TMI Blog2014 (11) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... an Steel Ltd. (2014 (11) TMI 427 - GUJARAT HIGH COURT) and we are also of the view/opinion that merely because erstwhile owner though it had ceased to carry on business on the premises in question, had failed to apply for de-registration and/or cancellation of the Registration Certificate and/or the department has not de-registered and/or cancelled the Registration Certificate issued in favour of the erstwhile owner, the same is no ground to deny Central Excise Registration to the subsequent purchaser-lessees in respect of premises in question as neither under Section 6 of the Act nor under Rule 9 of the Rules nor under any Notification, Central Excise Registration cannot be refused on the aforesaid ground. Under the circumstances, the action of the respondents-authority in refusing to grant Central Excise Registration in favour of the petitioner No. 3 on the aforesaid ground, cannot be sustained and the same deserves to be quashed and set aside - Decided in favour of assessee. - Special Civil Application No. 15515 of 2010 - - - Dated:- 18-9-2013 - M.R. Shah and Sonia Gokani, JJ. Shri Paritosh Gupta for Paresh M. Dave, Advocate, for the Petitioner. Shri R.J. Oza, Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s where is and what is basis . That the auction came to be finalized in favour of one M/s. S.P. Enterprises, Ahmedabad and Board of Directors of the Corporation in its meeting held on 15-9-2000 accorded its approval to the sale of the assets viz. land, building, plant and machinery of M/s. Jem Ispat Ltd. to M/s. S.P. Enterprises. That the said sale was made subject to observance of the conditions stipulated by the GIDC in its letter dated 9-10-2000 and also observance of general terms and conditions for sale of assets under Section 29 of the State Financial Corporations Act, 1951. It appears that the said M/s. S.P. Enterprises sold the said properties of M/s. Jem Ispat Ltd. in favour of one M/s. Jagdish Enterprises Pvt. Ltd. in the month of February, 2001. That the petitioner No. 1 - M/s. Jagdish Enterprises Pvt. Ltd. applied for Registration Certificate under the Act and the Rules and the Central Excise Department issued Registration Certificate in favour of M/s. Jagdish Enterprises Pvt. Ltd. - petitioner No. 1 with respect to Plot Nos. 548 and 549, GIDC Estate, Vaghodia, Vadodara somewhere in the month of February, 2001. It appears that thereafter, M/s. Jagdish Enterprises Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ratnaveer Stainless Products Pvt. Ltd. for Central Excise Registration Certificate, the petitioners herein have preferred the present Special Civil Application under Article 226 of the Constitution of India. 2.3 That vide communication dated 27-10-2010, Superintendent, Central Excise and Customs has called upon the petitioner No. 1 - M/s. Jagdish Enterprises Pvt. Ltd. and its Managing Director - Mr. Prabhulal Badrilal Kabra to pay outstanding dues due and payable by erstwhile owner - M/s. Jem Ispat Ltd. 2.4 Being aggrieved by and dissatisfied with the impugned communication dated 27-10-2010 issued by the Superintendent, Central Excise and Customs, Vaghodia Division, Vadodara-II, for initiating proceedings against the petitioner Nos. 1 and 2 for outstanding dues of erstwhile owner - M/s. Jem Ispat Ltd., petitioners have preferred the present Special Civil Application for the aforesaid reliefs. 2.5 Thus, by way of present Special Civil Application, petitioners have prayed to quash and set aside the recovery proceedings initiated against the petitioner Nos. 1 and 2 to recover the outstanding Central Excise duties, due and payable by erstwhile owner - M/s. Jem Ispat Ltd. (towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 449 (Bombay), in support of his above submissions. 3.2 Mr. Paritosh Gupta, learned Advocate appearing on behalf of the petitioners has further submitted that even otherwise on the ground of delay and laches also, there cannot be any recovery proceedings against the petitioners for Central Excise dues of erstwhile owner - M/s. Jem Ispat Ltd. which are of the year 1997 and 2000, respectively. It is submitted that nothing has come on record whether any recovery proceedings have been initiated against erstwhile owner - M/s. Jem Ispat Ltd. in accordance with Section 11 of the Central Excise Act. It is submitted that M/s. S.P. Enterprises, Ahmedabad, who subsequently transferred the properties in favour of the petitioner Nos. 1 and 2, purchased the properties in a public auction held by the GIDC somewhere in the year 2001 and the impugned recovery proceedings have been initiated against the petitioner Nos. l and 2 after a period of approximately 10 years, which is not permissible. 3.3 Mr. Paritosh Gupta, learned Advocate appearing on behalf of the petitioners has heavily relied upon the decision of this Court in the case of Valley Valvet P. Ltd. v. Union of India, reported in 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. 