Custom, Excise & Service Tax Tribunal
Sachdeva Holdings Pvt Ltd vs Ce & Cgst Noida on 15 September, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Excise Appeal No.70061 of 2020
(Arising out of Order-in-Appeal No.NOI-EXCISE-002-APP-1092-2019-20 dated
13/11/2019 passed by Commissioner (Appeals) Central Excise & Services
Tax, Noida)
M/s Sachdeva Holdings Pvt. Ltd., .....Appellant
(Krishna Apra Royal Plaza, 207, Alpha-I, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(4th Floor, C-56/42, Renu Tower, Sector-62, Noida-201301) APPEARANCE:
Shri Amit Neogi, Chartered Accountant for the Appellant Shri Manish Raj, Authorised Representative for the Respondent CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70084/2023 DATE OF HEARING : 15 September, 2023 DATE OF DECISION : 15 September, 2023 SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.NOI- EXCISE-002-APP-1092-2019-20 dated 13/11/2019 passed by Commissioner (Appeals) Central Excise & Services Tax, Noida.
By the impugned order Commissioner (Appeals) has dismissed the appeal filed by the appellant by observing as follows:-
"6. I find that the appellant had filed the aforesaid refund claim on 09.01.2018. The appellant deposited service tax on 01.06.2016 in the present case. Accordingly, under Section 11B of the Central Excise Act' 1944 the refund claim should have been filed on or before 30.05.2017, but 2 Customs Appeal No.70723 of 2019 the appellant failed to do so and filed their refund claim on 09.01.2018, after the lapse of more than one year.
7. I find that the appellant has submitted in the grounds of appeal that *Extra payment of Service Tax is a mere deposit and does not amount to payment of tax; hence time-limit of section 11B and principle of unjust enrichment would not apply to refund thereof. In this regard, I place reliance on the decision of Hon'ble Supreme Court of India in the case of Anam Electrical Manufacturing Company [1997(90) E.L.T. 260 (S.C.)], wherein Apex Court has held that refund application has to be filed within the time limit under Section 11 B of the Central Excise Act' 1944/Section 27 of Customs Act1962 and Statutory time limit not extendable by any authority or Court in case of "illegal levy". Further, Division Bench of the Tribunal in the case of Prabhakar C. Suvarna Vs. CCE&ST, Mangalore [2015-TIOL- 2576-CESTAT-BANG], has held that the refund of service tax paid under mistake, the claim has to be filed within prescribed period of one year and the limitation for claiming the refund cannot be extended in any circumstances including when the payments are made by error of law or under mistake. Accordingly, I find that the aforesaid refund claim is time barred and hit by period of limitation. Further, I also agree with the view of adjudicating authority who clearly held in the impugned order that the burden of service tax paid was not borne by the claimant. Hence, I do not find any reason to intervene in the impugned order passed by the adjudicating authority.
8. In view of the above discussion and findings, Order-In-
Original No.314/R/AC/D-I/N-II/17-18 dated 11.05.2018 passed by the adjudicating authority is upheld and appeal bearing No.779/ST/Noida/Appl/GBN/2018-19 dated 18.07.2018 filed by the appellant is rejected."
3Customs Appeal No.70723 of 2019 2.1 Appellant filed a refund claim for Rs.4,99,525/- on 09.01.2018 for the value of taxable services provided by them during the period from 01.04.2016 to 30.09.2016 was disclosed as Rs.40,00,000/- instead of actual taxable services of Rs.5,55,000/- resulting in excess payment of service tax.
2.2 Appellant had received certain advanced payment from M/s Umang Realtech Pvt. Ltd. against which they deposited service tax of Rs.5,80,000/- vide chalan dated 01.06.2016. However, subsequently they had refunded Rs.30,00,000/- + Rs.6,00,000/- to M/s Umang Realtech Pvt. Ltd. on 05.09.2016 and 26.09.2016 leaving in balance of Rs.5,80,000/-, for the actual services provided on which service tax liability as per appellant working out to be Rs.80,475/-. Therefore, appellant claimed that they have paid excess service tax of Rs.4,99,525/- for which the said refund claim is made.
2.3 On scrutiny of refund claim filed on 09.11.2018, it was observed that an amount of Rs.5,80,000/- which appellant had deposed as service tax was not refunded by them to M/s Umang Realtech Pvt. Ltd. Accordingly, them have not bound the burden of excess tax paid. It was also noticed that the refund claim filed on 09.01.2018 was barred by limitation as has been filed after more than one year from the date of payment of the service tax claimed as refund.
2.4 Accordingly, a show cause notice dated 27.03.2018 was issued to the appellant asking them to show cause as to why the refund claim may not be rejected for the above stated reasons. This show cause notice was adjudicated vide the Order-in- Original dated 11.05.2018, rejecting the refund claim of the appellant.
2.5 Aggrieved appellant challenged the Order-in-Original before Commissioner (Appeals), who has rejected the appeal by the impugned order as referred in para-1 above. Hence, appellant has filed this appeal.
4Customs Appeal No.70723 of 2019 3.1 I have heard Shri Amit Neogi, learned Chartered Accountant appearing for the appellant and Shri Manish Raj, learned Authorised Representative appearing for the revenue.
3.2 Arguing for the appellant learned Chartered Accountant submits that they have paid some amount under mistake of law and this Tribunal has not taking the view that in case of payment on the mistake of law, provisions of Section 11B of the Central Excise Act would not be applicable for the refund claim of said amount. The reliance is placed on the decision of this Tribunal in the case of M/s Asl Builders Pvt. Ltd. Vs Jamshedpur Commissionerate (CESTAT-Kolkatta). Accordingly, he argued that refund claim should be allowed in their favour by setting aside the impugned order.
3.3 Learned Authorised Representative reiterates the findings of the impugned order and submits that the appeal needs to be dismissed.
4.1 I have considered the impugned order along with the submissions made in the appeal and during the course of arguments.
4.2 From the facts as stated in the impugned order it is evident that the refund claim has been rejected primarily on the ground of being much beyond the period of one year as prescribed by Section 83 of the Finance Act, 1994 read with Section 11B of the Central Excise Act.
