Andhra HC (Pre-Telangana)
Vbc Industries Ltd., Visakhapatnam & ... vs Union Of India And Others on 30 July, 1999
Equivalent citations: 1999(5)ALD151, 1999(5)ALT240, 2000(67)ECC371, 1999(114)ELT378(AP)
Author: P. Venkatarama Reddi
Bench: P. Venkatarama Reddi
ORDER
P. Venkatarama Reddi, J
1. Legal ingenuity knows no bounds. It baffles an ordinary person whether the pleas such as those put forward in the present case could be available at all. The petitioners having got the refund pursuant to the judgment of this Court which was later on reversed by the Supreme Court tries to resist the move of the Excise Department to recover back the amount refunded to it.
2. By the judgment dated 25-10-1992 in Writ Petition No.4637 of 1978, this Court directed the refund of excise duty to the predecessor of the petitioner-Company within three months after due determination of the quantum thereof. The refund was ordered on the ground that excess payment was made on a wrong classification. The Union of India went in appeal to the Supreme Court. During the pendency of the appeal, an amount of Rs.18,49,568/- representing excise duty paid between 1-4-1972 and 3-11-1976 was refunded. The Supreme Court, following the view taken in Mafatlal Industries v. Union of India, , set aside the judgment of the High Court and allowed the appeal on 15-7-1997. As a follow-up to the judgment of the Supreme Court, the 3rd respondent sent a communication dated 19-11-1997 requiring the petitioner to pay back an amount of Rs.18,49,568/- together with interest. The petitioner protested stating that the demand was barred by limitation prescribed by Section 11 A of the Central Excise Act. The 2nd respondent then sent a detailed communication on 15-12-1997 stating inter alia that the orders rejecting refund applications stood restored as a consequence of the judgment of Supreme Court. The petitioner was therefore required to pay back the amount of Rs.18,49,568/- within 7 days from the date of receipt of the letter with a threat of coercive action in case of non-payment. This communication has been assailed in this writ petition and a direction is sought to restrain the respondents from recovering the said amount from the petitioners.
3. The contention advanced on behalf of the petitioners, put in a nut-shell, is that there is no provision of law under the Central Excise Act to recover the duty refunded to it in accordance with a judgment of Court of law, other than the Section 11-A of the Central Excise Act. If Section 11-A is applied, the time limit of six months prescribed therein precludes the recovery at this distance of time under the Act. Therefore, the Central Government can only have recourse to common law remedy of civil suit in which appropriate defences are open to the petitioner. The learned Counsel argues that if the claim for refund by assessee is governed entirely by the provisions of the Central Excise Act as laid down by the Supreme Court in Collector of C.E., Chandigarh v. M/s. Doaba Co-operative Sugar Mills Ltd, , by parity of reasoning, the claim of the Department to recover the refunded duty, could only be within the four corners of the Act. When the law under which the duty was collected and refunded does not specifically provide for 're-restitution', it is not open to the respondents to take the law into their own hands by resorting to coercive process of recovery. It is then submitted, relying on the Law Lexicon that 're-restitution' in contradiction to 'restituion' is purely discretionary. It is submitted that during the pendency of the appeal in the Supreme Court, the petitioner not having knowledge of the appeal, passed on the benefit of refund to its dealers and therefore, there is no unjust enrichment. It is further submitted that the respondents ought to have sought specific directions of the Supreme Court for the recovery of duty instead of unilaterally starting the recovery proceedings.
4. We find no substance in any of these contentions. We are of the view that the petitioner cannot invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution to circumvent and defeat the judgment of the Supreme Court which binds one and all. Any relief granted by the High Court ought not to run counter to the spirit of the judgment of Supreme Court and the effect thereof cannot be nullified by denying effective execution. The question is not whether the amount should be recovered under the doctrine of restitution or on applying a specific provision contained in the Act or the Rules. The real question is whether this Court should in exercise of its jurisdiction under Article 226 lend its helping hand to a party who does not want to disgorge the unwarranted benefit which it got under the judgment of the High Court, despite the reversal of the judgment by the Apex Court. Should we accord judicial benediction to the plea that the amount can be recovered by the Union of India by filing a civil suit? The answer in our view should plainly be in the negative. The absence of specific direction by the Supreme Court authorising the respondents to recover back the money shall not make any difference. The plain and logical consequence of the judgment setting aside the judgment of the High Court which ordered refund is to restore status quo ante and imposing a duty and obligation on the assessee who got the refund under the overruled judgment to pay back that amount. In the absence of specific order placing restrictions or conditions on the entitlement to recover back the amount refunded during the pendency of appeal, the unsuccessful assessee cannot approach this Court to scuttle the recovery instead of discharging its obligation voluntarily. The petitioner has no legal or moral right to approach this Court under Article 226 raising hyper-technical grounds to wriggle out of the situation in which it is placed in the aftermath of the judgment of the Supreme Court. That is why, in Asst. Collector of Customs v. Anam Electrical Manufacturing Company, , the Supreme Court was cautious enough to lay down the following proposition keeping in view the eventualities of this nature :
"Where the refund claim is rejected by this Court, the assessee who has already obtained any amount by way of refund shall be liable to pay back the same to the department and the department shall be entitled to recover the same in accordance with law."