4.1 Now, so far as the challenge to the recovery proceedings initiated against the petitioner Nos. 1 and 2 for the dues of Central Excise of M/s. Jem Ispat Ltd., Mr. Oza, learned counsel appearing on behalf of the respondents has heavily relied upon the terms and conditions of the sale of assets of erstwhile owner - M/s. Jem Ispat Ltd. and the terms and conditions on which the sale came to be confirmed in favour of M/s. S.P. Enterprises, Ahmedabad, from whom the properties have been transferred in favour of the petitioner Nos. 1 and 2. It is submitted that as such there is no sale in favour of the petitioner Nos. 1 and 2 and, in fact, the sale was confirmed in favour of M/s. S.P. Enterprises, Ahmedabad. However, at its request, the GIDC transferred the properties of M/s. Jem Ispat Ltd. in favour of the petitioner Nos. 1 and 2. It is submitted that, therefore, as such the petitioner Nos. 1 and 2 are bound by the terms and conditions of the sale by GIDC in a public auction. It is submitted that as such the entire properties of M/s. Jem Ispat Ltd. came to be sold in favour of M/s. S.P. Enterprises/petitioners on as is where is and what is basis . It is further submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable to the facts of the case on hand. 4.2 Mr. Oza, learned counsel appearing on behalf of the respondents has further submitted that similarly in view of the specific stipulations/conditions mentioned in clause 14 reproduced hereinabove, decision of the Hon ble Supreme Court in the case of Sicom Ltd. (supra) also would not be applicable. It is submitted that as such, the case would be governed by the decision of the Hon ble Supreme Court in the case of Macson Marbles Pvt. Ltd. v. Union of India, reported in 2003 (158) E.L.T. 424 (S.C.). 4.3 Now, so far as the challenge to the action of the respondents in rejecting the application of the petitioner No. 3 for Registration Certificate is concerned, it is submitted by Mr. Oza, learned counsel appearing on behalf of the respondents that Registration Certificate issued in favour of M/s. Jem Ispat Ltd. with respect to the very premises in question i.e. Plot Nos. 548 and 549, GIDC Estate, Vaghodia, Vadodara, is yet not cancelled and/or there is no de-registration of the said Registration Certificate issued in favour of M/s. Jem Ispat Ltd. and therefore, second Registration Certificate with respect to the very property cannot be is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the respondents-department that the aforesaid decision relied upon by the learned advocate appearing on behalf of the petitioners are only with respect to statutory liabilities and not with respect to contractual obligation/liabilities, as in the present case and therefore, the aforesaid decision would not be applicable to the facts of the present case. It is also the case on behalf of the respondents that as per the terms and conditions of the sale, more particularly condition No. 14, sale in favour of the purchasers was subject to rights of the Central Government to recover outstanding duties of excise and therefore, there is a contractual obligation of the petitioner Nos. 1 and 2 to clear/pay the outstanding Central Excise duties and therefore, the petitioner Nos. 1 and 2 are liable to pay outstanding Central Excise duties of the erstwhile owner - M/s. Jem Ispat Ltd. It is also the case on behalf of the petitioners that even otherwise on the ground of delay and laches, since the recovery proceedings are not initiated within a reasonable period, now it is not open for the respondents to initiate recovery proceedings against the subsequent purchasers-petitioner Nos. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the subsequent purchaser after a period of 10 years by observing in paras 14 to 17 as under : 14. It is settled legal position that when no time limit is prescribed for exercise of a power under a statute, it does not mean that it can be exercised at any time; such power has to be exercised within a reasonable time. That any power conferred under a statute is required to be exercised in a reasonable manner which inheres the concept of its exercise within a reasonable time. 15. The Apex Court, in the case of Ibrahimpatnam Taluk Vyavasaya Coolie Sangham v. K. Suresh Reddy, [2003] 7 SCC 667, in the context of exercise of suo motu powers, has laid down as follows : Exercise of suo motu power at any time only means that no specific period such as days, months or years are not prescribed reckoning from a particular date. But that does to mean that at any time should be unguided and arbitrary. In this view, at any time must be understood as within a reasonable time depending on the facts and circumstances of each case in the absence of prescribed period of limitation. 16. This Court, by a decision rendered on 16th December, 2005, in the case of Ani Elastic In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioners purchased the properties in auction, they sought registration under the very Act for the purposes of manufacturing the goods by using the same properties, including the machineries. It is not even the case of respondent authorities that any fraud was committed while seeking registration. Considering the principles enunciated in the aforesaid decisions, the action of the respondents in seeking to recover the central excise dues of the erstwhile unit from the petitioners is hopelessly time barred. 5.4 Similar view has been taken by the Division Bench of this Court in the case of Ani Elastic Industries (supra) wherein the Division Bench has quashed and set aside the recovery proceedings initiated against subsequent purchaser to recover the dues of erstwhile unit, initiated after a period of 10 years, by observing in para 14 as under :- 14. It is an admitted position that the petitioner has purchased the manufacturing unit belonging to erstwhile M/s. Urmi Enterprise in an auction held by the respondent No. 5 in the year 1999. The impugned order bears out the fact that the dues of M/s. Urmi Enterprise have arisen by virtue of an Order-in-Original dated 8th January ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Nos. 1 and 2 - subsequent purchasers, to recover Central Excise dues of the erstwhile owners - M/s. Jem Ispat Ltd., cannot be sustained and the same deserves to be quashed and set aside. 