TMI Blog2014 (10) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... n of India, the petitioner -Gujarat Industrial Investment Corporation Limited has prayed for an appropriate writ, direction and order to quash and set aside the impugned notices of attachment dated 19.04.2007 (Annexure A) and 15.03.2004 (Annexures B-1, B-2 and B-3) issued by the respondent no.2- Assistant Commissioner of Central Excise, Junagadh. It is also further prayed to quash and set aside the impugned letters dated 19.04.2007 (Annexure C) and 13.12.2006 (Annexure D) of the respondent no.2. 1.1 It is also further prayed to declare that the respondents have no priority over the rights of the petitioner to sell the secured assets on the principle of Crown debt having priority. 1.2 It is also further prayed to declare that proviso to Section 11 of the Central Excise Act, 1944 will have no application in case of a sale made by the petitioner or any Financial Corporation under the provisions of Section 29 of the State Financial Corporations Act, 1951. 2. It is the case on behalf of the petitioner that petitioner is a Government Company registered under the provisions of the Companies Act, 1956. That the Government of India vide notification published in the Government Gaze ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SFC Act. 2.2 That thereafter, the petitioner filed Special Civil Application No.7166 of 2005 against the respondent no.2 and Union of India before this Court challenging the aforesaid notices of attachment dated 15.3.2004. However, the Special Civil Application came to be withdrawn with a liberty to make representation to the respondent authority. It appears that thereafter petitioner made detailed representation on dated 27.7.2005 requesting him to withdraw the notices of attachment. That by communication dated 13.12.2006, respondent no.2 has informed the petitioner that Central Excise Dues payable in respect of Rohil Zinc Limited being crown debt has to be paid as first priority amongst all the recoveries. According to the petitioner, by the said letter the officer of the petitioner were to initiate action for sale of any properties of Rohil Zinc Limited were threatened with personal responsibility. That thereafter, respondent no.2 again wrote another letter dated 19.4.2007 to the petitioner and according to the petitioner contents of the said letter are similar to the aforesaid letter dated 13.12.2006 of the respondent no.2. 2.3 That thereafter, petitioner has been ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of attachment deserves to be quashed and set aside. It is submitted that the considering Section 11(E) of the Central Excise Act, now it will be open for the Central Government and / or respondent no.2 to issue fresh order of attachment in view of the amendment in the law and the Central Government dues having first priority / first charge. However, according to the petitioner impugned notices considering the provision of law at the relevant time must be quashed and set aside. Shri Kapadia, learned advocate for the petitioner has heavily relied upon the decision of the Orissa High Court in the case of Suburban Ply Panels (P.) Ltd. v. Regional Provident Fund Commissioner 2004(1) LR 284 in support of his above submission and prayed to quash and set aside the impugned attachment notice. 3.2 Shri Kapadia, learned advocate for the petitioner has further submitted that even otherwise the provisions of Section 11(E) of the Central Excise Act create statutory charge over the property of the assessee and not mortgage over the property. It is submitted that therefore, the excise dues are secured by a charge, whereas the dues of the petitioner are secured by a mortgage. It is submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evailed over the charge created in favour of the Bank in respect of the loan taken by the second respondent- loanee. Considering the above, it is observed and held that there is no question retrospectively in such a case, on the date when it was introduced, Section 33-C operated in respect of all charges that were then in force and gave sales tax dues precedence over them. It is submitted that applying the ratio laid down by the Hon'ble Supreme Court in the said decision to the facts of the case on hand, more particularly, Section 11(E) of the Central Excise Act, there is no question of applying Section 11(E) retrospectively and on the date of which Section 11 (E) has come into it gives central excise dues precedence over them. 4.2 Shri Patel, learned advocate for the respondent Central Excise Department has also relied upon the decision of the Hon'ble Supreme Court in the case of Dena Bank v. Bhikhabhai Prabhudas Parekh Co. [2000] 5 SCC 694 which came to be considered by the Hon'ble Supreme Court in the case of State Bank of Indore (Supra). 4.3 It is submitted by Shri Patel, learned advocate for the respondent Central Excise Department that in view of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication. 