Gujarat High Court
Alidhara Textile Engineers Ltd & 4 vs Union Of India & on 28 June, 2017
Author: S.R.Brahmbhatt
Bench: S.R.Brahmbhatt, A.G.Uraizee
C/SCA/20125/2016 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 20125 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
==============================================================
1 Whether Reporters of Local Papers may be
allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the
fair copy of the judgment ?
4 Whether this case involves a substantial
question of law as to the interpretation of
the Constitution of India or any order made
thereunder ?
==============================================================
ALIDHARA TEXTILE ENGINEERS LTD & 4....Petitioners
Versus
UNION OF INDIA & 1....Respondents
==============================================================
Appearance:
MR PARESH M DAVE, ADVOCATE for the Petitioners No. 1 - 5
MR ANKIT SHAH, ADVOCATE for the Respondent No. 2
MR DEVANG VYAS Ld. A.S.G. for the Respondent No. 1
==============================================================
CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
Date : 28/06/2017
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE S.R.BRAHMBHATT) Page 1 of 10 HC-NIC Page 1 of 10 Created On Sun Aug 20 07:54:23 IST 2017 C/SCA/20125/2016 JUDGMENT
1. Rule. Mr. Ankit Shah, learned advocate, waives service of notice of rule on behalf of respondent no.2. Shri Devang Vyas, learned A.S.G. waives service of notice of rule on behalf of respondent no.1. By consent, rule is fixed forthwith.
2. The petitioners, noticees, mentioned in the notice dated 27.12.1995, at page no.23, have approached this Court by way of this petition with following prayers:
(A) That Your Lordships may be pleased to issue a Writ of Prohibition or any other appropriate writ, direction or order, completely and permanently prohibiting the Respondents, their servants and agents from taking any action against the Petitioners in pursuance of Show Cause Notice No.V(Ch.84)15-6/OA/95 dated 27.12.1995 (Annexure-"C");
(B) That Your Lordships may be pleased to issue a Writ of Mandamus or Certiorari or any other appropriate writ, direction or order, quashing and setting aside Show Cause Notice No.V(Ch.84)15-6/OA/95 27.12.1995 (Annexure-"C");
(C) Pending hearing and final disposal of the present petition, Your Lordships Page 2 of 10 HC-NIC Page 2 of 10 Created On Sun Aug 20 07:54:23 IST 2017 C/SCA/20125/2016 JUDGMENT may be pleased to restrain the Respondents, their servants and agents from taking any action including adjudication of Show Cause Notice No.V(Ch.84)15-6/OA/95 27.12.1995 (Annexure-"C") thereby staying the proceedings of this show cause notice dated 27.12.1995;
(D) An ex-parte ad-interim relief in terms of para 17(C) above may kindly be granted.
(E) Any other further relief that may be deemed fit in the facts and circumstances of the case may also please be granted.
3. Facts in brief, as could be gathered from the petition, deserves to be set out as under:
3.1 The petitioner, who are Company and Firms, were engaged in business of manufacturing textile machinery like twisting machines, winding machines, sizing machines etc. Various accessories like motor, starter, belt spindles, bobbins etc. which were to be used with the above referred types of textile machines, were purchased and procured by the petitioners from the open market, and they were supplied to the customers who purchased machines from the petitioners.Page 3 of 10
HC-NIC Page 3 of 10 Created On Sun Aug 20 07:54:23 IST 2017 C/SCA/20125/2016 JUDGMENT 3.2 M/s. Alidhara Textile Engineers Ltd., a public limmited company was also engaged in marketing of textile machines manufactured by the petitioners. The Central Excise officers conducted enquiry and investigation against the petitioners and also M/s. Alidhara and ultimately, a Show Cause Notice F.No.V(Ch.84)15-12/OA/94 dated 07.04.1994 was issued by the Collector of Central Excise, Surat who demanded Central Excise duty of Rs.5,76,09,599/- from M/s. Alidhara Textile Engineers Ltd., Udhna, for various textile machines marketed by them during 1.4.1989 to 30.9.1992. In this show cause notice, penalties were proposed to be imposed on various other parties, some of whom are petitioners in the present case.
