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TMI Blog1980 (7) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... han excise duty on the stock of manufactured cloth lying in the Mills on April 1, 1949 and also on the cloth manufactured during the period from April 1, 1949 to March 31, 1950, at the rates set forth in the Schedule to the Ordinance. It is averred that the total amount, which became payable on account of the excise duty under the Ordinance for the said period, works out to ₹ 2,14,520/- but nothing was paid by the defendant to the State of Rajasthan. The plaintiff goes on to state that under Articles 278 and 295 of the Constitution of India, the President of India entered into an agreement with the then Raj Pramukh of Rajasthan on February 25, 1950, whereby the parties agreed to accept the recommendations of the Indian States Finance Enquiry Committee 1948-49, contained in Part I of its report read with Chapters I, II, III of Part II of its report, in so far as they applied to the State of Rajasthan together with the recommendations contained in Chapter V of Part II of the said report. It is alleged that by virtue of the said agreement, the Union of India became entitled to recover the excise duty which was payable by the defendant to the State of Rajasthan as from April 1, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uperintendent had no authority to issue a notice of demand he was not an officer under the Ordinance under which the duty was sought to be levied and collected. The defendant also challenged the jurisdiction of the civil court to try and decide the suit. Bar of limitation was also pleaded. Besides the above mentioned objections, the defendant pleaded that the plaint was not properly signed, verified and presented. 4. The plaintiff filed an additional written statement on January 7, 1976, and on the pleadings of the parties, the trial Court framed the following issues on March 11, 1967 :- (1) Is the plaintiff entitled to duty on 13455678 yards instead of on 1340589 yards as admitted by the defendant today and also on 273600 yards instead of on 228000 yards, as admitted by the defendant to-day? (2) Was excise duty payable to the State of Rajasthan? (3) Is the plaintiff entitled to recover that excise duty for reasons given in para 4 of the plaint? (4) Is the suit not triable by a civil court for reasons given in para 14 of the written statement ? (5) Is the suit barred by time ? (6) (A) Was the person signing and verifying the plaint authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of 30 years; 6. That the plaint was signed and verified by a duly authorised person and was also presented by an authorised person in accordance with law. 7. That the excise duty could be levied retrospectively and the same can be recovered by a suit; and 8. That assessment of excise duty was duly made and the duty was demanded according to law by the Central Excise Officer by notice of demand Ex. 2 and this was enough compliance with the provisions of law. 7. As a result of the aforesaid findings, the learned District Judge decreed the plaintiff's suit for ₹ 2,14,520/-, on account of the excise duty in question and further directed that the plaintiff shall get interest at 6% on the decretal amount from the date of the suit till realisation. 8. The learned Counsel for the appellant has reiterated practically all the objections which the defendant had taken in the trial court. At the commencement of his arguments, he contended that the Ordinance was promulgated on September 5, 1949, but the duty has been levied retrospectively with effect from April 1, 1949. Excise duty, according to the learned Counsel, could not have been levied retros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Section 3. - Duties specified in the First Schedule to be levied, - (1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods which are produced or manufactured in Rajasthan whether in stock on the first day of April 1, 1949, or thereafter produced or manufactured, and at the rates set forth in the First Schedule. (2) ... ... ... .... (3) ... ... ... ...." "Section 10. Recovery of sums due to Government - In respect of duty and any other sums of any kind payable to the Government under any of the provision of this Ordinance or of the Rule s made thereunder, the officer empowered by the Government to levy such duty or require the payment of such sums may deduct the amount so payable for any money owing to the person from whom such sums may be recoverable or due, which may be in his hands or under his disposal or control or may recover the amount by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered, he may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation; (viii) provide for the appointment, licensing, management and supervision of bonded warehouses and the procedure to be followed in entering goods into and clearing goods from such warehouses; (ix) provide for the distinguishing of goods which have been manufactured under licence of materials which have been imported under licence and of goods on which duty has been paid, or which are exempt from duty under this Ordinance; (x) so far as such imposition is essential for the proper levy and collection of duties imposed by this Ordinance, impose on persons engaged in the production or manufacture, storage or sale (whether on their own account or as brokers or commission agents) of excisable goods, their duty of furnishing information, keeping records and making returns, and prescribe the nature of such information and the form of such record and returns, the particulars to be contained therein; and the manner in which they shall be