4.3 The law of limitation does not extiguish the right which may have a arisen, but only for the reason of passage of time restricts the enforcement of that right. Admittedly, in the present case the refund claim has been filed much beyond the period of one year as prescribed in law, the same is necessarily time barred as having filed beyond the statutory period of limitation as prescribed in law. Section 83 of Finance Act, 1994 read with Section 11 B of Central Excise Act, 1944 prescribes that refund claim should have been filed within one year from the relevant date.
5Customs Appeal No.70723 of 2019 also in view of the judgment Hon'ble Supreme Court in the case of Mafatlal Industries Ltd vs Union of India [1997 (89) ELT 247 (SC)], by holding as follows:-
"67. The first question that has to be answered herein is whether Kanhaiyalal has been rightly decided insofar as it says (1) that where the taxes are paid under a mistake of law, the person paying it is entitled to recover the same from the State on establishing a mistake and that this consequence flows from Section 72 of the Contract Act; (2) that it is open to an assessee to claim refund of tax paid by him under orders which have become final - or to reopen the orders which have become final in his own case
- on the basis of discovery of a mistake of law based upon the decision of a court in the case of another assessee, regardless of the time-lapse involved and regardless of the fact that the relevant enactment does not provide for such refund or reopening; (3) whether equitable considerations have no place in situations where Section 72 of the Contract Act is applicable; and (4) whether the spending away of the taxes collected by the State is not a good defence to a claim for refund of taxes collected contrary to law.
68. Re. : (I) : Hereinbefore, we have referred to the provisions relating to refund obtaining from time to time under the Central Excises and Salt Act. Whether it is Rule 11 (as it stood from time to time) or Section 11B (as it obtained before 1991 or subsequent thereto), they invariably purported to be exhaustive on the question of refund. Rule 11, as in force prior to August 6, 1977, stated that "no duties and charges which have been paid or have been adjusted....shall be refunded unless the claimant makes an application for such refund under his signature and lodges it to the proper officers within three months from the date of such payment or adjustment, as the case may be". Rule 11, as in force between August 6, 1977 and 6 Customs Appeal No.70723 of 2019 November 17, 1980 contained sub-rule (4) which expressly declared: "(4) Save as otherwise provided by or under this rule, no claim of refund of any duty shall be entertained". Section 11B, as in force prior to April, 1991 contained sub-section (4) in identical words. It said : "(4) Save as otherwise provided by or under this Act, no claim for refund of any duty of excise shall be entertained". Sub-
section (5) was more specific and emphatic. It said :
"Notwithstanding anything contained in any other law, the provisions of this section shall also apply to a claim for refund of any amount collected as duty of excise made on the ground that the goods in respect of which such amount was collected were not excisable or were entitled to exemption from duty and no court shall have any jurisdiction in respect of such claim." It started with a non- obstante clause; it took in every kind of refund and every claim for refund and it expressly barred the jurisdiction of courts in respect of such claim. Sub-section (3) of Section 11B, as it now stands, is to the same effect - indeed, more comprehensive and all-encompassing. It says, "(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder or in any law for the time being in force, no refund shall be made except as provided in sub-section".
The language could not have been more specific and emphatic. The exclusivity of the provision relating to refund is not only express and unambiguous but is in addition to the general bar arising from the fact that the Act creates new rights and liabilities and also provides forums and procedures for ascertaining and adjudicating those rights and liabilities and all other incidental and ancillary matters, as will be pointed out presently. This is a bar upon a bar - an aspect emphasised in Para 14, and has to be respected so long as it stands. The validity of these 7 Customs Appeal No.70723 of 2019 provisions has never been seriously doubted. Even though in certain writ petitions now before us, validity of the 1991 (Amendment) Act including the amended Section 11B is questioned, no specific reasons have been assigned why a provision of the nature of sub-section (3) of Section 11B (amended) is unconstitutional. Applying the propositions enunciated by a seven-Judge Bench of this Court in Kamala Mills, it must be held that Section 11B [both before and after amendment] is valid and constitutional. In Kamala Mills, this Court upheld the constitutional validity of Section 20 of the Bombay Sales Tax Act (set out hereinbefore) on the ground that the Bombay Act contained adequate provisions for refund, for appeal, revision, rectification of mistake and for condonation of delay in filing appeal/revision. The Court pointed out that had the Bombay Act not provided these remedies and yet barred the resort to civil court, the constitutionality of Section 20 may have been in serious doubt, but since it does provide such remedies, its validity was beyond challenge. To repeat - and it is necessary to do so - so long as Section 11B is constitutionally valid, it has to be followed and given effect to. We can see no reason on which the constitutionality of the said provision - or a similar provision - can be doubted. It must also be remembered that Central Excises and Salt Act is a special enactment creating new and special obligations and rights, which at the same time prescribes the procedure for levy, assessment, collection, refund and all other incidental and ancillary provisions. As pointed out in the Statement of Objects and Reasons appended to the Bill which became the Act, the Act along with the Rules was intended to "form a complete central excise code". The idea was "to consolidate in a single enactment all the laws relating to central duties of excise". The Act is a self-contained enactment. It contains provisions for collecting the taxes which are due according to law but have not been collected 8 Customs Appeal No.70723 of 2019 and also for refunding the taxes which have been collected contrary to law, viz., Sections 11A and 11B and its allied provisions. Both provisions contain a uniform rule of limitation, viz., six months, with an exception in each case. Sections 11 and 11B are complimentary to each other.
To such a situation, Proposition No. 3 enunciated in Kamala Mills becomes applicable, viz., where a statute creates a special right or a liability and also provides the procedure for the determination of the right or liability by the Tribunals constituted in that behalf and provides further that all questions about the said right and liability shall be determined by the Tribunals so constituted, the resort to civil court is not available - except to the limited extent pointed out therein. Central Excise Act specifically provides for refund. It expressly declares that no refund shall be made except in accordance therewith. The Jurisdiction of a civil court is expressly barred - vide sub- section (5) of Section 11B, prior to its amendment in 1991, and sub-section (3) of Section 11B, as amended in 1991. It is relevant to notice that the Act provides for more than one appeal against the orders made under Section 11B/Rule 11. Since 1981, an appeal is provided to this Court also from the orders of the Tribunal. While Tribunal is not a departmental organ, this court is a civil court. In this view of the matter and the express and additional bar and exclusivity contained in Rule 11/Section 11B, at all points of time, it must be held that any and every ground including the violation of the principles of natural justice and infraction of fundamental principles of judicial procedure can be urged in these appeals, obviating the necessity of a suit or a writ petition in matters relating to refund. Once the constitutionality of the provisions of the Act including the provisions relating to refund is beyond question, they constitute "law" within the meaning of Article 265 of the Constitution. lt follows that any action taken under and in accordance with the said provisions 9 Customs Appeal No.70723 of 2019 would be an action taken under the "authority of law", within the meaning of Article 265.