5.6 Now, so far as the action of the respondents-authority in denying the Registration Certificate to the petitioner No. 3 on the ground that Registration Certificate with respect to the very property in question being Plot Nos. 548 and 549, GIDC Estate, Vaghodia, Vadodara issued in favour of erstwhile owner - Plot Nos. 548 and 549, GIDC Estate, Vaghodia, Vadodara, is still not cancelled and/or de-registered and there are Central Excise dues of the erstwhile owner - M/s. Jem Ispat Ltd. and therefore, Registration Certificate cannot be granted in favour of the petitioner No. 3 - subsequent purchaser for the very property, is concerned as such the said issue is squarely covered by the decision of the Bombay High Court in the case of TATA Metalinks Ltd. (supra) and unreported decision of this court in the case of Surat Metallics Ltd. (supra) and in the matter of M/s. Jahaan Steel Ltd. (supra) and decision in the case of Prelude Laminates Pvt. Ltd. in Special Civil Application No. 11619 of 2000. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in such notification, specify person or class of persons who may not require such registration. (3) The registration under sub-rule (1) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board. Sub-rule (3) of Rule 9 contemplates that the registration shall be subject to the conditions as specified by Notification by the Board. The Board has issued notification under Rule 9. The perusal of the said notification, requires compliance of the following : (a) An application by every person specified under sub-rule (1) of Rule 9 for registration. (b) If the person has more than one premises requiring registration, separate registration certificate shall be obtained for each of such premises. (c) Where a registered person transfers his business to another person, the transferee shall get himself registered afresh. (Emphasis supplied) (d) Every registered person, who ceases to carry on the operation for which he is registered, shall de-register himself by making a declaration in the form specified in Annexure III and depositing his registration certificate with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , then he must obtain separate registration certificate for each premises and as such the registration is always in respect of particular premises and not with respect to a particular person. Relying on the notification issued by the Board, the court held that the intention appears to be to prevent successive registration in respect of the same premises. If that be so, one and the same premises cannot be registered in the name of two different persons. The court proceeded to hold that the person holding earlier registration certificate must surrender registration certificates in respect of that premises, then only a new person can get registration in respect of that premises. From the facts, it will be clear that earlier though M/s. Swastik were in arrears fresh registration was granted in favour of M/s. Jagruti Textile Processors. The court found on the facts therein that there was a systematic attempt to evade tax dues and it is in these circumstances that the court was pleased to take the view which it has is taken. The person who owned the premises was the same but was inducting various licencees who had defaulted in payment of their dues. The judgment will have to be restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different persons. That person holding earlier registration certificate must surrender registration certificate in respect of that premises, then only can a new person get registered in respect of that premises. However, on behalf of the petitioners, reliance had been placed upon a decision of the Bombay High Court in the case of Tata Metailiks Ltd. v. Union of India and Others, 2009 (234) E.L.T. 596 (Bom.) wherein the Court after considering the provisions of Section 6 of the Act, Rule 9 of the Central Excise Rules, and the notification issued thereunder, has inter alia held thus : 7. A perusal of Section 6 makes it absolutely clear that who has to be registered is the prescribed person. Under the rules also, it is the person who has to get registered. The notification in Clause (2) only sets out that if such registered person has more than one premises, then each of such separate premises would require registration certificate for each of such premises. In other words, it is the person who has to obtain separate registration certificate for each of the said premises. It is open to a person who has ceased to carry on the business to apply for deregistration. Would that mean i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respondent authority that in respect of the same premises, two persons cannot be registered being contrary to the provisions of law, cannot be accepted. 5.8 The aforesaid decision of the Division Bench in the case of Surat Metallics Ltd. (supra) has been subsequently followed by another Division Bench of this Court in the case of M/s. Jahaan Steel Ltd. (supra) and a similar view has been taken. 5.9 Considering Section 6 of the Central Excise Act and Rule 9 of the Central Excise Rules, we are in complete agreement with the view taken by the Bombay High Court in the case of TATA Metalinks Ltd. (supra) and view taken by the Division Bench in the case of Surat Metallics Ltd. as well as in the case of M/s. Jahaan Steel Ltd. (supra) and we are also of the view/opinion that merely because erstwhile owner though it had ceased to carry on business on the premises in question, had failed to apply for de-registration and/or cancellation of the Registration Certificate and/or the department has not de-registered and/or cancelled the Registration Certificate issued in favour of the erstwhile owner, the same is no ground to deny Central Excise Registration to the subsequent purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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