verified; (xi) require that excisable goods shall not be sold or offered or kept for sale in the United States except in prescribed containers, bearing a banderol, stamp or label of such nature and affixed in such manner as may be prescribed; (xi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cause of action or from the date of the act or order complained of." "30. Repeal and, savings. - All laws dealing with matters covered by this Ordinance, in force at the commencement thereof in any part of Rajasthan are hereby repealed; But any duty levied, assessment made, thing done or action taken under or in pursuance of any such law hereby repealed shall, unless otherwise provided by or under this Ordinance, be valid and be deemed to have been levied, made, done or taken, as the case may be, under or in pursuance of this Ordinance as if it were then in force." "31, Interpretation. - The provision of the General Clauses Act, 1897, of the Central Legislature shall mutatis mutandis apply so far as it may be, to the interpretation of this Ordinance in the same manner as they apply to the interpretation of a Central Act of the Indian Legislature." 10. It is worthy of note that no Rule s were framed under the Ordinance. However, by notification dated September 15, 1949, issued under section 5 read with section 26 of the Ordinance, the Jaipur Excise Duties Rules, 1945 (hereinafter called "the Rules") were made applicable under the said Ordinance and were direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y short-levied, or erroneously refunded. - When duty has been short-levied through inadvertence, error, collusion or misconstruction on the part of an officer, or through mis-statement as to the quantity, description or value of such goods on the part of the owner, or when any such duty; after having been levied, has been, owing to any such cause, erroneously refunded, the person chargeable with the duty so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or repay the amount paid to him in excess, as the case may be, on written demand being made within three months from the date on which the duty was paid or adjusted in the owner's account-current, if any or from the date of making the refund." "11. No refund of charges erroneously levied or paid, unless claimed within three months. - No duty which has been paid, or has been adjusted in an account-current maintained with the Commissioner under Rule 9, and of which the repayment wholly or in part is claimed in consequence of the same having been paid through inadvertence, error or misconstruction, shall be refunded unless a written claim is lodged with the proper officer within three months f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly published, as required under the Jaipur Act and it was not necessary to publish the same in extension over again under the Ordinance. In this connection strong reliance has been placed on Union of India v. Maharaja Kishangarh Mills Ltd. (supra). It has also been urged that the excise duty in the present case became a debt for which the Union of India can file a civil suit. 13. We shall first take up the question of maintainability of the suit. The learned Counsel for the appellant has contended that the Ordinance itself provides for remedies for adjudication of the disputes and the method for recovery of- the tax and therefore the jurisdiction of the civil court is barred. In support of his contention, he has relied on Venkataraman and Co. v. State of Madras, State of Kerala v. Ramaswami Iyer and Sons, Premier Automobiles v. K.S. Wadke, and Union of India v. Elgin Mills Co.. We have gone through all these authorities and are of opinion that the principle of law laid down therein has no application to the facts and the circumstances of the present case. 14. In Venkataraman and Co. v. State of Madras the question raised before the Supreme Court was whether a suit for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them and the orders of the appellate authorities, subject to the exercise of the revisional jurisdiction, are declared final. It was further observed that liability to pay tax arises by virtue of the provisions and the quantum of the liability may be determined under the Act alone. The jurisdiction of the Civil Court in these matters was therefore impliedly barred by the scheme of the Act. 16. In Premier Atomobiles v. K.S. Wadke, it was held with reference to the provisions of the Industrial Disputes Act, 1947, that what the Union sought to challenge by the institution of a suit was the termination of the award and it was clear that the suit was in relation to the enforcement of a right created under the Act. Consequently, the Supreme Court observed that the remedy in Civil Court was barred and the only remedy available to the workmen was the raising of an industrial dispute which was actually raised shortly after the institution of the suit. 17. In Union of India v. Elgin Mills Co., it was held that the Central Excises and Salts Act has made adequate provisions for the adjudication of disputes and the provisions made thereunder have been made final. Therefore, the civ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment to made upon the assessee quantifying the tax due from him and a demand for the payment thereof is issued within the period specified therein, it creates a debt payable by the assessee in favour of the State. It is well established that once a debt is created, the State has the right to recover it by any of the modes open to it under the general law unless as a matter of policy only a specific mode for the exclusion of any other is prescribed by the law. No such prohibition is enacted in S. 32 of the