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M/s Jaiprakash Associates Ltd. Versus Union of India & Others

2015 (8) TMI 1126 - ALLAHABAD HIGH COURT

Recovery of excise duty - Recovery from purchaser of wound up company - Held that:- Corporation has not transferred or disposed of its business or trade. The Corporation has been wound up by an order of the Court and its assets have been sold off. A running business has not been sold. It has come on record that production activity is not being carried out since 1997. The Counter Affidavit of the Central Excise Department is silent as to how they have asserted that a running business of the Corpo .....

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lying in stock, which was received by the petitioner from the Official Liquidator pursuant to their highest bid being accepted. The Commissioner, Central Excise Department after considering the matter passed an order dated 28.07.2011 holding that the petitioner was not the manufacturer of goods and, therefore, was not liable to pay central excise duty quite apart from the fact that the petitioner had purchased the property in auction, which was free from all encumbrances and, consequently, drop .....

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rwani, JJ. ORDER (Per: Tarun Agarwala, J.) U.P. State Cement Corporation Limited was incorporated as a company under the Companies Act, 1956. The said company carried on commercial operations till 1998 where it is suffered heavy losses and, upon erosion of its net worth, fell within the ambit of the provisions of Sick Industrial Companies (Special Provisions) Act, 1985. The BIFR declared this company as a sick industrial company in 1992 and, subsequently, recommended its winding up. Upon receipt .....

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petitioner, accordingly, paid a sum of ₹ 459.00 crores to the Official Liquidator. The Central Excise Department issued the impugned notice dated 26.08.2010 contending that central excise dues amounting to ₹ 15.97 crores was due and payable by the erstwhile corporation and since the petitioner has purchased a running business of the Corporation, the liability of the Corporation towards the central excise dues has to be cleared by the petitioner and, accordingly, directed the petitio .....

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. The Central Excise Department has filed a counter affidavit and contended that the petitioner has taken over the running business of the Corporation by purchasing the Corporation and its assets and that the arrears of the central excise dues can be recovered from the petitioner under Section 11 of the Central Excise Act (hereinafter referred to as the Act). The Official Liquidator has also filed a counter affidavit contending that the assets of the Corporation were sold pursuant to the winding .....

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d in accordance with the provisions of Sections 529, 529A and 530 of the Companies Act. We have heard Sri Navin Sinha, the learned Senior Counsel along with Sri Raghav Nayar for the petitioner, Sri R.C.Shukla for the Central Excise Department and Sri Ashok Mehta along with Sri Ashish Agrawal for the Official Liquidator. The Central Excise Department has relied upon Section 11 of the Act. For facility, the said provision is extracted hereunder: "11. Recovery of sums due to Government.- In re .....

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he 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 prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the Collector of the district in which such person resides or conducts his business and the said Collector, on receipt o .....

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de by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the Commissioner of Central Excise, for the purposes of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwi .....

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ch results in change of ownership, in that scenario, the successor would be liable. In the instant case, the Corporation has not transferred or disposed of its business or trade. The Corporation has been wound up by an order of the Court and its assets have been sold off. A running business has not been sold. It has come on record that production activity is not being carried out since 1997. The Counter Affidavit of the Central Excise Department is silent as to how they have asserted that a runn .....

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