Recovery proceedings against assets of another unit of Group Companies is not permissible in absence of evidence that entire import was at instance of Group Companies

Surlux Diagnostic Ltd. & Others Vs. Assistant Commissioner of Customs & Another [2014-TIOL-1490-HC-MUM-CUS]

In the instant case, Surlux Diagnostic Ltd. (“the Petitioner”) has filed a writ petition before the  Hon’ble Bombay High Court requesting to direct the Assistant Commissioner of Customs to withdraw the letter dated May 29, 2013 which prohibited the Petitioner from transfer of property rights in the flat owned by the Petitioner in the Building of a Co-operative Society.

The Department contended that there are some dues adjudged against Surlux Medicare, which is one of the Units of the Petitioner. Since, the Petitioner and Surlux Medicare are under common management called Surlux Group of Companies and there is inter-connection among different units, the Group Companies have together defaulted in payment of the Government dues.

The Petitioner submitted that the Order in Original dated May 31, 2000 is not passed against the  petitioner but against Surlux Medicare.

Further, the Petitioner contended that these are two distinct corporate entities having independent legal existence. Furthermore, the   Petitioner contended that unless and until it is demonstrated that the Petitioner has defaulted in payment of Customs duty, the property/flat cannot be attached and sold during the course of recovery proceedings. The high court held that there was no evidence on record to show that the entire import was made at the instance of the group companies. Therefore, the petitioner cannot be barred from transferring the rights in property unless the revenue provides sufficient evidence that the entire import was at the instance of the group companies and the petitioner was involved in it.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)

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