Act." (Underlining is ours) It may be mentioned here that their Lordships expressed their agreement with the view taken in Inder Chand v. Secretary of State, wherein the Patna High Court had held that a suit was maintainable by the Crown for recovery of the income-tax dues against the assessee and also in Chaganti Raghva Reddy v. State, <$FA.I.R. 1959 A.P. 631. AIR 1959 A.P. 631 wherein a similar view was taken. Their Lordships went on to observe that in principle as will as in the consistent views of the High Courts, it is beyond doubt that where a taxing statute provides for a summary mode of recovery which is not exhaustive, it will be open to the State to have recourse to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly) ₹ 2,14,520.00 sd/- 7-2-51 Superintendent Central Excise : Jodhpur C. No. IV(a) 8 (13) 50/9, Dated 7-2-1951 Copy forwarded to the Inspector of Central Excise Incharge the Maharaja Shri Umaid Mills Ltd., Pali (Marwar) for information. He should countersign the treasury challan forms if presented by the Mills. The amount is creditable to the usual head of account `II - Union Excise Duties - Duty on cloth'. Copy submitted to the Deputy Collector/Asstt. Collector of Central Excise, Ajmer/Jodhpur, for favour of information. sd/- 7-2-1951 Superintendent, Jodhpur 23. It is argued that the cloth in question in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the goods had already been cleared before any proceedings, for collecting the tax, were taken. It may be recalled that the Rajasthan Excise Duties Ordinance 1949, was issued on September 5, 1949, whereas the duty was levied on the stock of goods on the 1st day of April, 1949. It is also clear from the facts narrated in the earlier part of this judgment that the Union of India became entitled to recover the duty in question which the State of Rajasthan was entitled to recover by virtue of an agreement entered into between the President of India and the Raj Pramukh of Rajasthan on February 25, 1950, whereby the parties agreed to accept the recommendations of the Indian States Finance Committee 1948-49 contained in Part I of its report read with Chapters I, II, and III of Part II of its report, in so far as they applied to the State of Rajasthan together with the recommendations contained in Chapter V of Part II of the said report. By virtue of the said agreement, which overrides Article 278 of the Constitution, the Union of India stepped into the shoes of the State of Rajasthan and become entitled to claim and recover all excise duty which the State of Rajasthan was ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax. It has been argued that the excise duty in dispute does not fall within the ambit of the term `current outstandings' (including pending assessments, refunds and arrears) liabilities, claims etc., so as to give rise to a right of suit to the Union of India. 28. It is important to note that with effect from the prescribed date it has been provided in the agreement that the Centre will take over all federal sources of revenue and all federal items of expenditure in State together with administration of the Departments concerned. That clearly means that excise duty which was federal source of revenue was taken over by the Centre. It has been made further clear in the agreement that the Centre will take over all current outstandings (including pending assessments, refunds and arrears), liabilities, claims etc. This only means that the right to recover excise duty vested in the Centre. In this view of the matter the argument of the learned Counsel that the Union of India did not acquire the right to recover the excise duty in question loses all its force. As already stated, in the peculiar facts and circumstances of the case the procedure laid down in the Rule s for assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery if the person taxed does not voluntarily pay." 31. In Cockerline and Co. v. Inland Revenue Commissioners, at page 19, Lord Hanworth, M.R., after quoting the passage from Lord Dunedin's judgment, reproduced above, observed as follows : - "Lord Dunedin, speaking, of course, with accuracy as to these taxes was not unmindful of the fact that it is the duty of the subject to whom a notice ……. is given to render a return in order to enable the crown to make an assessment upon him, but the charge is made in consequence of the Act upon the subject the assessment is only for the purpose of quantifying it." Their Lordships of the Federal Court further observed that in India these well considered pronouncement are accepted without reservation as laying down the true principles of taxation under the Income-tax Act. 32. In Wallace Brothers v. The Commissioner of Income Tax, while dealing with the Income tax Act, 1922 as amended in 1939, it was held that the liability to tax arises by virtue of the charging section alone and it arises not later than the close ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved, - "There is no Rule at all to cover a case of the kind created by sub-section (2) of section 7 under which the Union Government is empowered to collect duties which have not been collected but which would have been collected even after the goods have been cleared and removed from the warehouse. The Collector or the Central Excise Officers are empowered to exercise powers conferred by the Rule s and if the Rule s have not provided, as to cover a case of this kind they cannot proceed to collect a tax, though it has been properly levied and is payable to the Government." It may be pointed out that Rule 10 referred to by the learned Judges of the Nagpur High Court did not cover the duty in respect of the goods which had