Gujarat High Court
Principal Commissioner Of Customs, ... vs Mulchand M Zaveri on 12 October, 2020
Author: J.B.Pardiwala
Bench: Vikram Nath, J.B.Pardiwala
C/TAXAP/277/2020 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 277 of 2020
==========================================================
PRINCIPAL COMMISSIONER OF CUSTOMS, AHMEDABAD
Versus
MULCHAND M ZAVERI
==========================================================
Appearance:
MR ANKIT SHAH(6371) for the Appellant(s) No. 1
MR PARESH M DAVE(260) for the Opponent(s) No. 1
==========================================================
CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH
and
HONOURABLE MR. JUSTICE J.B.PARDIWALA
Date : 12/10/2020
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. This tax appeal under Section 130 of the Customs Act, 1962 is at the instance of the Revenue and is directed against the order passed by the Customs Excise & Service Tax Appellate Tribunal, Western Zonal Bench, Ahmedabad dated 05.12.2019 in the Customs Appeal No.C/10749/2017. The Revenue has proposed the following questions for the consideration of this Court:-
"(i) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law by reducing the redemption fine considering the quantum of duty evaded in the consignment rather than considering market price of the confiscated goods for determining the quantum of redemption fine?
(ii) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error in law by not imposing penalty on the partner Sanjay M. Patel, having Page 1 of 6 Downloaded on : Tue Mar 02 05:33:01 IST 2021 C/TAXAP/277/2020 ORDER active role in evasion of duty, by considering Hon'ble High Court's order which held for not imposing penalty if no specific role of the partner in the offence is brought out?"
2. The Tribunal, while allowing the appeal preferred by the respondent herein, held as under:-
"9. A separate penalty of Rs.50 Lakhs under section 114A, of the Customs Act, 1962, has been imposed on Shri Sanjay Patel, Hon'ble High Court of Gujarat, in the case of Jai Prakash Motvani-2010 (25B) ELT 204 (Guj.), has held that when penalty has been imposed on the firm, separate penalty on partner cannot be imposed. Respectfully following the decision of Hon'ble High Court, the appeal of Shri Sanjay Patel is allowed."
3. Thus, the Tribunal has taken the view that if penalty has been imposed upon the firm, a separate penalty cannot be imposed on the partner of the firm under Section 114A of the Act, 1962.
4. The principal argument of Mr. Ankit Shah, the learned standing counsel appearing for the Revenue is that by virtue of the proviso to Section 114A of the Act, 1962, separate penalty cannot be imposed on the person under Section 112 of the Act when the very same person has been penalized under Section 114A. However, according to Mr. Shah, there does not seem to be any prohibition under Section 112A of the Act to impose penalty on any person whose role in the offence has been defined and established. He pointed out that the respondent, namely, Sanjaykumar M. Patel has not been penalized under Section 114A of the Act, 1962.
5. We are of the view that none of the two questions proposed by the Revenue could be termed as the substantial questions of Page 2 of 6 Downloaded on : Tue Mar 02 05:33:01 IST 2021 C/TAXAP/277/2020 ORDER law. We can do no better than refer to a direct decision of the Supreme Court in the case of Commissioner of Customs (Import) vs. Stoneman Marble Industries, reported in 2011 (264) E.L.T 3 (SC), wherein the Supreme Court has observed as under:-
"11. Before adverting to the rival submissions, it would be expedient to make a reference to the provisions of Section 130A of the Act, which read as follows:
"130A. Application to High Court. - (1) The Commissioner of Customs or the other party may, within one hundred and eighty days of the date upon which he is served with notice of an order under section 129B passed [before the 1st day of July, 2003] (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment), by application in the prescribed form, accompanied, where the application is made by the other party, by a fee of two hundred rupees, apply to the High Court to direct the Appellate Tribunal to refer to the High Court any question of law arising from such order of the Tribunal.
(2)The Commissioner of Customs or the other party applying to the High Court under sub-section (1) shall clearly state the question of law which he seeks to be referred to the High Court and shall also specify the paragraph in the order of the Appellate Tribunal relevant to the question sought to be referred."