In the face of the express provision which expressly declares that no claim for refund of any duty shall be entertained except in accordance with the said provision, it is not permissible to resort to Section 72 of the Contract Act to do precisely that which is expressly prohibited by the said provisions. In other words, it is not permissible to claim refund by invoking Section 72 as a separate and independent remedy when such a course is expressly barred by the provisions in the Act, viz., Rule 11 and Section 11B. For this reason, a suit for refund would also not lie. Taking any other view would amount to nullifying the provisions in Rule 11/Section 11B, which, it needs no emphasis, cannot be done. It, therefore, follows that any and every claim for refund of excise duty can be made only under and in accordance with Rule 11 or Section 11B, as the case may be, in the forums provided by the Act. No suit can be filed for refund of duty invoking Section 72 of the Contract Act. So far as the jurisdiction of the High Court under Article 226 - or for that matter, the jurisdiction of this court under Article 32 - is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment.
69. There is, however, one exception to the above proposition, i.e., where a provision of the Act whereunder the duty has been levied is found to be unconstitutional for violation of any of the constitutional limitations. This is a situation not contemplated by the Act. The Act does not contemplate any of its provisions being declared 10 Customs Appeal No.70723 of 2019 unconstitutional and therefore it does not provide for its consequences. Rule 11/Section 11B are premised upon the supposition that the provisions of the Act are good and valid. But where any provision under which duty is levied is found to be unconstitutional, Article 265 steps in. In other words, the person who paid the tax is entitled to claim refund and such a claim cannot be governed by the provisions in Rule 11/Section 11B. The very collection and/or retention of tax without the authority of law entitles the person, from whom it is collected, to claim its refund. A corresponding obligation upon the State to refund it can also be said to flow from it. This can be called the right to refund arising under and by virtue of the Constitutional provisions, viz., Article 265. But, it does not follow from this that refund follows automatically. Article 265 cannot be read in isolation. It must be read in the light of the concepts of economic and social justice envisaged in the Preamble and the guiding principles of State Policy adumbrated in Articles 38 and 39 - an aspect dealt with at some length at a later stage. The very concept of economic justice means and demands that unless the claimant (for refund) establishes that he has not passed on the burden of the duty/tax to others, he has no just claim for refund. It would be a parody of economic justice to refund the duty to a claimant who has already collected the said amount from his buyers. The refund should really be made to the persons who have actually borne its burden - that would be economic justice. Conferring an unwarranted and unmerited monetary benefit upon an individual is the very anti-thesis of the concept of economic justice and the principles underlying Articles 38 and 39. Now, the right to refund arising as a result of declaration of unconstitutionality of a provision of the enactment can also be looked at as a statutory right of restitution. It can be said in such a case that the tax paid has been paid under a mistake of law which mistake of law was discovered by the 11 Customs Appeal No.70723 of 2019 manufacturer/assessee on the declaration of invalidity of the provision by the court. Section 72 of the Contract Act may be attracted to such a case and a claim for refund of tax on this score can be maintained with reference to Section 72. This too, however, does not mean that the taxes paid under an unconstitutional provision of law are automatically refundable under Section 72. Section 72 contains a rule of equity and once it is a rule of equity, it necessarily follows that equitable considerations are relevant in applying the said rule - an aspect which we shall deal with a little later. Thus, whether the right to refund of taxes paid under an unconstitutional provision of law is treated as a constitutional right flowing from Article 265 or as a statutory right/equitable right affirmed by Section 72 of the Contract Act, the result is the same - there is no automatic or unconditional right to refund.
70. Re : (II) : We may now consider a situation where a manufacturer pays a duty unquestioningly - or he questions the levy but fails before the original authority and keeps quiet. It may also be a case where he files an appeal, the appeal goes against him and he keeps quiet. It may also be a case where he files a second appeal/revision, fails and then keeps quiet. The orders in any of the situations have become final against him. Then what happens is that after an year, five years, ten years, twenty years or even much later, a decision is rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasise that while dealing with this situation we are keeping out the situation where the provision under which the duty is levied is declared unconstitutional by a court; that is a separate category and the discussion in this paragraph does not include that situation. In other words, we are dealing with a case where the duty was paid on account of mis-construction, mis-application or wrong 12 Customs Appeal No.70723 of 2019 interpretation of a provision of law, rule, notification or regulation, as the case may be.) Is it open to the manufacturer to say that the decision of a High Court or the Supreme Court, as the ease may be, in the case of another person has made him aware of the mistake of law and, therefore, he is entitled to refund of the duty paid by him? Can he invoke Section 72 of the Contract Act in such a case and claim refund and whether in such a case, it can be held that reading Section 72 of the Contract Act along with Section 17(1)(c) of the Limitation Act, 1963, the period of limitation for making such a claim for refund, whether by way of a suit or by way of a writ petition, is three years from the date of discovery of such mistake of law? Kanhaiyalal is understood as saying that such a course is permissible. Later decisions commencing from Bhailal Bhai have held that the period of limitation in such cases is three years from the date of discovery of the mistake of law. With the greatest respect to the learned Judges who said so, we find ourselves unable to agree with the said proposition. Acceptance of the said proposition would do violence to several well-accepted concepts of law. One of the important principles of law, based upon public policy, is the sanctity attaching to the finality of any proceeding, be it a suit or any other proceeding. Where a duty has been collected under a particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law.