already been removed from the warehouse and therefore it was held that no resort could be had for collection of the excise duty under the Rule s but in the last paragraph of their judgment, the learned Judges observed, - "As we have held that section 7(2) is valid and governs the case, none of the respondents is in any way prohibited from collecting the tax in accordance with law." This clearly means that the remedy under the ordinary law to collect the tax was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for the levy of a tax or duty by legislative provisions indicating the subject matter of the tax and the rates at which it has to be taxed. The term `assessment' on the other hand, is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the object of the tax in a particular case and determining its amount. The Division Bench appeared to equate `levy' with an `assessment' as well as with the collection of a tax when it held that `when the payment of tax is enforced, there is a levy'. We think that although the connotation of the term `levy' seems wider than that of `assessment', which it includes, yet, it does not seem to us to extend to collection'. Article 265 of the Constitution makes a distinction between `levy' and `collection'. We also find that in N.B. Sanjana v. The Elphinstone Spg. & Wvg. Mills Co. Ltd., AIR 1971 SC 2039 at p. 2045 = 1978 E.L.T. (J 399) this Court made a distinction `levy' and `collection' as used in the Act and the Rules before us. It said therewith reference to Rule 10 - "We are not inclined to accept the contention of Dr. Syed Mohammad that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs involving civil consequences. If there is power to decide and determine to the prejudice of a personal, duty to act judicially is implicit in the exercise of such powers. This is of course a basic concept of the Rule of law. But, in the present case, we are of opinion that there has been no violation of principles of natural justice. The duty has been calculated on the date supplied by the Mill itself and no prejudice whatsoever has been caused to the Mills in calculating the duty. The goods, as already noticed, had been cleared away and the assessee himself submitted a statement of the goods only with one objection viz, that in case offends and seconds cloth weighing 1 lb. should be taken as 21/2 yards and not 3 yards. The assessing authority accepted the statement submitted by the assessee and assessed the tax on that basis. Thus, it appears to us that in the present case there has been no violation of the principles of natural justice. The assessment in the facts and circumstances of the case must be deemed to have been made in consonance with the principles of natural justice. In other words, the tax was properly quantified and a demand for payment there was legally and prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of...................Lbs. No. of packages................... Variety........................... Tariff classification............. Rate of duty..................... ...........................Customs and Excise Deptt. Receipt Receipt the sum of Rs............................................. (Rupees..........................................................." ...................Signature ............Treasury No....................... .......................19." A perusul of Ex. 2, demand notice, would show that it contains all the necessary particulars of assessment. It further appears to us that the defendant has withheld the original requisition made by the Department calling for particulars of production figures. Schedules I and II, appended to the plaint, go to show that the following note has been appended to the Schedules :- Note : Yardage of fent bales are approximate and each bale contains 380 lbs. N.S. - Out of 17908 bales of cloth delivered during the year beginning from st April, 1949 to 31st March, 1950, as shown above 262 bales of second quality each bale containing 380 lbs. was delivered. These lbs. have been converted into approximate yards at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pealed. In our opinion, none of these contentions has any force. In the first place, it would be reasonable to presume under section 114 of the Evidence Act after passage of such a long time and section 114, illustration (e) provides that the Court may presume that an official act has been regularly performed and that Jaipur Rules must have been duly published as required by section 27 of the Act. We are further of opinion that it was not necessary to publish them over again, in extension, under section 28 of the Ordinance. A Notification had been issued in the Rajasthan Gazette, Part IV, dated Margh Shirsh Krishna 7, Smt. 2006, 1949. that in exercise of the powers conferred upon it by sections 5 and 26 of the Ordinance, the Rajasthan Government directs that unless new Rules are framed under the Ordinance, the Rules framed under the Jaipur Excise Duties Act, 1945. would be applicable, mutatis mutandis, in the whole of Rajasthan, and will be deemed to have been made under the said Ordinance. This was sufficient compliance with section 28 of the Ordinance. We may, here, also refer to the observations in Union of India and others v. Maharaja Kishangarh Mills Ltd. (in liquidation), whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention. In paras 2, 3 and 5 of the plaint, it has been clearly averred that the liability to tax was quantified at ₹ 2,14,520/- and there is also reference to that effect in the notice of demand Ex. 2, which contains particulars of assessment. 