TMI Blog1987 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... pany sells cigarette manufactured by it through whole-seller, secondary wholesalers and retailers. The petitioner Company also had been getting their brands of cigarettes manufactured on job basis from other tobacco companies which are mentioned in the show cause notice. Prior to 1st March, 1983 the cigarettes were liable to excise duty under Item 4 II(2) of the First Schedule, of the said Act and were liable to excise duty under Chapter 24 of the Central Excise Tariff Act, 1985. The valuation of the excisable goods for the purpose of charging the excise duty was made in accordance with the provisions of Section 4 of the said Act. The said Tariff Act as prescribed under the said item was as follows : Date Basic Duty Addl. Duty Spl. Excise Duty 1-3-1983 Rs. 440/- per thousand or 300% Rs. 160/- per thousand or 100% ad . val . plus Rs. 12/- per thousand whichever is higher Nil 1-3-1984 Rs. 400/- per thousand or 300% ad . val. plus Rs. 20/- per thousand whichever is higher Rs. 260/- per thousand or 175% ad . val . plus Rs. 12/- per thousand whichever is higher Nil 25-3-1985 -do- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 'adjusted sale price', in relation to each cigarette contained in a package of cigarettes, means the unit price arrived at by dividing the sale price of such package by the number of cigarettes in such 'package;" (b) " 'cigarettes packed in packages', means cigarettes which are packed for retail sale, in packages which - (a) contain 10 or 20 cigarettes, and (b) bear a declaration specifying the maximum sale price thereof as the amount specified in the declaration, plus local taxes only;" (c) " 'Sale price' in relation to a package of cigarettes means the maximum price (exclusive of local taxes only) at which such packages to be sold in accordance with the declaration made on such package." In the show cause notice it was alleged that the excise duty was short-paid by the petitioner company inasmuch as the petitioner deliberately paid duty at a lesser rate on the basis of declaration and printing incorrect prices on the packages of cigarettes, and it is stated that on proper interpretation of the said Notification the petitioner Company was required to declare and state on the package of cigarette the maximum retail price or in other words, the price at which the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d chosen to communicate such margin of profit in a clandestine manner drastically reducing the margin available to wholesale dealers, retailers immediately after the budgetary changes made in the year 1983 while increased their sale price and the sale realisation. It also transpired from the seized documents that by this pricing strategy process, the margin left for the retailers was reduced to only 10 Paise per one thousand cigarettes and that it was stated that it was practically impossible on the part of any retailer to sell 1000 sticks of cigarettes at a total margin of profit of 10 Paise only. The "effective price" that was introduced by the petitioner company was the price at which the retailers would sell and as a matter of fact sold the goods at such effective prices in the market. It is stated that the petitioner company fixed one price for the purpose of levy and collection of duty only and fixed another price for the purpose of selling the same in the market and that by this process it is stated that there had been large scale evasion of excise duty to the extent indicated above. From the various exhibits filed before this Court it is clearly evident that the effective p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice was issued against the petitioner Company on the allegation that the petitioner Company by adopting a pricing strategy, fixing one price for the purpose of payment of Excise and the other for the purpose of sale in the market and the marketing strategy was also fully controlled by the petitioner. This show cause notice by which the petitioner was called upon to pay the deficit excise duty paid by the petitioner during this period to the extent of Rs. 804.75 crores. 3. Mr. Nariman, the learned Advocate appearing on behalf of the petitioner made the following submissions in support of the writ application : (a) That the respondents have acted illegally and without jurisdiction in issuing the impugned show cause notice, dated 27th March, 1987, inasmuch as, there was no short levy and/or short payment of excise duty on the part of the petitioner company and in any event there was no mis-statement and/or misrepresentation made by the petitioner company in the matter of printing the sale price on the packages of cigarette for the purpose of payment of excise duty. (b) That on the basis of rules of interpretation contemporanea expositio, (contemporary exposition) the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore I can proceed on to the merits of the case. Ordinarily, a writ petition is not maintainable against a show cause notice inasmuch as, when a show cause notice is issued, the party gets an opportunity to place his case before the authority concerned and there are elaborate procedures by way of an appeal and/or revision against such order passed in such