Madras High Court
M/S.Ponni Sugars (Erode) Ltd vs The Assistant Commissioner Of Cgst on 20 November, 2017
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam
In the High Court of Judicature at Madras Dated : 20.11.2017 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM Writ Petition No.29588 of 2017 & WMP.No.31867 of 2017 M/s.Ponni Sugars (Erode) Ltd., rep. by its Deputy General Manager (Accounts) G.Lakshminarayanan ...Petitioner Vs 1.The Assistant Commissioner of CGST & Central Excise, Erode II Division, 81, Bharathi Nagar, Soolai, Veerappan Chatram, Erode-4. 2.The Additional Commissioner, office of the Commissioner of Central Excise, No.1, Foulks Compound, Anai Road, Salem-1. 3.The Joint Commissioner, office of the Commissioner of Central Excise, No.1, Foulks Compound, Anai Road, Salem-1. ...Respondents PETITION under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus to call for the records on the file of the first respondent herein in C.No.IV/16/17/210/2006-Arrears dated 31.10.2017, quash the same as illegal, without jurisdiction and as unauthorized by the Central Excise Act, 1944 and by the Finance Act, 1994 while directing the first respondent herein to forbear from initiating recovery proceedings pursuant to the proceedings of the second respondent herein in C.No.V/17/15/281/2003 CX ADJ/Order Sl.No.02/2005 (ADC) dated 31.3.2005 and that of the third respondent herein in C.No.V/GTO/15/44/ 2006 ST ADJ/ Order Sl.No.02/2007 (JC) dated 12.2.2007. For Petitioner : Mr.N.Prasad For Respondents : Mr.V.Sundareshwaran ORDER
Mr.V.Sundareshwaran, learned Senior Standing Counsel accepts notice for the respondents. Heard both.
2. The petitioner is a public limited company incorporated under the provisions of the Companies Act, 1956, having a factory at Erode involved in the manufacture of sugar. Originally, there was a company by name M/s.Ponni Sugars & Chemicals Limited, incorporated in the year 1982, owned the sugar factory at Erode. The said M/s.Ponni Sugars & Chemicals Limited also set up a new factory in the State of Orissa. Subsequently, the factory at Erode was declared as a sick industrial company and with a view to protect the same, a Scheme of Arrangement was conceived. According to the said Scheme of Arrangement, the factory at Orissa would be owned and run by M/s.Ponni Sugars & Chemicals Limited and the Erode undertaking would be transferred to the petitioner. The Scheme of Arrangement sanctioned by this Court in C.P.Nos. 118 and 119 of 2000, by order dated 10.9.2001, provides for an effective date as 01.4.1999.
3. On 31.3.2005, the second respondent passed an Order-in-Original, which was with reference to the show cause notices dated 04.6.1993 and 03.6.1993, claiming service tax and other charges for the period November 1992 as well as December 1992 and January 1993 respectively. By the order dated 31.3.2005, the second respondent confirmed the demand in the show cause notices and directed payment of Rs.91,74,660/- and imposed a penalty of Rs.25 lakhs.
4. After about two years, the third respondent passed an Order-in-Original dated 12.2.2007, which was with reference to the show cause notice dated 20.8.2002 demanding service tax. By the said order, the third respondent confirmed the demand of Rs.10,07,117/- under Section 73 of the Finance Act, 1994 apart from demanding interest and levying penalty.
5. These two orders led to the issuance of a notice dated 13.6.2014 issued to the Superintendent of Customs, Central Excise and Service Tax, Erode stating that the liability, which has been confirmed in Orders-in-Original dated 31.3.2005 and 12.2.2007, is liable to be paid by the petitioner, which being the existing transferee company. The petitioner submitted their reply dated 23.6.2014, which appears to be a brief reply largely relying upon the fact that the Official Liquidator has been appointed as the Provisional Liquidator of the company and that the assets vest with the Official Liquidator. This was followed by a further reply dated 14.7.2014, which appears to be a little more elaborate referring to the order passed by the Company Court approving the Scheme of Arrangement.
6. Subsequently, the first respondent issued a notice dated 21.8.2017 on similar lines as that of the notice dated 13.6.2014, to which, the petitioner submitted their reply dated 28.8.2017. This appears to be a very elaborate reply than the earlier two replies. Once again, the first respondent issued the impugned notice dated 31.10.2017 reiterating the earlier stand that the petitioner is liable to pay the dues, failing which, the first respondent informed the petitioner that appropriate action will be initiated under Section 11 of the Central Excise Act, 1944 and the Finance Act, 1994 and the Rules made thereunder. On receipt of the same, the petitioner gave their objections dated 10.11.2017.
7. These facts clearly show that the first respondent is yet to adjudicate the petitioner's case and that the matter is still at the stage of a show cause notice. The contentions raised by the petitioner are that the effective date as per the orders of the Company Court approving the Scheme of Arrangement is 01.4.1999 and as on the said date, the amounts are not due and payable.
8. On the other hand, the learned Senior Standing Counsel for the respondents would submit that the petitioner company, being the successor, is liable to pay the amount, which was the subjective issue pursuant to the show cause notices issued in the year 1993 and 2002 respectively and that the contention raised by the petitioner that they are not liable to pay any amount is incorrect.
9. This Court does not wish to express any opinion at this juncture, as the first respondent is yet to adjudicate the case. The first respondent, having issued the impugned demand, has to consider the petitioner's objections and pass an order and it is open to the petitioner to prefer an appeal. On the other hand, if the first respondent is convinced on the legal issue raised by the petitioner, it may even lead to dropping of proceedings. Therefore, necessarily, there should be an adjudication. For the above reasons, the prayer sought for by the petitioner to quash the impugned show cause notice cannot be granted, as it is premature.
10. In the light of the above discussions, the writ petition is dismissed as premature with a direction to the first respondent to consider the petitioner's reply dated 10.11.2017 as well as the earlier replies dated 23.6.2014, 14.7.2014 and 28.8.2017, afford an opportunity of personal hearing to the authorized representative of the petitioner, consider the factual and legal submissions made by him and pass a speaking order on merits and in accordance with law, within a period of six weeks from the date of receipt of a copy of this order. No costs. Consequently, the connected WMP is closed.
20.11.2017 Internet : Yes T.S.SIVAGNANAM,J RS To
1.The Assistant Commissioner of CGST & Central Excise, Erode II Division, 81, Bharathi Nagar, Soolai, Veerappan Chatram, Erode-4.
2.The Additional Commissioner, office of the Commissioner of Central Excise, No.1, Foulks Compound, Anai Road, Salem-1.
3.The Joint Commissioner, office of the Commissioner of Central Excise, No.1, Foulks Compound, Anai Road, Salem-1.
WP.No.29588 of 2017& WMP.No.31867 of 2017 20.11.2017