So long as that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained. But what is happening now is that the duty which has been paid under a proceeding which has become final long ago - may be an year back, ten years back or even twenty or more years back - is sought to be recovered on the ground of alleged discovery of mistake of law on the basis of a 13 Customs Appeal No.70723 of 2019 decision of a High Court or the Supreme Court. It is necessary to point out in this behalf that for filing an appeal or for adopting a remedy provided by the Act, the limitation generally prescribed is about three months (little more or less does not matter). But according to the present practice, writs and suits are being filed after lapse of a long number of years and the rule of limitation applicable in that behalf is said to be three years from the date of discovery of mistake of law : The incongruity of the situation needs no emphasis. And all this because another manufacturer or assessee has obtained a decision favourable to him. What has indeed been happening all these years is that just because one or a few of the assessees succeed in having their interpretation or contention accepted by a High Court or the Supreme Court, all the manufacturers/Assessees all over the country are filing refund claims within three years of such decision, irrespective of the fact that they may have paid the duty, say thirty years back, under similar provisions - and their claims are being allowed by courts. All this is said to be flowing from Article 265 which basis, as we have explained hereinbefore, is totally unsustainable for the reason that the Central Excise Act and the Rules made thereunder including Section 11B/Rule 11 too constitute "law" within the meaning of Article 265 and that in the face of the said provisions - which are exclusive in their nature - no claim for refund is maintainable except under and in accordance therewith. The second basic concept of law which is violated by permitting the above situation is the sanctity of the provisions of the Central Excises and Salt Act itself. The Act provides for levy, assessment, recovery, refund, appeals and all incidental/ancillary matters. Rule 11 and Section 11B, in particular, provide for refund of taxes which have been collected contrary to law, i.e., on account of a mis-interpretation or mis-construction of a provision of law, rule, notification or regulation. The Act provides for 14 Customs Appeal No.70723 of 2019 both the situations represented by Sections 11A and 11B. As held by a seven - Judge Bench in Kamala Mills, following the principles enunciated in Firm & Illuri Subbaiya Chetty, the words "any assessment made under this Act"
are wide enough to cover all assessments made by the appropriate authorities under the Act whether the assessments are correct or not and that the words "an assessment made" cannot mean an assessment properly and correctly made. It was also pointed out in the said decision that the provisions of the Bombay Sales Tax Act clearly indicate that all questions pertaining to the liability of the dealer to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct and whether a transaction is exigible to tax or not are all matters to be determined by the authorities under the Act. The argument that the finding of the authority that a particular transaction is taxable under the Act is a finding on a collateral fact and, therefore, resort to civil court is open, was expressly rejected and it was affirmed that the whole activity of assessment beginning with the filing of the return and ending with the order of assessment falls within the jurisdiction of the authorities under the Act and no part of it can be said to constitute a collateral activity not specifically or expressly included in the jurisdiction of the authorities under the Act. It was clarified that even if the authority under the Act holds erroneously, while exercising its jurisdiction and powers under the Act that a transaction is taxable, it cannot be said that the decision of the authority is without jurisdiction. We respectfully agree with the above propositions and hold that the said principles apply with equal force in the case of both the Central Excises and Salt Act and the Customs Act. Once this is so, it is un-understandable how an assessment/adjudication made under the Act levying or 15 Customs Appeal No.70723 of 2019 affirming the duty can be ignored because some years later another view of law is taken by another court in another person's case. Nor is there any provision in the Act for re-opening the concluded proceedings on the aforesaid basis. We must reiterate that the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under "the authority of law" within the meaning of the said article.
In short, no claim for refund is permissible except under and in accordance with Rule 11 and Section 11B. An order or decree of a court does not become ineffective or unenforceable simply because at a later point of time, a different view of law is taken. If this theory is applied universally, it will lead to unimaginable chaos. It is, however, suggested that this result follows only in tax matters because of Article 265. The explanation offered is untenable as demonstrated hereinbefore. As a matter of fact, the situation today is chaotic because of the principles supposedly emerging from Kanhaiyalal and other decisions following it. Every decision of this Court and of the High Courts on a question of law in favour of the assessee is giving rise to a wave of refund claims all over the country in respect of matters which have become final and are closed long number of years ago. We are not shown that such a thing is happening anywhere else in the world. Article 265 surely could not have been meant to provide for this. We are, therefore, of the clear and considered opinion that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee's case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and 16 Customs Appeal No.70723 of 2019 in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee's case, a similar point is decided in favour of the manufacturer/assessee. (See the pertinent observations of Hidayatullah, CJ. in Tilokchand Motichand extracted in Para 37). The decisions of this Court saying to the contrary must be held to have been decided wrongly and are accordingly overruled herewith."
4.4 This decision of the Hon'ble Supreme Court has been followed constantly by the various courts and tribunal holding that the refund claims filed beyond statutory period of limitation as prescribed by the statute (Section 11 B of Central Excise Act, 1944 or Section 27 of the Customs Act, 1962) are barred by limitation. Some of the decisions are reproduced below:
A. Hon'ble Supreme Court in the case of Anam Electricals [1997 (90) ELT 260 (SC)] stated as follows:
Pursuant to the directions given in Mafatlal Industries v. Union of India - 1997 (89) E.L.T. 247 (S.C.) = 1996 (9) SCALE 457, the appeals/Special Leave Petitions coming up for disposal shall be disposed of in terms of one or the other of the clauses below :
(1) Where a refund application was filed by the manufacturer/purchaser beyond the period prescribed by the Central Excise Act/Customs Act in that behalf, such petition must be held to be untenable in law. Even if in any appeal, suit or writ petition, direction has been given that the refund application shall be considered with reference to the period of limitation prescribed in the Central Excise Act/Customs Act - or that the period of limitation shall be taken as three years - such a direction of the Appellant Court/Civil Court/High Court shall be deemed to be unsustainable in law and such direction shall be set aside.
The period prescribed by the Central Excise Act/Customs 17 Customs Appeal No.70723 of 2019 Act for filing a refund application in the case of "illegal levy" cannot be extended by any Authority or Court.
(2) ...."