proceedings. But when a case is made out that the show cause notice was issued without jurisdiction and without the authority of law or that the show cause notice on the basis of the admitted facts is not maintainable in law, the writ petition would be maintainable and the writ Court can undertake a limited scrutiny on the points raised in the petition to find out whether there was any jurisdictional error and/or any legal infirmity in the proceeding. In the instant case it is alleged that the show cause notice was issued on the basis of an erroneous interpretation of the provisions of the Notification in question, which was issued under Rule 8 of the said Rules and in law there had been no mis-statement or mis-representation regarding the sale price and there had been no evasion of excise duty. It was alleged that on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imum retail sale price or the actual market price at which the goods are likely to be sold in the market. The only requirement to print a sale price, was solely for the purpose of payment of excise duty on the basis of such sale price printed thereon. The legislature did not provide any guideline for fixing of the sale price and/or any machinery for having supervision over such fixation of sale price nor the legislature provide any provision for reviewing and/or revising the sale price so fixed. The petitioner's case is that whatever price that is printed on the package of cigarette was finally binding and conclusive on the parties which could not be reopened or questioned at a later stage. The petitioner company on coming to know that the cigarettes manufactured by the petitioner company were sold at 10% above the printed price, started making representations before the revenue drawing their attention to this aspect of the matter, to which the revenue did not take any exception but on the contrary the revenue sought for suggestions from the petitioner company and ultimately with effect from 1-4-1987 the duty is being levied on the basis of the length of the cigarettes and not on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler were bound to sell the goods at that particular price; and if the prices were more there was a legal provision for taking action against the retailers. 7. Subsequently the notification was amended which required that, before printing the sale price, the petitioner had to get the price list approved by the revenue and as a matter of fact such sale prices as printed on the package of cigarettes was approved as it is, without taking any exception in spite of the fact that the revenue was all along aware that the cigarettes manufactured by the petitioner company were sold at a price 10% higher than the printed price. According to the petitioner on a true and proper construction of the term 'sale price' in the notification in question it must be held that it must not be the maximum price at which the said package may be sold in the market. The words "may be" according to Mr. Nariman indicate that it is mere directory and not mandatory. If it was the intention of the legislature that it must be sold and not may be sold, in that event the legislature should have used such expression in the notification in clear words. By any stretch of imagination, the words "may be sold" in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is printed by the petitioner was made upon duty compliance with the law. Section 11A of the said Act did not contemplate a proceeding for recovery on the basis of review of the whole situation and/or more change of the opinion after the lapse of so many years. It is stated that in a fiscal statute unless the words are clear, such a proceeding which is unwarranted in law could not be initiated by exercise of any inherent power. 8. On the question of interpretation of the fiscal notification Mr. Nariman relied on a case of the Supreme Court in Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise Customs, Surat reported in AIR 1970 S.C. 755 where the Supreme Court observed that it is well established that in a taxing statute there is no rule for any intendment. The entire matter is to be governed wholly by the language of the notification. If the taxpayer is entitled to get any benefit on the basis of the plain term of the expression, it could not be denied its benefit by resorting to any supposed intention of the Exempting Authority. 9. Reliance was also placed in the decision of this Court in case of M/s. Mangla Brothers v. Collector of Customs, reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that under the exemption notification the petitioner had no liberty to declare any price as the sale price for the purpose of payment of duty. The maximum price thus printed, may be recommendatory nature but such a price must be fixed bona fide and the same must be capable of being sold in the market at that price. But in this case the petitioner deliberately printed a lower price on the packages as the sale price for declaring the same to the excise authority to avail of a lower rate of excise duty and at the same time fixed another price as the 'effective price' which was the market price and which has higher than the printed price, this according to Mr. Advocate General, amounts