3.3 After conduction adjudication of the above referred show cause notice dated 7.4.1904, the Collector of Central Excise, Surat, passed an order No.34/MP/95 dated 24.05.1995 thereby demanding Central Excise duty from the parties who were proposed to be penalized in the show cause notice, whereas the duty demand raised against M/s. Alidhara Textile Engineers Ltd. was dropped while passing this adjudication order on the basis that the said company was not a manufacturer. The demand of Rs.5,76,09,588/- that was raised in the show cause notice against M/s. Aloidhara was bifurcated and demanded from 14 parties including the petitioners herein on the ground that they were the manufacturers of textile machinery and hence liable to pay excise Page 4 of 10 HC-NIC Page 4 of 10 Created On Sun Aug 20 07:54:23 IST 2017 C/SCA/20125/2016 JUDGMENT duty on the value of accessories which were bought out and supplied with the textile machines. 3.4 The parties aggrieved by the above referred order of the Collector filed appeals before the Appellate Tribunal, Bombay, and theses appeals being E/698/V-95-Bom to E/721/V-95-Bom came to be allowed by the Appellate Tribunal vide order No.2306- 30/97/WZB dated 6.5.1997.
3.5 The Revenue was also aggrieved by the above referred adjudication order dated 24.5.1995 because the demand of duty raised against a company in the show cause notice was confirmed against other parties against whom no duty demand was raised. The Revenue's appeal No.E/2803/96 was heard by the Appellate Tribunal, Bombay on 22.7.2005, and vide order No.A/911/WZB/05/C1 dated 22.5.2005, the Appellate Tribunal held that the Commissioner had gone beyond the scope of the notice and therefore the order passed by him needed to be set aside, but the Department was not entitled to demand duty from M/s. Alidhara Textile Engineers Ltd. as a consequence of the Commissioner's order being set aside.
3.6 In the meanwhile, a separate show cause notice F.No.V(Ch.84)15-6/OA/95 dated 27.12.1995 has been issued by the Collector of Central Excise, Surat, to various parties including the petitioners herein. In this show cause notice, the demand of differential excise duty has been raised against individual parties including the petitioners herein Page 5 of 10 HC-NIC Page 5 of 10 Created On Sun Aug 20 07:54:23 IST 2017 C/SCA/20125/2016 JUDGMENT for the period from December, 1990 to March, 1993.
3.7 The parties to whom this show cause notice had been served, including the petitioners have filed replies to the show cause notice. Other parties to the above show cause notice including the petitioners have also filed replies to the show cause notice around the same time i.e. August, 1997. Thereafter, the Commissioner of Central Excise, Surat, held a personal hearing on 16.9.1997 when the Advocate and Consultant of the petitioners appeared before the Commissioner and made elaborate submissions, and also requested for cross examination of various customers/persons whose statements had been recorded by the department for the show cause notice. For showing coopertaion in the adjudication proceedings, the petitioners' advocate also agreed for reducing the number of witnesses for cross examination, which was also recorded by the Commissioner in the elaborate note of record of personal hearing prepared on 16.9.1997.
3.8 Thereafter, no further hearing was fixed by the adjudicating authority in this case, and the petitioners have been under a genuine and bonafide impression that the proceedings were terminated by the Commissioner upon finding that there was no merit in the allegations and issues raised in the show cause notice dated 27.12.1995, and also because the show cause notice was barred by limitation for various reasons including that a show cause notice on Page 6 of 10 HC-NIC Page 6 of 10 Created On Sun Aug 20 07:54:23 IST 2017 C/SCA/20125/2016 JUDGMENT the same evidence had already been issued to the same parties on 7.4.1994 wherein also the extended period of limitation was invoked, and that the proceedings of such show cause notice stood terminated in favour of the petitioners. However, to utter shock and surprise of the petitioners, notices/letters dated 7.9.2016 came to be issued from the office of the 2nd respondent referring to the above referred show cause notice dated 27.12.1995 and informing the parties that personal bearing of the show cause notice would be held on 22.9.2016 before the Commissioner.