B. Hon'ble Bombay High Court has in case of Orkay Silk Mills Ltd. [1998 (98) E.L.T. 310 (Bom.)] held as follows:
"2. In view of the decision of the Supreme Court reported in 1997 (89) E.L.T. 247 (S.C.) as per Section 27, application claiming refund as such, should be presented within a period of six months as envisaged. In the present case, the claim is barred by limitation.
3. The learned Counsel for Petitioner vehemently urged before us, that since the levying of duty itself was without any authority of tariff, Section 27 as such has no application. In the submission of learned Counsel normal period of limitation for recovery as described is 3 years. The submission is that the application of refund presented on 22-2-1987 (sic) was within the period of limitation of 3 years from the date of payment of duty and as such, it is not barred, in view of the period of limitation.
4. The Limitation Act provides a period of limitation for initiating the proceedings for any recovery of claim in the Court of law. Making of such application for refund of customs duty would not be such a proceeding as envisaged of Limitation Act. As such, the period prescribed under the said Act has no application. Alternatively, the learned Counsel urged before us that the instant petition is within the period of limitation.
5. Proceedings under Article 226 are not envisaged by the Limitation Act. The period of limitation prescribed under Limitation Act has no application to the extra ordinary jurisdiction of this Court exercisable under Article 226 of the Constitution of India writ of this Court. The submissions in this behalf are devoid of any merit. Even otherwise, the Authorities under the Customs Act duly 18 Customs Appeal No.70723 of 2019 empowered to collect the duty, could make a mistake or error in exercise of their power. However, it cannot be successfully argued that erroneous act to which the Petitioner has questioned is without any jurisdiction. Even in view of this matter, the provisions of Section 27 of the Act has application as laid down by the Supreme Court in the case cited supra. Since application is beyond the period of limitation, the same cannot be entertained."
C. In case of Kirloskar Pneumatic Co. Ltd. [1999 (105) E.L.T. 277 (Bom.)] Hon'ble Bombay High Court held as follows:
"2. In view of the decision laid down by the Supreme Court in case of Mafatlal Industries Ltd. v. Union of India - 1997 (89) E.L.T. 247 (S.C.), petition cannot be entertained as the claim was not preferred within the statutory period as envisaged by Section 27 of the Act.
3. Our attention is particularly invited to observation recorded in para 100 of the report of the judgment. The Supreme Court to mitigate the situation, owing to law as declared, observed that Petitioner who filed Writ Petition or suit is at liberty to present claim for refund within 60 days from the date of the judgment i.e., 19th December, 1996. However, the Petitioners have not availed the opportunity as such and therefore cannot now take the advantage.
4. Another decision referred to us is reported in the case of Assistant Collector of Customs v. Anam Electrical Manufacturing Co. - 1997 (90) E.L.T. 260 (S.C.) wherein it is observed that even if the claim is not instituted within a stipulated period but petition or suit filed within the period prescribed, the parties according to law are entitled to the relief of refund. Even this observation is of no avail since the instant Petition is filed beyond the period of limitation as envisaged by Section 27.
5. The learned Counsel Mr. Nankani then urged that observation of the Supreme Court needs to be interpreted 19 Customs Appeal No.70723 of 2019 liberally. Even acceding to the submission, the words which are deployed are plain, unambigous and cannot be stretched beyond what they convey in common parlance. The Supreme Court as discussed has stated that 60 days from the date of the judgment "(To-day)"; this phraseology by no stretch of imagination cannot be interpreted to convey something else."
D. Hon'ble Karnataka High Court has in case of N.G.E.F. Limited [1998 (104) E.L.T. 628 (Kar.)] observed as follows:
"5. Section 27 of the Customs Act 1962, inter alia provides that any person claiming refund of any duty paid by him in pursuance of an order of assessment made by an officer of Customs lower in rank than an Assistant Collector of Customs may make an application for refund of such duty to the Assistant Collector of Customs within the time stipulated therein. Sub-section (4) of Section 27 stipulates that save as provided in Section 26, no claim for refund of any duty shall be entertained except in accordance with the provisions of the said Section. On a plain reading of the provision therefore it would appear that refunds if any arising under the Act, are regulated by the provisions of Section 27, and that the Scheme of the Act does not envisage any such refunds except in accordance with the procedure prescribed thereunder. The question whether an amount paid by the assessee which was not otherwise due and recoverable from the assessee could be claimed by way of a refund even outside the provision of Sec. 27 and beyond the period prescribed therein fell directly for consideration of the Supreme Court in Mafatlal Industries Case (Supra). On a review of the entire case law on the subject the Court summed up the legal position thus :-
"Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/ plaintiff - whether before the commencement of the Central Excises 20 Customs Appeal No.70723 of 2019 and Customs Laws (Amendment) Act, 1991 or thereafter by mis-interpreting or mis-applying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by mis-interpreting or mis-applying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it.
xxx xxx xxx xxx All refund claims except those mentioned under
Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court."
6. The above in my opinion provides a complete answer to the petitioner's case. The decisions unequivocally declares that refunds under the Act can be claimed only in 21 Customs Appeal No.70723 of 2019 accordance with the provisions of Section 27 which has been held to constitute `law' within the meaning of Article 265 of the Constitution of India. The court has declared this at page-30 of the majority Judgment in the following words :-
"We must reiterate that the provisions of the Central Excise Act also constitute `law' within the meaning of Art. 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under `the authority of law' within the meaning of the said article."
It follows that if a request for refund is not made by the person affected within the period prescribed under Section 27 his remedy to claim return of the amount even when the same may not have been recoverable from him is lost. The failure to claim refund within the period stipulated has the effect of legitimising what may have been in the inception either irregular or illegitimate. Section 27 of the Act having been declared to be a valid piece of legislation within the meaning of Article 265 of the Constitution, the result is that the recovery and retention of the money although strictly speaking not recoverable from the citizen concerned shall be treated to be a recovery with the authority of law. There is as is apparent from a reading of the conclusions extracted above only one exception to that general Rule namely where the recovery is made in terms of a provision which is declared constitutionally invalid. In any such case, the refund would fall outside the purview of the enactment and would therefore be immune from the rigors of Section 27. To the same effect is the view taken by the Apex Court in Kirloskar's case (supra) also. In that case the argument that the High Court could under Article 226 of the Constitution direct the Authorities to grant refund was repelled in no uncertain terms. The Court observed that the provisions of Article 226 of the 22 Customs Appeal No.70723 of 2019 Constitution could not be invoked to direct the Officers to ignore a validly made provision of law like Section 27 of the Customs Act. The jurisdiction under Article 226 could on the contrary be invoked only to direct the authorities to act in accordance with law and not in defiance thereof. In the Division Bench, decision of this Court, relied upon by the respondent, a similar view has been taken relying upon the decision of the Supreme Court in Collector of Central Excise v. Sugar Mills - 1988 (37) E.L.T. 478. In the light of the above pronouncements therefore the contrary view taken by the Division Bench of this Court in Assistant Commissioner C.C. Ex. v. Kashyap Engineering & Metallurgicals (P) Ltd. - 1990 (45) E.L.T. 375 (Kar.) must be deemed to have been impliedly over-ruled."