to fraud on the revenue and such a case is covered by provision of Section 11 A of the said Act. It was further submitted that the over-charging of price by the retailers, if any, over the printed price has nothing to do with the excise law, inasmuch as, it is only concerned with the manufacturer and the manufacturer in the instant case was under the statutory obligation of duty to fix and declare a maximum sale price on the packages. Such an act should be bona fide and should not be allowed to be done w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... became clear after recovery of the documents and papers on seizure. It is stated that this is a case where the petitioner company was conducting this affair in a clandestine manner and whole purpose was to cause loss to the revenue in a cool and calculated manner. Mr. Advocate General also pointed out that from the seized documents and records, it also appeared that the management decided to go on making representations periodically in a ritualistic manner complaining about the sale of the Petitioner's cigarettes 10% above the printed price by the retailers and this fact, according to Mr. Advocate General, clearly indicated and established beyond doubt that the petitioner company was fully aware that what was done by the petitioner company by way of fixing the effective price over and above the sale price was illegal and unlawful. The petitioner company understood that the 'effective price' should have been the real sale price and should have been reflected on the package of cigarette for the purpose of payment of excise duty. It is further submitted that the manouvering tactics was adopted by the petitioner company solely for the purpose of diverting the attention of the revenue, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market. The expression 'may be sold' in accordance with the declaration made on such package as appearing in the definition of the 'sale price', implies that the manufacturer is duty bound to print the retail price of the packages of which every retailer is enjoined under the law to sell the same to the consumers. It was submitted by Mr. Ganguly that no manufacturer under the scheme of the said exemption of notification, can be allowed to say that it would be proper compliance with the notification by merely printing a price which is not the retail sale price. It is further submitted by Mr. Ganguly that it was not open to the petitioner to declare a price which according to the petitioner is not the retail sale price. The exemption of notification prescribed the requirements to be observed in order to avail the benefits thereunder and that in order to get benefit of such notification, the petitioner was required to declare the maximum retail sale price which it is stated admittedly had not been done and on the contrary, it was stated by Mr. Ganguly that the petitioner did not in fact print the maximum retail price but printed a price according to their choice which is not permissib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ganguly that Section 11 A of the said Act did not provide any condition precedent before exercise of such power. The power can be exercised in the instant case, if it could be established that there had been short payment of excise duty because of wilful mis-statement and/or mis-representation. It was submitted that on true interpretation of the notification it was a duty of the petitioner company to print the price correctly and if it is found that the petitioner had not printed the price correctly and consequently did not pay the proper duty, in that event, there is no other restriction imposed upon the power of the revenue to recover the same. It was further submitted by Mr. Ganguly that on the basis of the materials on records it cannot be said that the Revenue acted without jurisdiction in issuing a show cause notice and that on true interpretation of the notification, it was made clear that the petitioner availed of the concessional rate in a clandestine manner and as such the petitioner is not entitled to any relief at this stage before this Court. 15. On Point 'B' : Mr. Nariman next contended that the petitioners were encouraged or induced to follow the practice which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight to the interpretation put upon it at the time of its enactment and since by those whose duty it has been to construe, execute and supply it" which was noted with approval by the Supreme Court in AIR 1979 SC 1049) (d) Commissioner of Income Tax, Bangalore v. J.H. Gotla, AIR 1985 SC 1698 (e) The State of Mysore v. M.H. Bellary, AIR 1965 SC 868 (f) The State of Orissa v. Dinabandhu Sahu Sons, AIR 1976 SC 1561 and other case laws and also relied on a passage from Statutory Interpretation by F.A.R. Bennion, wherein it was observed at Paras 252 and 253 that "In the period immediately following its enactment, the history of how an enactment is understood forms part of the contemporanea expositio and may be held to throw light on the legislative intention" and that "Official Statements by the Government department administering an Act, or by any other authority concerned with the Act, may be taken into account as persuasive authority on the meaning of its