5. Heard the learned advocates for the respective parties at length. Challenge in the present Special Civil Application is the impugned notice of attachment of the movable and immovable properties issued by the respondent no.2 - Assistant Commissioner, Central Excise, Junagadh for the central excise dues of Rohil Zinc Limited. It is the case on behalf of the petitioner that petitioner is a secured creditor and is in possession of the properties attached in exercise of Section 29 of the SFC Act and considering the law prevailing at the relevant time the said notice of attachment deserves to be quashed and set aside. However, in view of subsequent amendment, more particularly, Section 11(E) of the Central Excise Act the dues of the Central Government should have been first charge and therefore, being a statutory first charge holder, it is always open for the Excise Department to recover the same from the properties so attached. Section 11(E) reads as under: Section 11(E): Liability under Act to be first charge: Notwithstanding anything to the contrary contained in any Central Act or State Act, any amount of duty, penalty, interest or any other sum payable by an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and therefore, this Court must quash and set aside the impugned notices of attachment. The aforesaid cannot be accepted. Learned advocate for the petitioner virtually concedes or admits that in view of Section 11(E) of the Central Excise Act, the Department can attach the property for recovery of dues. Therefore, to quash and set aside the impugned notices of attachment and thereafter to permit the department to issue fresh notice of attachment would be exercise in futility. Therefore, in view of Section 11(E) of the Central Excise Act when Central Government would have first charge over the properties of the Rohil Zinc Limited for its central excise dues and consequently it will always be open for the department to attach the property for recovery of dues, we are of the opinion that impugned notices of attachment need not be set aside as even otherwise subsequently it permissible for respondent no.2 to attach the properties of Rohil Zinc Limited. Therefore, as such challenge to the impugned notice of attachment had become academic in light of the Section 11(E) of the Central Excise Act. 8. Now, so far as another prayer on behalf of the petitioner and / or relief sought by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax from the defaulters over the equitable mortgages created by them in favour of Banks and Financial Institutions is no more res integra. Dealing with the provisions parallel to Section 26B of the Kerala General Sales Tax Act by the various Sales Tax Laws of other States, Supreme Court has already recognized the statutory first charge in respect of sales tax arrears. Reference may be made to the decisions of the Apex Court in State Bank of Bikaner Jaipur v. National Iron Steel Rolling Corporation and Ors. (1995) 96 STC 612), Delhi Auto and General Finance Pvt. Ltd. v. Tax Recovery Officer and Ors. (1999) 114 STC 273), Dattatreya Shanker Mote v. Anand Chintaman Datar, Dena Bank v. Bhikhabhai Prabhudas Prakash Co. and various other decisions. We may refer to the latest decision of the Apex Court in State of M.P. v. State Bank of Indore, wherein the court examined the charge created under Section 33C of the M.P. General Sales Tax Act, 1958 and held that Section 33C creates a statutory first charge that prevails over any charge that may be in existence. The Court held that the charge thereby created in favour of the State in respect of the sales tax dues of the second respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, the High Court has rightly held that the first charge created by Section 26B of the Kerala Act will have primacy over the bank's dues.' 9. Even otherwise, if the contention on behalf of the petitioner is accepted, in that case, Section 11(E) of the Central Excise Act, by which, there would be a statutory first charge over the properties of the defaulter in favour of the Central Government with respect to their excise dues would become redundant and / or nugatory. Under the circumstances, contention on behalf of the petitioner that despite Section 11(E) of the Act their right to recover dues of the borrower / mortgagee in exercise of powers under Section 29 of the SFC Act, cannot be accepted. 10. Now, so far as challenge to the impugned letters dated 19.04.2007 and 13.12.2006, by which, according to the petitioner, respondent no.2 gave threats to the officer of the petitioner that if they are proceeded further with the sale of the properties attached and they will face consequence and they will held personally responsible is concerned, on considering the aforesaid letters, as such it cannot be said that any threats were given. By the aforesaid letters, as such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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