5. The argument that there is no provision in the Act to call back the amounts refunded under a superseded judgment and the reasoning that both the assessee as well as the Revenue should confine their claims for refund and restitution within the four comers of the Act, cannot be accepted. The calim for refund arising in the course of proceedings under the Act stands on a different footing from the obligation to pay back the amount which the assessee is not entitled to retain as a necessary consequence of the judgment of the highest Court. The dicta of the Supreme Court in Doaba Sugar Mills case (supra) does not in any way help the petioner. In that case, the Department sought to recover the amount sanctioned as an incentive in excess of what was due to the assessee. The Supreme Court affirmed the view of the Tribunal that such recovery cannot be made under Section 11-A in view of the time bar. The Supreme Court observed :
"But in making claims for refund before the departmental authority, an assessee is bound within four comers of the statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation prescribed in the Act will prevail. It may, however, be open to the department to initiate proceedings in the Civil Court for the recovery of the amount due to the department in case when such a remedy is open on the ground that the money received by the assessee was not in the nature of refund."
We cannnot understand the observation therein as laying down the law that the refunds or recoveries consequential to the judgments of Constitutional Courts should also be traced to a specific provision in the Act or the Rules; otherwise, a suit has to be filed. Considerations which will be relevant to decide whether refund should be ordered or not are quite different from the steps directed towards the implementation of the judgment after the issue has been finally decided.
6. Yet another argument urged by the learned Counsel too has no merit. The learned Counsel contends that the refund obtained by the petitioner on the basis of the judgment of me High Court falls within the scope of the expression 'erroneous refund' occurring in Section 11-A and therefore the limitation prescribed by Section 11-A will be equally applicable to such a case. We cannot accept this contention. A refund made pursuant to a binding judgment of the Court is not a case of 'erroneous refund'. The refund is a result of a conscious act on the part of the concerned authorities to comply with the judgment of the High Court.
7. The learned Counsel for the pctilioner then submits that after receiving the refund, the assessee in its turn refunded the excess amount of excise duty collected from the dealers/distributors and that the Company did not retain with it any part of the refunded amount. The learned Counsel argues that the basis of principle of restitution being unjust enrichment, the petitioner cannot be called upon to pay back that amount to the Union of India. According to the learned Counsel, the petitioner will suffer irreparable prejudice from the impugned action of the respondents. Attention was drawn to certain observations of I.T. Tribunal while disposing of the appeal for the year 1982-83 to substantiate that the benefit of refund which the petitioner obtained was passed on to the dealers. We cannot accept this contention for more than one reason. If what the petitioner states is the real state of affairs, that fact should have been brought to the notice of their Lordships of the Supreme Court and appropriate direction should have been sought as regards the recovery of the refunded amount which was the subject-matter of the dispute before the Supreme Court. Secondly, it is unbelievable that an ordinary prudent business-man would, during the pendency of the appeal in the Supreme Court, take the risk of refunding the excess excise duty collected from its dealers/distributors. The judgment of this Court was rendered on 25-10-1982 and the refund was obtained in February, 1983 and the entire amount of refund was allegedly distributed amongst the dealers during the assessment year 1983-84 itself. Thus, if the petitioner's version is to be accepted, it resorted to the exercise of refund to its buyers even without verifying whether any appeal was filed or was likely to be filed. That aprt, it is ununderstandable as to how the petitioner thought of reimbursing the dealers/distributors with the excess duty collected from them, when they would have, without semblance of doubt, passed on the tax liability to the retailers or consumers. It is difficult to assume that the petitioner was not aware of these implications. In the process, if the petitioner unjustly enriched the intermediary viz., dealers/distributors, it was doing so at its own risk or on account of some business exigencies. The petitioner cannot claim any equity in its favour. For all these reasons, we cannot take the petitioner's plea of having passed on the benefit to the dealers/distributors on its face value, more especially when no material has been, placed before us despite an undertaking to that effect in paragraph 6. As already observed, the only supporting material relied on before us is the order of the I.T. Tribunal. We do not therefore sec any special grounds to extricate the petitioner from the operation of the rule of restitution. In fact, in the light of our discussion at the outset, there is no need to test the petitioner's plea on the anvil of restitution doctrine. As observed supra, when once the judgment of the Apex Court creates by necessary implication an obligation on the part of the petitioner to pay back the duty refunded to it pursuant to the overruled judgment of the High Court, this Court will stay off its hands and refrain from exercising its extraordinary discretionary jurisdiction under Article 226 so as to give a handle to the petitioner to disown or dilute that obligation.
8. We see no merit in the writ petition and the writ petition is dismissed. No costs.