2005 (8) TMI 117 - HC - Central Excise

Summary

Issues: Stay of operation and implementation of Notifications No. 49/2003-C.E. and 2/2005-C.E. granting exemption to pharmaceutical manufacturing units in Himachal Pradesh and Uttaranchal, imposing tax based on MRP of medicines manufactured by other units.

Stay Issue Analysis:
The High Court of Gujarat at Ahmedabad, comprising Justices G.S. Singhvi and A.S. Dave, heard a Special Civil Application regarding the stay of Notifications No. 49/2003-C.E. and 2/2005-C.E. related to taxation of pharmaceutical manufacturing units. The petitioners sought a stay on the operation and implementation of these notifications, specifically concerning the exemption granted to units in Himachal Pradesh and Uttaranchal and the tax imposition based on the MRP of medicines manufactured by other units. The Court considered the arguments presented by the petitioners' counsel, Shri D. V. Parikh, but ultimately found no valid grounds to grant a stay. The Court highlighted that the manufacturing units in Himachal Pradesh and Uttaranchal were not party respondents in the case. Additionally, the Court emphasized that there was no justification to prevent the official respondents from collecting duties and taxes as per the impugned Notifications. The Court referenced a Supreme Court judgment to support its decision, emphasizing that interim orders should not impede tax recovery unless the impugned notifications are successfully challenged. Therefore, the Court rejected the prayer for stay, allowing tax collection to proceed as per the notifications in question.

This judgment underscores the principle that interim orders should not obstruct the collection of taxes and duties unless there are strong grounds to do so. The Court's decision was based on the lack of justification to halt tax collection from the petitioners, especially considering the absence of the manufacturing units in Himachal Pradesh and Uttaranchal as party respondents. The Court's reliance on a Supreme Court judgment further solidified its stance on the matter, emphasizing the importance of allowing tax collection to continue unless the impugned notifications are invalidated through due process.