provisions." Relying on this principle it was contended that as the Revenue was continuously administering the law on the basis that the price printed by the petitioner on the commodity was final and binding and not open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 35A or the Revisional Authority under Section 35EE of the said Act. It was further contended that Section 11 A of the said Act was not a complete code for recovery of the duty short paid. It is stated that the provision of Section 11 A is only restricted to cases where assessment had not been made or completed and those Sections 35A and 35EE of the Act are applicable to cases of completed assessments. Mr. Nariman pointed out that such a question had not been considered by any court until now about the scope and ambit of the provision of Section 11 A of the said Act as sought to be interpreted by Mr. Nariman and it was stated that the Court should give a harmonious construction considering the scope and ambit of those sections, so that the powers conferred by different parts of the statute do not overlap and do not create any ambiguity. According to Mr. Nariman the scope of Section 11 A should only be restricted to cases where no assessment had been made and/or completed and that when assessments have been completed, it is found that something was due, in that event, the provision of Section 11 A could be invoked for the purpose of recovery of the duty short paid. The questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is made by the Appellate and/or Revisional Authority. On behalf of the Revenue it was submitted that provisions of Section 11 A and those of Sections 35A and 35EE are independent provisions and could only be exercised by the original, Appellate and Revisional Authorities respectively and it was contended that from the provisions of Sections 35A and 35EE, it was made abundantly clear that Section 35A and Section 35EE did not incorporate the entire provision of Section 11 A but only it was provided those powers which could not be exercised by the Appellate and/or Revisional Authorities beyond the period of limitation mentioned in Section 11 A of the said Act. This according to the learned counsel on behalf of the Revenue, made it abundantly clear that Section 11 A is not intended to be used as a mere machinery provision but an independent provision and the powers conferred therein are independent from the powers conferred in other provisions of the act. If it was an intention of the legislature that Section 11 A is a machinery provision which could be exercised only in aid of the power conferred under Section 35A or Section 35EE, in that event, the legislature should not have inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise) were delegated with the powers of the ranks of the officers of Central Excise. By the said notification the Director of Anti Evasion was invested with the power of a Collector to exercise throughout the territory of India. The said notification was issued by the Central Board of Excise Customs in exercise of the power conferred by Clause (b) of the Section 2 of the Central Excises Salt Act, 1944 read with Rule 4 of the Central Excise Rules, 1944. Mr. Nariman contended that Section 2(b) of Central Excises Salt Act provides the definition of Central Excise Officers, which means any officer of Central Excise Department or any person invested by the Central Board of Excise Customs constituted under the Central Board of Revenue Act 1963 with any of the powers of the Central Excise Officers under this Act. It was pointed out that Rule 2(ii) defines the word 'Collector' and in the said definition various Collectors have been mentioned on whom jurisdiction was conferred in respect of a part of a State or whole of a State or two or more States together. Mr. Nariman submitted the Section 2(b) of the Act read with Rule 2(ii) of the said Rules clearly indicates that the Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board of Excise Customs may appoint such persons as it thinks fit to be the Central Excise Officers or to exercise all or any of the powers conferred by this rule on such officers. Mr. Nariman strenuously argued that Rule 4 did not provide any such power upon the Board to make such delegation of power and as such the notification in question is ultra vires the provision of the Act and the rules framed thereunder. In this connection, it may be mentioned that the validity and/or legality of the notification in question was also the subject matter of challenge before the Madras High Court, wherein the Madras High Court in case of M/s. Asia Tobacco Company (unreported) upheld the validity of the Notification No. 215/86-Central Excise, dated 27-3-1986, firstly by a Single Judge of the Madras High Court, which was subsequently affirmed by the Division Bench of the Madras High Court. Mr. Nariman submitted that the Madras High Court did not consider some of the points which were relevant for the purpose. It was contended by Mr. Nariman that the judgments of the Madras High Court did not consider that under the provisions of the said Act, there was no scope for conferring any concurrent j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication by which concurrent jurisdiction was