42. Learned Counsel has also urged that there is provision for an appeal under section 24 of the Ordinance and also for revision in section 25. He submits that if a regular assessment order had been passed, the Mill would have gone in appeal against the assessment order, but since no assessment order in the eye of law was passed, the defendant was deprived of right of appeal and/or revision. As we have already observed, notice Ex. 2 is a composite order and therefore, if the defendant was aggrieved of the order, it could have gone in appeal. It appears to us that, as a matter of fact, it could not have any grievance against that order, as the duty has been calculated on the facts and figures supplied by the defendant itself. 43. The next contention of the learned Counsel for the appellant is that, at any rate, the Superintendent, Central Excise, was not competent to assess the duty and issue a demand notice for the same. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars to the total income including the agricultural income, so however that for this purpose any reduction of tax allowed on the agricultural income by the State law shall not be taken into account. (2) If immediately before the 1st day of April, 1950, there is in force in any State other than Jammu and Kashmir a law corresponding to, but other than, an Act referred to in sub-section (1) or (2) of section 11, such law is hereby repealed with effect from the said date; and if immediately before the said date there is in force in the State of Jammu and Kashmir a law corresponding to the Indian Post Office Act, 1898, such law is hereby repealed with effect from the said date : Provided that such repeal shall not effect (a) the previous operation of the corresponding law, or (b) any penalty, forfeiture or punishment ordered in respect of an offence committed against any such law, or (c) any investigation, legal proceeding or remedy in respect of such penalty, forfeiture or punishment and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if this Act had not been passed." 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice was not held to be invalid on the ground that it had been issued by an unauthorized person. 45. Reliance has also been placed on section 6 of the General Clauses Act, which is applicable to the Ordinance by virtue of S. 31 of the Ordinance, which provides, inter alia, that repeal of an enactment shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed, nor shall affect any investigation or legal proceeding in respect of any such right, privilege, obligation, liability, penalty or punishment. In support of his argument, the learned Counsel relied upon Amadalavalasa Co-operative Agricultural and Industrial Society Ltd. and another v. Union of India and another, and G. Ekambarappa and other v. Excess Profits Tax Officer, Bellary,. In Amadalavalasa's case, while interpreting the provisions of the Emergency Risks (Goods) Insurance Act (62 of 1962) and the Emergency Risks (Factories) Insurance Act (63 of 1962), the Supreme Court observed that the principle behind section 6 of the General Clauses Act is that all the provisions of the Acts would continue to be in force for purposes of enforcing the liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the goods may be removed." In a case like the present, the assessment of the goods already cleared is a matter separate from and independent of the question of the mode of recovery of the duty. We are, therefore, of opinion that the contention of the learned Counsel that because the goods had already been cleared, no assessment could be made cannot be accepted. 47. The next contention raised by the learned Counsel for the appellant is that the suit is barred by limitation under section 29(2) reads as under :- "No suit, prosecution, or other legal proceeding shall be instituted for anything done or ordered to be done under this Ordinance after expiration of six months from the accrual of the cause of action or from the date of the act or order complained of." It is contended that the suit should have been brought within six months from the date of accrual of the cause of action. It is argued that S. 29(2) of the Ordinance governs suits by the Government also. It has also been argued that Art. 112 of the Limitation Act is a general article governing suits by the State but the present suit will be governed by the special provision contained in S. 29(2) of the Ordinance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plaint is in favour of Shri Than Chand Mehta as well as Shri Narain Chand Mehta, and it is signed by Shri G.N. Kale, Assistant Collector, Central Excise, Jodhpur. The objection by the defendant is that Shri Narain Chand Mehta was not appointed by the President of India or any person duly authorized in accordance with law by the Union of India in this behalf. It is conceded that Shri G.N. Kale had authority to sign and verify the plaint but he had not been authorised to act for the Government, and, therefore, cannot be deemed to be the recognized agent, by whom appearances, acts and applications under the Code of Civil Procedure may be made or done on behalf of the Government. In support of this contention, reliance has been placed on Firm Mohan Lal Ramchandra v. Union of India. In our opinion, the contention raised by the learned Counsel is devoid of force. We have gone through the authority relied by the learned Counsel and are of opinion that the principle laid down therein has no application to the case on hand. In that case the Government Pleader had acted without general or special authority in writing from the Central Government empowering him to do so and it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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