Customs Authorities Lack Jurisdiction To Issue Directions Under GST Law: Madras High Court

A single bench of Justice N Anand Venkatesh ruled that such powers lie exclusively with authorities designated under the GST Act.

"It is not known as to where the 1st respondent gets the power and jurisdiction to issue a Public Notice directing the custodians not to collect GST. This direction given by the 1st respondent certainly does not fall within the domain of the customs authorities."

The Court further clarified that Customs authorities may issue Public Notices only to explain or implement provisions and procedural changes under the Customs Act, and that such powers do not extend to matters governed by other statutes, including the GST laws.

"Under the Scheme of the Act, the only right that is available for the authorities to make Regulations is provided under Section 152 of the Act read with Section 157. A Public Notice can be issued by the Department to the importers, exporters etc., clarifying about the changes to the customs Procedures, Regulations or Policies. Such Rules and Regulations is confined to the Customs Act alone and the same cannot be used with respect to any other enactment."

Consequently, it found that the Public Notice issued by the Joint Commissioner of Customs, Chennai as “wholly without jurisdiction” and “contrary to the provisions of the CGST Act, 2017 and the Customs Act, 1962.

The case concerned a plea filed by National Association of Container Freight Stations (NACFS) challenging a public notice issued by the Joint Commissioner of Custom on February 12, 2021.

The notice directed that the bid amount for uncleared or unclaimed cargo sold through auction by Container Freight Stations (CFS) would be treated as inclusive of customs duty and IGST, and that no additional tax could be demanded from the highest bidder.

The association, acting as custodians under the Customs Act, 1962, argued that the Customs Department had exceeded its authority by issuing directions relating to GST.

The petitioners contended that once customs duty on imported goods is discharged, any subsequent auction sale conducted by the CFS constitutes a separate “supply of goods” under Section 7(1) of the CGST Act, attracting GST. The Customs Department, however, maintained that levying GST again would amount to double taxation, since the bid price already included IGST as part of the customs duty, and that the CFS had no independent right to impose further tax.

Rejecting the Customs Department's argument, the Court held that the levy of IGST on import and the levy of GST on the subsequent auction sale are “separate and independent transactions.” It clarified that once the Bill of Entry is filed and customs duty is paid, the Customs Department will not have any further jurisdiction in the matter.

The Bench also noted that when Customs itself conducts auctions, GST is collected from the highest bidder before delivery, asking, “If that is so, it is not

known as to why the same GST should not be insisted for payment when the auction is conducted by the CFS”

Subsequently, the court quashed both the Public Notice dated February 12, 2021, and the consequential letter dated December 22, 2021.

Case Title: National Association of Container Freight Stations v. The Joint Commissioner of Customs

Citation: 2025 LiveLaw (Mad) 378

Case Number: WP No. 11222 of 2022

For Petitioner: Advocates Radhika Chandra Sekhar and P Giridharan

For Respondents: Advocate K Mohanamurali for the Customs authorities

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