conferred. It was contended on behalf of the Revenue that under Section 2(b) of the said Act read with Rule 4 of the said rules, it is abundantly clear that any officer of the Central Excise Department may be conferred with any of the powers of the Central Excise Officers by the Board and the decision of the Andhra Pradesh High Court in the case of Sri Balaji Rice Company had no application in this case. It was further argued by Mr. Nariman that in respect of the Collectors having territorial jurisdiction exercising power under Section 11 A there is a provision for appeal but there is no provision for appeal from an order, if passed, by the Respondent No. 3 in this case. It was further pointed out that the notification in question had brought about a situation which would lead the possibility of conflict of jurisdiction, and the notification would also be arbitrary and discriminatory violative of the provision of Article 14 of the Constitution of India. Relying upon the decision of the Andhra High Court in the case of Sri Balaji Rice Flour Mills v. State of Andhra Pradesh reported in 55 Sales Tax Case 292, it was submitted that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be regarded as incidental to or consequence upon those things that has to be taken into consideration. It was submitted that the Madras High Court correctly decided that the Notification in question was correctly issued and validly conferred jurisdiction upon the Respondent No. 3 to as the Collector. 21. Submission on Point 'E' : Mr. Nariman next submitted that Shri N.K. Bajpai, the Director of Anti Evasion (Central Excise) the Respondent No. 3 herein was thoroughly biased and prejudiced against the petitioner company, inasmuch as : (a) He was personally involved in this matter as the said Shri Bajpai had occasion to know the petitioner company while he was posted at Calcutta as Collector of Central Excise for some time and had occasion to know the problems of the petitioner company in the matter of selling of the cigarettes at a price higher than the printed price and had occasion to deal with certain representations filed by the petitioner company. (b) There had been a reward rules under which it was alleged that the said Shri Bajpai would be eligible to get reward for unearthing the evasion of excise duty and certain other officers working under Mr. Bajpai were also enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes packed in packages' must be cigarettes which are packed for retail sale only and which must bear the maximum sale price plus local taxes extra and that the definition of 'sale price' also states that the same is 'in relation to a package of cigarettes'. Of course the word 'may' in there and that on the question of the word 'may' in the definition of 'sale price', the Court have to ascertain the meaning of a word, particularly general words. The same cannot be read in isolation, their colour and content are depriced from their context. It is the duty of the Court/to examine every word of a statute in its context and in its widest sense. According to the petitioner it means, not must, and as such it must be held that the price that may be fixed and declared in the packages need not be the price at which the small should be sold by the retailer or capable of being sold by such retailers. On the contrary according to the revenue the word 'may' means, it must be capable of being sold, otherwise, it will be contrary to the very spirit of the notification. In this connection, it is pertinent to mention that here the Court has been called upon to decide the liability of a party arising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner was declaring a price which is lower than the retail-market price, the petitioner was also fixing a higher price in some cases which is stated to be 'effective price', and that the petitioner has also, it appears, issued blind notes and secret circulars and directions to the wholesalers and retailers regarding this effective price at which the same would be sold in the market. The respondents are able to find out certain papers and documents during search and seizure that the petitioner was fixing two prices at a time one for the purpose of payment of excise duty and another for the purpose of selling the same at the market as the effective price. It is a matter of common knowledge that sometimes the goods may be sold at a price higher than printed price, but when the petitioner was fully aware that the printed price that was printed was not the price at which it was intended to be sold in the market, can it be said that the petitioner can fix any price as the sale price. It is also an admitted position from the documents seized during such search and seizure that if the retailers had to sell the same in the market on the basis of the printed price, only margin of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it will be contrary to the well established principle of interpretation of statute that if it is a case of notification for exemption, it has to be interpreted in a manner which fulfilled the object of such notification and further a statute has to be interpreted in such a manner, so as to prevent any evasion of the revenue and the notification could not be