Himachal Pradesh High Court
M/S Mondelez India Foods Private ... vs State Of Himachal Pradesh & Ors on 13 October, 2020
Bench: Tarlok Singh Chauhan, Jyotsna Rewal Dua
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
CWP No. 1757 of 2020
Decided on: 22.09.2020
.
M/s Mondelez India Foods Private Limited ...Petitioner
Versus
State of Himachal Pradesh & Ors. ...Respondents
__________________________________________________________________________
Coram:
Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Hon'ble Ms. Justice Jyotsna Rewal Dua, Judge.
Whether approved for reporting? 1 No.
For the Petitioner : Mr. Goverdhan Lal Sharma, Advocate along
with Mr. Amar Pratap Singh, Advocate.
For the Respondents : Mr. Ajay Vaidya, Senior Additional Advocate
General.
(Through Video Conferencing)
Tarlok Singh Chauhan, Judge (Oral)
The instant petition has been filed for the grant of following substantive reliefs:-
i) Issue a writ of mandamus or any order or direction in the nature thereof, directing respondent No. 2 to release the Bank Guarantees furnished by the petitioner forthwith;
ii) Issue a writ of mandamus or any order or direction in the nature thereof, directing respondent No. 2 not to encash the Bank Guarantees as entire amount of entry tax has been deposited by the petitioner; Iii) Issue a writ of mandamus or any order or direction in the nature thereof, directing respondent No. 2 to pay reimburse the bank charges paid by the petitioner from maintaining the bank guarantees.1
Whether reporters of the local papers may be allowed to see the judgment? yes ::: Downloaded on - 16/10/2020 20:18:02 :::HCHP 2
2. The background leading to filing of the present .
petition is that the State of Himachal Pradesh enacted Himachal Pradesh Tax on Entry of Goods into Local Area Act, 2010 (for short the "Act"), which was assailed by the petitioner before this Court by filing CWP No. 2494 of 2011.
3. On 29.04.2011, the Court directed the petitioner to deposit 1/3rd of its liability as assessed and to furnish bank guarantee so far as the balance 2/3rd r of the liability is concerned. The petitioner complied with the order by depositing 1/3rd of the amount and had furnished bank guarantee qua the 2/3rd amount.
4. On 05.08.2014, this Court disposed of the writ petition alongwith other connected matters by directing that these petitions shall abide by the judgment of the Hon'ble Supreme Court in Civil Appeal No. 3453 of 2002, titled Jindal Stainless Steel Limited and Anr. vs. State of Haryana and Ors.
and further granted liberty to the parties to lay a motion in terms of the Hon'ble Apex Court judgment, if need arises.
5. On 14.12.2015, this Court modified its earlier order dated 05.08.2014, by directing the petitioner to deposit the assessed amount and furnish a security for the balance amount of 50%.
::: Downloaded on - 16/10/2020 20:18:02 :::HCHP 36. Thereafter, the matter i.e. M/s Jindal Stainless Steel Ltd. (Supra) came up for consideration before the Hon'ble Nine .
Judges Bench of Hon'ble Supreme Court on 11.11.2016 and the Hon'ble Bench referred the matter back to the learned Division Bench of the Hon'ble Supreme Court to decide the issue on constitutional validity of any particular State Entry Tax Legislation.
7. On 21.03.2017, the learned Division Bench of the Hon'ble Supreme Court passed judgment in Civil Appeal Nos.
997-998 of 2004 by observing that the matter will be heard by the respective High Court in terms of the judgment passed by the Hon'ble Supreme Court dated 11.11.2016.
8. The respondent No. 4 i.e. Excise and Taxation Commissioner, Himachal Pradesh, Shimla vide letter dated 23.03.2017 issued to respondent No. 2 i.e. Assistant Excise & Taxation Commissioner, District Solan, Himachal Pradesh, directed the encashment of the bank guarantee. Respondent No. 2, in turn, vide his letter dated 24.03.2017 issued letter to the petitioner bank for encashment of the bank guarantee given by the petitioner.
9. The petitioner assailed this action by filing civil miscellaneous petition before this Court in CWP No. 2494 of 2011 for stay of encashment of bank guarantee. However, later on, on 27.03.2017, the petitioner deposited an amount of ::: Downloaded on - 16/10/2020 20:18:02 :::HCHP 4 Rs.5,20,68,938/- under protest for the period April 2016 to January 2017 and requested respondent No. 2 to release bank .
guarantee furnished against the said amount.
10. On 10.04.2017, this Court granted stay of encashment of bank guarantee given by the petitioner against the entry tax. In the meanwhile, the petitioner in June 2017 deposited the entire amount of entry tax demand raised by the respondents including the demand covered by the bank guarantee. Yet the bank guarantee furnished by the petitioner has not been released, constraining it to file the instant petition.
11. The only ground on which the claim of the petitioner has been opposed by the respondents is that the petitioner is in arrears under H.P. VAT Act and the CST Act of more than Rs. 37 crores for the year 2012-13 and there is a mismatch on the online VAT application of the Department of Rs. 877 crores for the period 2011-12 to 2014-15, which is pending to be reconciled on behalf of the petitioner firm, which in turn is likely to change into huge tax liability.
We have heard learned counsel for the parties and have gone through the records of the material placed on record.
12. We are of the considered opinion that in absence of there being any provision in law, the respondents cannot refuse to release the bank guarantee that was furnished under a different statute and for different purpose. The respondents on ::: Downloaded on - 16/10/2020 20:18:02 :::HCHP 5 their own cannot withhold the bank guarantee only on the ground of outstanding liability under other statutes unless and .
until such a condition is backed by any statutory provision or else the same would amount to an alternate mode of recovery.
13. The respondents have failed to realize that the offices being held by them are public offices which are meant for use and not for abuse and in case repositories of such offices spoil the rule, then the law is not that powerless and would step in to not only quash such arbitrary actions, but would also ensure that such abuse is not repeated in future. Being Officers of the State, they could not have acted like a private individual, who is free to act in a manner whatsoever he likes, unless interdicted by law. It needs no reiteration that the State and its Officers have to strictly fall within the four corners of law and all their activities are governed by rules, regulations, instructions etc.
14. The situation, in best, is described by the Hon'ble Supreme Court in Noida Entrepreneurs Association vs. Noida and others, (2011) 6 SCC 508, wherein it was observed as under:
"Power vested by the State in a public authority should be viewed as a trust coupled with duty to be exercised in large public and social interest. Power is to be exercised strictly adhering to the statutory provisions and fact situation of a case. "Public authorities cannot play fast and loose with the powers vested in them." A decision ::: Downloaded on - 16/10/2020 20:18:02 :::HCHP 6 taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise the power reasonably and in good .
faith to effectuate the purpose for which power stood conferred. In this context, "in good faith" means "for legitimate reasons." It must be exercised bona fide for the purpose and for none other."
15. Consequently, we find merit in this petition and the same is accordingly allowed. The respondents are directed to the judgment.
r to release the bank guarantee furnished by the petitioner forthwith, in no event later than two weeks on the receipt of the copy of Pending application(s), if any, also stand(s) disposed of.
For compliance to come up on 13.10.2020.
(Tarlok Singh Chauhan) Judge (Jyotsna Rewal Dua) 22 nd September, 2020. Judge (sanjeev) ::: Downloaded on - 16/10/2020 20:18:02 :::HCHP