E. Hon'ble Supreme Court has in case of Sansera Engineering Ltd.[2022 (382) E.L.T. 721 (S.C.)] observed as follows:
12. As such, the issue involved in the present appeal is squarely covered by the decision of this Court in the cases of Mafatlal Industries Ltd. (supra) and Uttam Steel Limited (supra). After taking into consideration Section 11B of the Act and the notification and procedure under Rule 12, it is specifically observed and held that rebate of duty of excise on excisable goods exported out of India would be covered under Section 11B of the Act. After referring to the decision of this Court in the case of Mafatlal Industries Ltd.
(supra), it is further observed in the case of Uttam Steel Limited (supra) that such claims for rebate can only be made under Section 11B within the period of limitation stated therefor.
On the argument based on Rule 12, this Court has specifically observed that such argument has to be discarded as it is not open to subordinate legislation to dispense with the requirements of Section 11B. The aforesaid observations made by this Court in the case of 23 Customs Appeal No.70723 of 2019 Uttam Steel Limited (supra) clinches the issue. The said decision has been subsequently rightly followed by the Madras High Court in the case of Hyundai Motors India Limited (supra).
F. In case of Uttam Steel [2015 (319) E.L.T. 598 (S.C.)] Hon'ble Supreme Court has held as follows:
"10. We have heard learned counsel for the parties and Shri Bagaria, the learned Amicus Curiae at some length. There is no doubt whatsoever that a period of limitation being procedural or adjectival law would ordinarily be retrospective in nature. This, however, is with one proviso super added which is that the claim made under the amended provision should not itself have been a dead claim in the sense that it was time barred before an Amending Act with a larger period of limitation comes into force. A number of judgments of this Court have recognized the aforesaid proposition. Thus, in S.S. Gadgil v. Lai and Company, AIR 1965 S.C. 171, this Court stated :-
"13. As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the Income Tax Act before it was amended, ended on March 31, 1956. It is true that under the amending Act by Section 18 of the Finance Act, 1956, authority was conferred upon the Income Tax Officer to assess a person as an agent of a foreign party under Section 43 within two years from the end of the year of assessment. But authority of the Income Tax Officer under the Act before it was amended by the Finance Act of 1956 having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date when he issued the notice it is within the period provided by that amending Act. This will be so, notwithstanding the fact that there has been no determinable point of time between 24 Customs Appeal No.70723 of 2019 the expiry of the time provided under the old Act and the commencement of the amending Act. The legislature has given to Section 18 of the Finance Act, 1956, only a limited retrospective operation i.e. up to April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income Tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided, become barred."
To similar effect is the judgment in J.P. Jani, Income Tax Officer v. Induprasad Devshanker Bhatt, AIR 1969 SC 778. The Court held :
"6. In our opinion, the principle of this decision applies in the present case and it must be held that on a proper construction of Section 297(2)(d)(ii) of the new Act, the Income Tax Officer cannot issue a notice under Section 148 in order to re-open the assessment of an assessee in a case where the right to re-open the assessment was barred under the old Act at the date when the new Act came into force. It follows therefore that the notices dated 13-11-1963 and 9-1-1964 issued by the Income Tax Officer, Ahmedabad were illegal and ultra vires and were rightly quashed by the Gujarat High Court by the grant of a writ."
In New India Insurance Co. Ltd. v. Shanti Misra, (1975) 2 SCC 840, this Court said :
"The new law of limitation providing a longer period cannot revive a dead remedy. Nor can it suddenly extinguish vested right of action by providing for a shorter period of limitation."
Similarly in T. Kaliamurthi v. Five Gori Thaikkal Wakf, (2008) 9 SCC 306, this Court said :
25Customs Appeal No.70723 of 2019 "40. In this background, let us now see whether this section has any retrospective effect. It is well settled that no statute shall be construed to have a retrospective operation until its language is such that would require such conclusion. The exception to this rule is enactments dealing with procedure. This would mean that the law of limitation, being a procedural law, is retrospective in operation in the sense that it will also apply to proceedings pending at the time of the enactment as also to proceedings commenced thereafter, notwithstanding that the cause of action may have arisen before the new provisions came into force. However, it must be noted that there is an important exception to this rule also. Where the right of suit is barred under the law of limitation in force before the new provision came into operation and a vested right has accrued to another, the new provision cannot revive the barred right or take away the accrued vested right."
For the latest exposition of the same Rule see: Thirumalai Chemicals Ltd. v. Union of India, (2011) 6 SCC 739 = 2011 (268) E.L.T. 296 (S.C.) at para 29.
11. The effect of the amendment of Section 11B on 12th May, 2000 is that all claims for rebate pending on this date would be governed by a period of one year from the date of shipment and not six months. This, however, is subject to the rider that the claim for rebate should not be made beyond the original period of six months. On the facts of the present case, since the claims for rebate were made beyond the original period of six months, the respondents cannot avail of the extended period of one year on the subsequent amendment to Section 11B.
The effect of Section 11B, and in particular, applications for rebate being made within time, has been laid down in Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 = 1997 (89) E.L.T. 247 (S.C.), thus :
26Customs Appeal No.70723 of 2019 "108. The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment.
(i) Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff -
whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter - by misinterpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by misinterpreting or misapplying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactments before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11-B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it.