given any narrow meaning. In my view, the Court has to interpret a statute of this nature having regard to the purpose and object of such statute and the Court has to keep in mind that the court's duty is not to make a destructive analysis of a statute so as to frustrate the purpose of the statute and to allow persons to take advantage of such interpretation and thereby indulge in evasion of duty payable by him under the law. In my view, it is not a function of the court to rescue individual from any hardship which may result from such notification when the enactment is clear and in my view, the Court should not go beyond the immediate purpose of the legislation and should not give a meaning broadly which may encourage evasion of duty; on the contrary, court's role is not destructive but should be creative. 24. In this connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me where the petitioner has to declare a price in view of the terms and conditions of the notification and that in the instant case it was alleged that such declaration was incorrectly made for paying lesser amount of duty which had resulted in short payment of excise duty to the extent of about Rs. 803.75 crores. 26. Other case law referred to by Mr. Nariman is also not applicable in the facts and circumstances of the case. This case stands on quite different fooling. Accordingly, I hold that the show cause notice cannot be sold to have been issued without the authority of law and/or had in law on any ground as alleged. 27. Finding on Point (b). - The best exposition of statute or any other document is that which it has received from Contemporary Authority and where this has been given to an enactment by judicial decision, then of course it is to be accepted as conclusive. The principle is that the language of statute must be understood in the sense in which it was understood when it was passed and those who lived at or near the time when it was passed may reasonably be supposed to be better acquainted than their descendants with the circumstances to which it had relation, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the petitioner and as such the respondents had no jurisdiction to re-open the issue at a later stage. Mr. Nariman further contended that if the Excise Authorities had pointed out in time that the petitioner was not fixing the price properly, in that event, the petitioner would have taken care of it and that the petitioner would not have fixed a sale price in such a manner which would ultimately cause a disastrous effect upon the petitioner company. It was further submitted that the respondents in the facts and circumstances of the case had no authority or jurisdiction to make any demand for payment of any excess excise duty which could not be demanded from the petitioner. The case of the respondents in short as made out in the show cause notice and from the affidavit-in-opposition, is that on the basis of the search and seizure conducted by the Excise Authorities, it revealed to the Excise Authorities that the petitioner company drastically reduced the margin available to the wholesale dealers/secondary dealers/retailers immediately after the budgetary change of 1983 while it increased the sale price and sale realisation and the margin of profit allowed to the retailer was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the said representation the petitioners expressed their helplessness. From such representations it also indicates that the petitioner company was fully aware and understood that the requirements of the said notification was to declare a sale price in which it must be sold in the market by the retailers otherwise there was no point for making such representation complaining about selling of the said cigarette at 10% above the printed sale price. In the facts and circumstances of this case the principles of contemporary exposition is not applicable at all and it cannot protect a party against whom serious allegations regarding large scale evasion of excise duty of the nature before me had been made. 29. Finding on Point (c). - With regards to the next contention of Mr. Nariman about the scope and ambit to provision of Section 11A of the Central Excises and Salt Act, 1944 it appears to me that Section 11A of the said Act provides provision for recovery of duties not levied or not paid or short levied or short paid or erroneously refunded. It is evident that whenever the excise duty has not been levied or not paid or has been short levied or short paid, the power under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow them, even though they lead to manifest absurdity. The Court has nothing to do with the question whether the legislature has committed an absurdity. In my opinion, the rule has always been this if the words of an act admit of two interpretations, then they are not clear; and if one interpretation leads to an absurdity and the other does not, the Court will conclude that the legislature did not intend to lead to an absurdity, and will adopt to other interpretation." In my view, the interpretation sought to be given by Mr. Nariman in Section 11A is given that would produce a wholly unreasonable result and it is duty of the Court to construe a statute according to literal