On a bare perusal of the provisions, it is manifest that it is for the party applying for reference to clearly state the question of law which he seeks to be referred to the High Court and then it is for the High Court to consider whether any such question of law stated in the application for reference before it should be directed to be referred. (See: Beer Sain Vs. Commissioner of Customs (ICD)2) (2007) 15 SCC 362 . It is manifest from the format of the questions proposed by the Revenue, extracted in para 6 supra, for reference to the High Court that the Revenue did not assail the Tribunal's finding to the effect that the facts in the instant cases were similar to those in M/s. Stonemann Page 3 of 6 Downloaded on : Tue Mar 02 05:33:01 IST 2021 C/TAXAP/277/2020 ORDER Marble Industries (supra). It is a trite proposition that unless the correctness of facts, on the basis whereof an inference is drawn by the Tribunal, is put in issue, a question of law does not arise from its order.
12. In Dhirajlal Girdharilal Vs. Commissioner of Income Tax3, Bombay a Constitution Bench observed that:
"5. The question whether or not the Hindu undivided family was doing business in shares transferred to it by the firm, is undoubtedly a question of fact; but if the court of fact whose decision on a question of fact is final, arrives at this decision by considering material which is irrelevant to the enquiry, or by considering material which is partly relevant and partly irrelevant, or bases its decision partly on conjectures, surmises and suspicions, and partly on evidence, then in such a situation clearly an issue of law arises."
13. Similarly, in K. Ravindranathan Nair Vs. Commissioner of Income Tax, AIR 1955 SC 271 (2001) 1 SCC 135, while dealing with Section 256 of the Income Tax Act, 1961, a Bench of three learned Judges of this Court had held that:
"7. The High Court overlooked the cardinal principle that it is the Tribunal which is the final fact-finding authority. A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no such question before the High Court. Unless and until a finding of fact reached by the Tribunal is canvassed before the High Court in the manner set out above, the High Court is obliged to proceed upon the findings of fact reached by the Tribunal and to give an answer in law to the question of law that is before it.
8. The only jurisdiction of the High Court in a reference application is to answer the questions of law that are placed before it. It is only when a finding of the Tribunal on fact is challenged as being perverse, in the sense set out above, that a question of law can be said to arise."
14. In Sudarshan Silks & Sarees Vs. Commissioner of Income Tax, (2008) 12 SCC 458 , this Court had observed that:
Page 4 of 6 Downloaded on : Tue Mar 02 05:33:01 IST 2021C/TAXAP/277/2020 ORDER "Question as to perversity of the findings recorded by the Tribunal on facts was neither raised nor referred to the High Court for its opinion. The Tribunal is the final court of fact. The decision of the Tribunal on the facts can be gone into by the High Court in the reference jurisdiction only if a question has been referred to it which says that the finding arrived at by the Tribunal on the facts is perverse, in the sense that no reasonable person could have taken such a view. In reference jurisdiction, the High Court can answer the question of law referred to it and it is only when a finding of fact recorded by the Tribunal is challenged on the ground of perversity, in the sense set out above, that a question of law can be said to arise."
15. Thus tested, we are in complete agreement with the High Court that the questions raised by the Revenue for reference could not be said to be questions of law. It bears repetition that the Revenue did not specifically challenge the finding of the Tribunal that the facts in the instant cases were similar to those in M/s. Stonemann Marble Industries (supra), which was essentially a finding of fact. Although, we do find some substance in the submission of learned counsel for the Revenue that a standard formula cannot be laid down for imposition of redemption fine and penalty under the aforenoted provisions of the Act and each case has to be examined on its own facts but when a final fact finding body returns a finding that the facts obtaining in each of the cases before it are similar, and such finding is not questioned, levy of redemption fine or penalty uniformly in all such cases cannot be construed as laying down an absolute formula, which is the case here. We are convinced that the Revenue did not discharge its burden under Section 130A of the Act in as much as it did not specifically challenge the Revenue's aforestated finding as being perverse. In this view of the matter, the High Court was justified in declining to issue direction to the Tribunal to make a reference under Section 130A of the Act. "
6. Thus, whether redemption in the redemption fine and penalty was justified or not is essentially a finding of fact and no material has been adduced by the Revenue to establish that the order of the Tribunal was perverse. In Stoneman Marble Industries (supra), it has been held that redemption fine and Page 5 of 6 Downloaded on : Tue Mar 02 05:33:01 IST 2021 C/TAXAP/277/2020 ORDER penalty would essentially be a question of fact.
7. The second question as proposed by the Revenue also essentially is a question of fact. In such circumstances, referred to above, this appeal fails and is hereby dismissed.
(VIKRAM NATH, CJ) (J. B. PARDIWALA, J) Vahid Page 6 of 6 Downloaded on : Tue Mar 02 05:33:01 IST 2021