Punjab-Haryana High Court
Shri Virinder Kumar vs Union Of India And Another on 30 May, 2012
Author: Ajay Kumar Mittal
Bench: Ajay Kumar Mittal, Gurmeet Singh Sandhawalia
CWP No.10790 of 2012 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CWP No.10790 of 2012
Date of decision: 30.5.2012
Shri Virinder Kumar
-----Petitioner
Vs.
Union of India and another
----Respondents
CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL
HON'BLE MR. JUSTICE GURMEET SINGH SANDHAWALIA
Present:- Mr. Surjeet Bhadu, Advocate for the petitioner.
Ajay Kumar Mittal,J.
1. This order shall dispose of Civil Writ Petition Nos. 10790, 10935 and 10964 of 2012 as learned counsel for the petitioner states that all the petitions involve identical facts and issue. However, the facts are being extracted from CWP No.10790 of 2012.
2. Challenge in CWP No.10790 of 2012 is to the order dated 23.2.2012, Annexure P.2 whereby penalty has been imposed upon the petitioner. The petitioner is Director of a Private Limited Company i.e. M/s Virindra Buildcon (P) Limited, Ludhiana (in short, "the Company"). The Company is engaged in the business of laying of cable alongside the roads, construction of the tower foundation, showrooms etc. for various companies in telecom sector and also laying of sewerage system in towns for government. During the years 2005-06 to 2009-10, the Company received payments for providing services. The Company paid service tax amounting to ` 71,92,025/- CWP No.10790 of 2012 2 in accordance with Section 68 of the Finance Act, 1994. During audit, it was pointed out that the company had short paid the service tax while claiming abatement under wrong taxable head of the service. Accordingly, a Show Cause Notice dated 22.10.2010, Annexure P.1 was issued to the company for recovery of such service tax alleging that it provided the services under the category of 'Site Formation and Clearance, Excavation and Earth Moving and Demolition Services' instead of 'Commercial or Industrial Construction Services' in order to wrongly avail the abatement of 67% under notification dated 1.3.2006. It was proposed to impose penalty equal to the demand of service tax upon the petitioner. The adjudicating authority vide impugned order dated 23.2.2012, Annexure P.2 confirmed the demand of service tax against the company to the tune of `1,56,24,251/- alongwith penalties of more than 200% of the amount of Service Tax was levied. Penalty under Section 78 of the Finance Act, 1994 was also imposed upon each of the three directors including the petitioner. Hence the present writ petition.
3. Learned counsel for the petitioner submitted that the adjudicating authority had imposed penalty of ` 1,56,24,251/- upon the petitioner under Section 78 of the Finance Act, 1994. According to the learned counsel, Section 78 of the Finance Act, 1994 was not applicable and, therefore, order levying penalty upon the petitioner was beyond jurisdiction. Reliance was placed on the judgments of this Court in Hindustan Construction Company Limited v. The State of Haryana and others, 2005(2) PLR 313 and M/s Dee Kay Exports CWP No.10790 of 2012 3 v. Union of India and another, CWP No.8568 of 2010, decided on 26.10.2010 to submit that the writ petition being maintainable, the penalty was liable to be set aside.
4. After hearing learned counsel for the petitioner and perusing the record, we find that against the order dated 23.2.2012, Annexure P.2 impugned herein, admittedly an appeal is maintainable under the Central Excise Act, 1944 (in short, "the 1944 Act"). In the present case, the question relates to levy of penalty upon the petitioner under Section 78 of the Finance Act, 1994. The issue shall be adjudicated by the authorities under the Act after interpreting Section 78 of the Act and other provisions of the Statute.
5. This Court in Larsen and Toubro Limited v. The State of Haryana and others, 2012(2) 166 PLR 345, considering the question of entertaining writ petition where alternate statutory remedy was available, had in paras 6 and 7 observed as under:-
"6.The following are the broad principles when a writ petition can be entertained without insisting for adopting statutory remedies:-
i) where the writ petition seeks enforcement of any of the fundamental rights;
ii) where there is failure of principles of natural justice; or
iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged.
7.We are not inclined to entertain this petition against the assessment order as it does not fulfil any of the broad outlines noticed herein above. The Apex Court in Titaghur Paper Mills Co. Ltd. v. State of Orissa, AIR 1983 SC 603 observed as under:-
"11. Under the scheme of the Act, there is a hierarchy CWP No.10790 of 2012 4 of authorities before which the petitioners can get adequate redress against the wrongful acts complained of. The petitioners have the right to prefer an appeal before the prescribed authority under sub-s. (1) of S. 23 of the Act. If the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub-s. (3) of S. 23 of the Act, and then ask for a case to be stated upon a question of law for the opinion of the High Court under S. 24 of the Act. The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Art. 226 of the Constitution. It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was-stated with great clarity by Willes, J. in Wolverhampton New Water Works Co. v. Hawkesford, (1859) 6 CBNS 336 at p. 356 in the following passage:
"There are three classes of cases in which a liability may be established founded upon statute. ******But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it ***********the remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to."
The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspaper Ltd., 1919 AC 368 and has been reaffirmed by the Privy Council in Attorney General of Trinidad and Tobago v. Gordon Grant and Co., 1935 AC 532 and CWP No.10790 of 2012 5 Secretary of State v. Mask and Co., AIR 1940 PC
105..."
6. Suffice it to notice that the judgments relied upon by the learned counsel for the petitioner do not help the petitioner being based on individual fact situation involved therein.
7. In view of the above, all the three writ petitions are dismissed. However, it shall be open to the petitioners to take recourse to alternative remedies under the Act in accordance with law.
(Ajay Kumar Mittal)
Judge
May 30, 2012 (Gurmeet Singh Sandhawalia)
'gs' Judge