and grammatical meaning which it had expressed and that the words of enactment must prevail. Under the scheme of the said Act, Section 11A of the said Act was provided as a substantive provision and a complete code for realisation of excise duty in case of short levy or short payment and Section 11B of the said Act also provided the substantive and the machinery provision for refund of any excess excise duty paid which is also a complete code for the same. Parliament introduced a simplified procedure for recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 A nor it could be said that Section 11 A is a mere machinery provision which could not be invoked independently and/or the same could only be invoked in aid of the powers conferred in Section 35A and/or Section 35EE of the said Act. The later Sections adopted by reference, only the period of limitation and nothing else. When the language of Section 11 A is clear and the powers conferred in other provisions could be invoked only within the period of limitation mentioned in Section 11 A of the said Act, makes it clear that the provision of Section 11 A is an independent code and/or provision for the purpose of recovery of the excise duty short paid and short levied. In my view, if the interpretation as sought to be given by Mr. Nariman is to be given in Section 11 A of the said Act, it would produce a wholly unreasonable result and would also defeat obvious intention of the legislature and further the Court has to do some violence to the words which, in my view, is not permissible. In this connection I may quote the observation of Lord Scarman of the House of Lords, in the case of Duport Steels Ltd. v. Sirs and others reported in (1980) 1 All ER page 529 at 551, "But in the field o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of the legislation. While interpreting the provision of law, the Court will try to ascertain the mischief which the statute intended to remedy from the whole of the enactment and the existing state of law. The object of Section 11 A was for recovery of duty short paid or short levied and in my view, the provision of Section 11 A could not be interpreted in a manner which would defeat the very purpose and/or object for which the same is enacted. Accordingly, in my view, this contention of Mr. Nariman must be overruled. In my view, that within the scope and ambit of Section 11 A of the said Act, the impugned show cause notice was issued rightly. 30. Finding on Point (d). - The next submission of Mr. Nariman was that the Notification No. 215/86, dated 27th March, 1986 is on the face of it without jurisdiction and accordingly the respondent No. 3 who was delegated with the power of a Collector under the Central Excises and Salt Act, 1944 should be prohibited from exercising any jurisdiction in the matter and as such the impugned notice issued by the respondent No. 3 should be held to be illegal. Incidentally it may be mentioned that the validity of the Notification No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of the self same matter on two sets of officers. It was submitted by Mr. Nariman that Section 2(b)/Rule 2(ii) of the said Rules clearly indicates that the Collector could only be appointed in the manner indicated only in respect of the part of the State or whole of the State and that in the instant case the notification is ultra vires the provisions of the Act and/or the rules framed thereunder. It was further stated that in the instant case there were as many as five Collectors who could exercise jurisdiction in this matter and that under such circumstances in the absence of any specific rule such a power could not be conferred upon the respondent No. 3 concurrently. In this connection Mr. Nariman relied on the decision of the Andhra Pradesh High Court in the case of Balaji Rice Company v. Commercial Tax Officer reported in 55, Sales Tax cases page 292 wherein the Division Bench of the Andhra Pradesh High Court held that under the relevant provisions of the Andhra Pradesh Sales Tax Act, the concurrent jurisdiction could not be conferred on two different authorities in respect of the self same-area. In the instant case it was submitted by the revenue, that there is no que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter, and in my view it would not cause any prejudice or injury to the petitioner and further such a power is, in my view, reasonable, and incidental to the exercise of the statutory powers expressly conferred upon the respondents. In my view the ultra vires doctrine could not be made applicable in the facts and circumstances of the case inasmuch as it is not intended to perpetrate any direct interference with the rights of individual without specific legal authority and is not intended to harass and cause prejudice to any party. Accordingly, I hold that the learned Single Judge and the learned Judges of the Division Bench of the Madras High Court in the case mentioned above had rightly decided that the Notification No. 215/86, dated 27th March, 1986 was legal and valid and as such I hold that the respondent No. 3 had jurisdiction to issue the impugned show cause notice. I am constrained to take this view apart from the decision of the Madras High Court and the observation by the