shah v. Union of India, held that if seized goods are provisionally released under Section 110A, the period during which they remain provisionally released should be excluded when calculating the limitation period prescribed under Section 110(2). In essence, it argued that provisional release could pause or negate the requirement to issue a show-cause notice within the statutory timeframe.

Both the Delhi High Court and the Supreme Court disagreed with this view. They reasoned that Section 110A merely provides for an interim release of goods and does not extinguish the mandatory consequences of Section 110(2) if a show-cause notice is not issued within the statutory period. The Supreme Court stated that allowing Section 110A to override Section 110(2) would be "contrary to the plain meaning and intendment of the statute," and that the only power to extend the time period is specifically provided in the first proviso to Section 110(2). The court reiterated that when a law mandates an act and specifies consequences for non-performance, the condition is mandatory.

6. What changes were made to Section 110(2) through the Finance Bill, 2018?

The Finance Bill, 2018, specifically clause 90, amended Section 110 of the Customs Act to introduce two key changes to sub-section (2):

1. Substitution of the existing proviso: This change clarified that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons recorded in writing, extend the initial six-month period for issuing a show-cause notice by a further period not exceeding six months. This extension must be communicated to the person from whom goods were seized before the expiry of the initial period.
2. Insertion of a second proviso: This new proviso explicitly states that "where any order for provisional release of the seized goods has been passed under Section 110A, the aforesaid period of six months, mentioned in sub-section (2), shall not apply." This means that after March 29, 2018, if goods are provisionally released, the time limit for issuing a show-cause notice under Section 110(2) is removed.

7. How do the amendments introduced by the Finance Bill, 2018, affect the legal position established in this Supreme Court judgment?

The amendments introduced by the Finance Bill, 2018, particularly the second proviso to Section 110(2), directly overturn the legal position established by this Supreme Court judgment for cases arising after March 29, 2018.

Prior to the amendment, the Supreme Court (and the Delhi High Court) firmly held that provisional release under Section 110A did not impede or limit the mandatory time frame for issuing a show-cause notice under Section 110(2). Failure to issue the notice within that time meant the goods had to be returned, regardless of provisional release.

However, the new second proviso explicitly states that if an order for provisional release under Section 110A has been passed, the six-month time limit in Section 110(2) shall not apply. This legislative change validates the "Bombay view" (from Jayant Hansraj Shah) prospectively, meaning that for seizures and provisional releases occurring after March 29, 2018, customs authorities are no longer bound by the six-month (or one-year) period for issuing a show-cause notice if the goods have been provisionally released.

8. What was the final decision of the Supreme Court in the Union of India vs Jatin Ahuja case and the related appeals?

The Supreme Court dismissed all eleven appeals preferred by the Revenue (Union of India) and allowed the two appeals filed by the assessees against the Bombay High Court judgment.

This means that the Supreme Court upheld the Delhi High Court's ruling that the failure of customs authorities to issue a show-cause notice under Section 124 within the stipulated time period under Section 110(2) of the Customs Act, 1962, before the 2018 amendment came into force, entitled the person from whom the goods were seized (like Jatin Ahuja) to the unconditional release of those goods. The Court explicitly stated that it could not subscribe to the "Bombay view" in Jayant Hansraj Shah's case, which suggested that provisional release would negate the time limit. However, the Court acknowledged that the subsequent 2018 amendment to Section 110(2) changes the legal landscape for future cases.