3.9 The petitioners' advocate, therefore, under the instructions of the petitioners, submitted an application on 19.9.2016 before the Commissioner and requested for time because the case was apparently very old and full papers and information of such an old case were also not readily available. Thereupon, another letter/notice dated 5.10.2016 came to be issued by the Superintendent (Adj.) from the Commissioner's office informing the parties that personal hearing in this case would be held on 19.10.2016. The petitioners' advocate therefore requested the Commissioner to grant another date of hearing because 19.10.2016 was the second last working day before Diwali vacation. Therefore, a further hearing notice dated 9.11.2016 is received by the petitioners from the office of the 2nd respondent for the hearing of show cause notice dated 27.12.1995.
Page 7 of 10
HC-NIC Page 7 of 10 Created On Sun Aug 20 07:54:23 IST 2017
C/SCA/20125/2016 JUDGMENT
3.10 In the meanwhile, the petitioners have
tried to organize themselves in respect of the show cause notice, and in the process, the petitioners have learnt that many of the parties who are also called upon to show cause as to why certain amounts as excise duties would not be recovered from them have ceased to exist. A few of such parties have discontinued all business activities whereas a few of them have been either taken over by some other entity or merger of their business with some other entities have taken place or they have closed down their operations; and it is also found by the petitioners that except the documents referred to in the present petition, no other documents are available with the petitioners in respect of the show cause notice. The petitioners have also found that most of the persons whose statements were recorded by the investigating officers for raising allegations in the show cause notice are also not available, and even the statements of such persons as well as the documents listed at Annexure to show cause notice are also not available with the petitioners because all such documents are misplaced or lost due to long time gap, shifting of the office premises and also because of flood that affected Surat in past. In these circumstances, the petitioners are constrained to approach this Court against revival of the adjudication proceedings proposed by the Central Excise authorities after more than 20 years.
Page 8 of 10
HC-NIC Page 8 of 10 Created On Sun Aug 20 07:54:23 IST 2017
C/SCA/20125/2016 JUDGMENT
This has given rise to filing of this
petition, essentially challenging the action of
reviving and/or restarting the proceedings under the stale show cause notice dated 27.12.1995.
4. Learned counsel appearing for the petitioners has placed heavy reliance upon the decision rendered by this Court in case of Siddhi Vinayak Syntex Pvt. Ltd. Vs. Union of India, in Special Civil Application No. 19437 of 2016, dated 07.03.2017, and invited Court's attention to the observations of the Court in paragraph no.7.5 and submitted that the present petition and the facts are identical, so far as the question of law is concerned. Inasmuch as the belated or rather the action of reviving the show cause notice or proceedings on the basis of stale show cause notice would not be permissible in view of catena of decisions mentioned in the judgment and the judgment itself, which has been placed on record.
5. Learned counsel appearing for the respondent no.2, submitted that there cannot be any blanket proposition of law that all notices are to be quashed only on account of inordinate delay in a case where the delay in proceedings is attributable to the assessee or the noticee. One can have a different view and submission, but in the instant case, he was not in a position to indicate any malafide or any overt act attributable to the noticees for attributing in the delay.
Page 9 of 10
HC-NIC Page 9 of 10 Created On Sun Aug 20 07:54:23 IST 2017
C/SCA/20125/2016 JUDGMENT
6. We are of the considered view that the Court need not elaborately dwell much upon any other aspect, as the entire controversy is covered by the observations of this Court rendered in case of Siddhi Vinayak Syntex Pvt. Ltd. (supra) relying upon the Supreme Court judgments. The notice dated 27.12.1995 at page 23 is admitted to be revived by the proceedings on the basis of the said show cause notice without any rhyme or reason and therefore, the inordinate delay would militate against the interest of justice.
7. In the result, the petition succeeds and is accordingly allowed. The impugned show cause notice No.V(Ch.84)15-6/OA/95 dated 27.12.1995, is required to be quashed and set aside and accordingly quashed and set aside. Rule is made absolute with no order as to costs.
(S.R.BRAHMBHATT, J.) (A.G.URAIZEE,J) Pankaj Page 10 of 10 HC-NIC Page 10 of 10 Created On Sun Aug 20 07:54:23 IST 2017