House of Lords mentioned above but also because of the observation of Denning L.J. in Magor and St. Mellons RDC v. Newport Corporation reported in (1950)2 All ER 1226 that "We do not sit here to pull t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e findings had been made against the petitioner and as such the respondent No. 3 should not be allowed to dispose of the matter as the said authority could not act impartially as required in the matter. (iv) That the said Shri Bajpai had made certain press statements after the search and seizure wherein it is stated that - "It is too early to determine the extent of evasion" and further stated that "incriminating documents had been seized and were being examined". Mr. Nariman suggested that these statements clearly indicate that the said Shri Bajpai had already formed an opinion that there had been evasion, but only thing that was required to be determined was the extent of such evasion. Various case laws were cited from the Bar on the question of Bias. In this connection it is not necessary in my view to discuss all the case laws, inasmuch as, it is firmly established principles that the decisions of the administrative authorities are liable to be set aside if it could be established that there was real likelihood of bias and/or reasonable suspicion of bias. A real likelihood of bias means at least a substantial possibility of bias and that it is not necessary to prove actual bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bias against Shri Bajpai. Further the allegation that the order of search and seizure, was passed by Bajpai and that whole thing happened under his control and supervision which had been denied by the respondents. There was no material on record to substantiate all these allegations against Shri Bajpai. There is no material before this Court that Shri Bajpai had occasions to peruse the report excepting the statement made from the Bar that the said Shri Bajpai must have looked into these things before the search and seizure was conducted. Admittedly in this instant case there is no allegation of personal hostility against the respondent No. 3 and/or his personal involvement in this matter, but a case of real likelihood of bias was sought to be made against the respondent No. 3 at the initial stage when a show cause notice had been issued against the petitioner by the respondent No. 3. In my view if an administrative authority is expressly empowered by statute to make a draft order or provisional decision and is then empowered to entertain representations and consider objections against it with a view to decide whether or not to give its final effect, then the question of bias cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the representations and objections that may be made before the said authority. In my view the Court's approach to the principles of bias in case of decision given subjectively and decision given objectively should be different as conceptually the principles of bias cannot be uniform in both the cases. In case of subjective decisions bias plays a very important role but in case of objective decisions like this, bias plays a very negligible and insignificant role. Accordingly, on the basis of the above principles and materials on record I am unable to hold that the proceeding in this case will be vitiated on the ground of bias and/or interest in case the same is allowed to be conducted by the respondent No. 3. Further on the basis of some remote or purely speculative allegations before this Court I am unable to hold that the said reward rule had created any interest or likely to create any interest for which the concept of departmental bias or institutional bias could be invoked in the instant case. Further I am of the view that this is neither offensive nor abnormal in the process of revenue administration in our country to issue a show cause notice and to pass final or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on from the show cause notice and that from the said statements it cannot be held that the respondent No. 3 was in any way biased and indicated any pre-conceived views of the respondent No. 3, Shri Bajpai in the matter. Accordingly, the contentions regarding bias in this regard alleged against respondent No. 3 fails. 34. With regard to the allegations of personal involvement of Mr. Bajpai in the matter by coming to know of the affairs of the petitioner Company while his short stay in Calcutta, I do not find that even accepting the allegations as it is, a case of bias and/or likelihood of bias had been made out and there was no materials on record also to show or to indicate that the respondent No. 3 had passed any order for search and seizure and/or had occasions to deal with the Intelligence Report if any I am unable to entertain these objections on the ground of bias on the basis of some mere speculative and vague allegations and/or on the basis of some hypothesis. The respondent No. 3 may be the head of the department and may be that as a matter of routine administrative acts he might have performed duties and passed orders but that cannot by itself prove the case of bias. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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