The said enactments including Section 11-B of the Central Excises and Salt Act and Section 27 of the Customs Act do constitute "law" within the meaning of Article 265 of the 27 Customs Appeal No.70723 of 2019 Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund of duties imposed thereunder. Section 11-B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court."
From the law laid down by this decision it is clear that all claims for rebate/refund have to be made only under Section 11B with one exception - where a statute is struck down as unconstitutional. Further, the limitation period of six months has to be strictly applied."
4.5 Interestingly in case of ASL Builders [Final Order No. 75043/2020 dated 09.01.2020 of Kolkata Bench] referred to by the counsel for appellant, following has been held:
"10. The constitutional Bench of the nine Hon'ble Judges of the Hon'ble Supreme Court in the case of Mafatlal Industries Limited Vs. Union of India reported in 1997 (89) ELT 247 extensively considered the nuances of Section 11B of the Act. While summarizing the propositions, the Hon'ble Court at para 99(ii) held as follows:-28
Customs Appeal No.70723 of 2019 "(ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. This principle is, however, subject to an exception : where a person approaches the High Court or Supreme Court challenging the Excise Appeal No.78558 of 2018 constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be re-opened on the basis of a decision on another person's case; this is the ratio of the opinion of Hidayatullah, CJ. in Tilokchand Motichand and we respectfully agree with it.
Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying Clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview."
11. Further, at paragraph 113 of the said judgement, the Hon'ble Court classified the various refund claims into three groups or categories:-
"(I) The levy is unconstitutional - outside the provisions of the Act or not contemplated by the Act.29
Customs Appeal No.70723 of 2019 (II) The levy is based on misconstruction or wrong or erroneous interpretation of the relevant provisions of the Act, Rules or Notifications; or by failure to follow the vital or fundamental provisions of the Act or by acting in violation of the fundamental principles of judicial procedure.
(III) Mistake of law - the levy or imposition wasunconstitutional or illegal or not exigible in law (without jurisdiction) and, so found in a proceeding initiated not by the particular assessee, but in a proceeding initiated by some other assessee either by the High Court or the Supreme Court, and as soon as the assessee came to know of the Excise Appeal No.78558 of 2018 judgment (within the period of limitation), he initiated action for refund of the tax paid by him, due to mistake of law."
After referring several judgments and provisions of Section 11A & 11B of Central Excise Act, at paragraph 137 of the said judgement, their Lordships have concluded as under:-
"137. Applying the law laid down the decisions aforesaid, it is not possible to conclude that any and every claim for refund of illegal/unauthorised levy of tax, can be made only in accordance with the provisions of the Act (Rule 11, Section 11B etc. as the case may be), and an action by way of suit or writ petition under Article 226 will not be maintainable under any circumstances. An action by way of suit or a petition under Article 226 of the Constitution is maintainable to assail the levy or order which is illegal, void or unauthorised or without jurisdiction and/or claim refund, in cases covered by propositions No. (1), (3) (4) and (5) in Dulabhai's case, as explained hereinabove, as one passed outside the Act and ultra vires. Such action will be governed by the general law and the procedure and period of limitation provided by the specific statute will have no application. [Collector of Central Excise, Chandigarh v. M/s. Doaba Co-operative Sugar Mills Ltd., 30 Customs Appeal No.70723 of 2019 Jalandhar [1988 (37) E.L.T. 478 (SC) = 1988 Supp. SCC
683); Escorts Ltd. v. Union of India & Ors. [1994 Supp. (3) SCC
86)] Rule 11 before and after amendment, or Section 11B cannot affect Section 72 of the Contract Act or the provisions of Limitation Act in such situations. My answer to the claims for refund broadly falling under the three groups or categories enumerated in Paragraph 5 of this judgment is as follows :
where the levy is unconstitutional - Outside the Category (I) provisions of the Act or not contemplated by the Act :-
In such cases, the jurisdiction of the civil courts is not barred. The aggrieved party can invoke Section 72 of the Contract Act, file a suit or a petition under Article 226 of the Constitution, and pray for appropriate relief inclusive of refund within the period of limitation Excise Appeal No.78558 of 2018 provided by the appropriate law. [Dulabhai's case (supra) - Para 32 - Clauses (3) and (4)]."
12. The Hon'ble Supreme Court in the case of Mafatlal (supra) at para 137 reiterated the proposition as laid down in Doaba Cooperative Sugar Mills case wherein the Supreme Court held that in applying Section 11B, an exception has been culled out in cases where the payment of duty was under a mistake of law (37 ELT 478 (SC), Para- 6-Last 4 lines).
13. The aforesaid propositions reveal that what one has to see is whether the amount paid by the assessee under a mistaken notion was payable or not. In other words, if the assessee had not paid those amounts, the authority could not have demanded from the assessee to make such payment. In other words, the department lacked authority to levy and collect such tax. In case, the department was to demand such payment, the assessee could have challenged it as unconstitutional and without authority of 31 Customs Appeal No.70723 of 2019 law. When once there is lack of authority to demand service tax or excise duty from the assessee, the department lacks authority to levy and collect such amount and the said amount is not "Service Tax" or "Excise duty"
and Section 11B of the Act has no application in such cases."
The above decision refers to para 113 and 137 of the decision in case of Mafatlal Industries, for coming at this conclusion. Para 113 and 137 are not the majority view, in the aforesaid decision of the Hon'ble Supreme Court, the majority decision has concluded in para 99 of the said decision. Accordingly the findings recorded by relying on the minority view in the said decision cannot create a binding precedence. In case of Orient Fabrics Pvt Ltd [2003 (158) E.L.T. 545 (S.C.)] Hon'ble Supreme Court has observed as follows:
"9. The Gujarat High Court in Ashok Fashion Ltd. (supra) although took notice of the fact that the cause of action therein arose in the year 1993, but inadvertently or otherwise noticed the amended provisions of sub-section (3) of Section 3 of the Act. It furthermore although noticed the decision of M/s. Khemka & Co. (Agencies) Pvt. Ltd. (supra), as would appear from the discussion made hereinafter, but chose to follow the minority decision and not the majority one.
10. In M/s. Khemka & Co. (Agencies) Pvt. Ltd. (supra), this Court categorically laid down Paras 25 and 26, which runs as under :
"25. Penalty is not merely sanction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act. Reference may be made to Section 28 of the Indian Income-tax Act, 1922 where penalty is provided for concealment of income.32
Customs Appeal No.70723 of 2019 Penalty is in addition to the amount of income-tax. This Court in Jain Brothers v. Union of India., 1970 (77) ITR 107 : 1969 (3) SCC 311, said that penalty is not a continuation of assessment proceedings and that penalty partakes of the character of additional tax.
26. The Federal Court in Chatturam v. C.I.T., Bihar, 1947 (15) ITR 302, said that liability does not depend on assessment. There must be a charging section to create liability. There must be first a liability created by the Act.
Second, the Act must provide for assessment. Third, the Act must provide for enforcement of the taxing provisions. The mere fact that there is machinery for assessment, collection and enforcement of tax and penalty in the State Act does not mean that the provision for penalty in the State Act is treated as penalty under the Central Act. The meaning of penalty under the Central Act cannot be enlarged by the provisions of machinery of the State Act incorporated for working out the Central Act."
11. Beg, J. in his concurring opinion held Paras 37 and 38, which runs as under :
"37. I also find from the Mysore Act of 1957, that Section 13 of the Act was entirely re-cast in 1958. It would, I think be carrying the theory of referential legislation too far to assume that Section 9(2) of the Central Act, 1956, purported to authorise the State Legislatures to impose liabilities in the nature of additional tax or penalties leaving their rates and conditions for their imposition also to be determined by the State Legislatures as and when the State Legislatures decided to impose or amend them. It is evident that these differ from State to State, and, in the same State, at different times. A conferment of such an uncontrolled power upon the State Legislatures could, if it was really intended, be said to travel beyond the provice of permissible delegated Legislation on the principles laid down long ago by this Court in Re Delhi Laws's case 33 Customs Appeal No.70723 of 2019 (supra) as no guidelines are given in Section 9(2) about the nature, conditions, or extent of penalties leviable. If such a power was really conferred would it not amount to an abdication of an essential legislative function with respect to a matter found as Item 92A of the Union List I of the Seventh Schedule so that, according to Article 246(1) of our Constitution, Parliament has exclusive power to legislate on a topic covered by it? As this question was not argued before us I would only say that the correct canon of construction to apply in such a case is that we should so interpret Section 9(2) of the Central Act, if possible, that no part of it may conceivably be invalid for excessive delegation. The well known maxim applicable in such cases is : ut res magis valeat quam pereat.
38. It is evident from Section 16(4) of the Bombay Act of 1953 that there is a particular percentage of the amount of tax levied which is prescribed as penalty to be paid as an "addition to the amount of tax for every month after the expiry of the prescribed period of default". In other words it is a liability in the nature of an additional or penal tax. Section 13(3)(b) of the Mysore Act also makes it clear that, on an application made to the Magistrate, such as the one made in the case which has come up before us from Mysore, the penalty may be equated with a fine. Section 63 of the Bombay Act of 1959 speaks of certain "offences and penalties". Indeed, Chapter 8 of that Act is itself headed as "Offences and Penalties".
12. Mathew, J., however, in his dissenting opinion, inter alia, held that penalty can be levied as incidental to the levy and recovery of tax stating as under :
"As the power to impose penalty is specifically provided for in Section 16 of the Bombay Sales Tax Act for enforcing payment of tax payable under it, it is unnecessary to speculate whether, but for the express provision in that Act, a power to impose penalty for enforcement of tax 34 Customs Appeal No.70723 of 2019 payable under that Act would have been implied. The object of the provision for the imposition of penalty in Section 16 of the Bombay Sales Tax Act is to provide a stimulant to the dealer to observe the mandate of the section directing the payment of the tax within the prescribed time. In other words, the provision for imposition of penalty in Section 16 of the Bombay Sales Tax Act facilitates the collection of tax as it is a sanction for non-observance of the duty to pay the tax within the prescribed time. It operates as a deterrent against the commission of breach of that duty, and is a means to enforce the payment of tax within the time prescribed."
13. The Gujarat High Court, in Ashok Fashion (supra), adopted the minority view holding :
"9.3 It will thus be seen that penalty provisions are an integral part of assessment and collection of duties of which the necessary adjuncts are confiscation and penalty without which the imposition of taxes will lack teeth and become ineffective. If power to impose penalty for violation of the obligation to pay additional duty of excise is excluded in respect of the goods enumerated in the First Schedule of the Additional Duties Act, then these taxation provisions would be reduced to a donation drive in respect of these very items for which duty of excise is also imposed under the Central Excise Act, 1944 and the Rules made thereunder and violation of which would entail both confiscation and penalty."
14. It further referred to the amended provisions of the said Act, as would appear from the following :
"7. It will be noticed from sub-section (3) of Section 3 of the Additional Duties Act that all the provisions of the Central Excise Act, 1944 and the Rules made thereunder including those relating to refunds and exemptions are made applicable, so far as may be, in relation to the levy 35 Customs Appeal No.70723 of 2019 and collection of additional duty of excise. The provisions of the Central Excise Act, 1944 and the Rules made thereunder are made applicable to the additional duty of excise in the same manner and extent to which they apply in relation to the levy and collection of the duties of excise on the goods specified in column 3 of the First Schedule referred to in Section 3(1) of the Additional Duties Act. This is so stated, because, all the goods specified in the said First Schedule were also subjected to duties of excise at the rates set forth in the Schedule to the Central Excise Tariff of 1985, under Section 3 of Central Excise Act, 1944, which provision also lays down that such duties of excise shall be 'levied and collected' in such manner as may be prescribed."
15. The decision in Ashok Fashion (supra) was, therefore, rendered on total misapplication of the law laid down by the Constitution Bench decision by M/s. Khemka & Co. (Agencies) Pvt. Ltd. (supra).
16. We are bound by the Constitution Bench decision in M/s. Khemka & Co. (Agencies) Pvt. Ltd. (supra)."
4.6 In view of the above, I do not find any merits in this appeal.
5.1 Appeal is dismissed.
(Operative part of the order pronounced in open court) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp