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2016 (4) TMI 888 - GUJARAT HIGH COURT

2016 (4) TMI 888 - GUJARAT HIGH COURT - 2016 (336) E.L.T. 495 (Guj.) - Justification of respondent Central Excise authorities in calling upon the GIDC not to register any transfer of the subject plot without production of an NOC from the Central Excise authorities - Held that:- On a perusal of the notice dated 11.12.2013 it appears that a huge demand of ₹ 1,87,05,178/- has arisen on 25.2.2008, which is subsequent to the date of transfer of the subject plot in favour of the petitioner. It c .....

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e petitioner and hence, would have no applicability to the facts of the present case. Considering the case from any angle, the respondent Central Excise authorities, do not have any authority in law to direct the fourth respondent GIDC not to register the transfer of change of ownership without obtaining an NOC from the Central Excise authorities. Consequently, the impugned letter dated 20.5.2014 issued by the Superintendent of Central Excise, Range III, Division V, Surat -I to Regional Manager, .....

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of the petitioner. Under the circumstances, as rightly submitted by the learned counsel for the respondents, the petitioner has no locus standi to challenge the same. - In the light of the above discussion, the petition succeeds and is, accordingly, allowed in the following terms as the impugned communication dated 20.5.2014 addressed by the Superintendent of Central Excise, Range III, Division V, Surat -I to Regional Manager, Gujarat Industrial Development Corporation is hereby quashed and .....

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Udhwani, JJ. For the Appellants : Mr Devan Parikh, Senior Adv. with Mr S N Thakkr, Adv For the Respondents : Mr R J Oza, Adv. Mr Chinmay M Gandhi, Adv. Mr Mb Gandhi, Adv JUDGMENT ( Per : Honourable Ms. Justice Harsha Devani ) 1. Rule. Mr. R. J. Oza, learned senior standing counsel waives service of notice of rule on behalf of the respondents No.1 to 3 and Mr. Chinmay Gandhi, learned advocate waives service of notice of rule on behalf of the respondent No.4. With the consent of the learned advoc .....

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ent notice dated 11.12.2013, the letter dated 20.05.2014 and the order dated 01.09.2015 at ANNEXURE J (Colly), and Annexures H respectively; (B) Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, order or direction directing the respondent No.4-Corporation to effect the change in the constitution of Board of Directors of the petitioner company as sought for by the petitioner company, without insisting for compliance with .....

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d lease deed in his favour for a period of ninety nine years commencing from 5.4.1988 till 4.4.2087, which was duly registered with the office of the Sub-Registrar of Assurances, Surat at Serial No.4748. On 1.8.2007, a registered deed of assignment came to be executed between Tehelram Thakordas Arora and the petitioner company (through one of its Directors Mr. Arun Gupta) for transfer and assignment of the leasehold rights in the lease deed dated 29.6.1990 subject to the terms and conditions men .....

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6.3.2013 furnished the required documents to GIDC along with the requisite transfer fees. After due scrutiny of all the documents on record, GIDC vide its final order dated 13.3.2013 transferred the said plot No.821 in favour of the petitioner company for the purpose of carrying out the activity of manufacturing textiles, effective from the said date. 3.2 However, since subsequently a new group of Directors was, pursuant to negotiations entered into with the erstwhile group of Directors, incline .....

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s of the new company and since the petitioner company was inclined to change its existing business from textile industry to manufacture of dyes and intermediate industries. In response to the said application of the petitioner company, the fourth respondent vide its letter dated 1.9.2015 granted the said permission as requested for, subject to the conditions mentioned therein which included a condition of production of NOC of the Central Excise Department. In view of the above condition stipulat .....

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outstanding of one M/s. Mahalaxmi Processors which was operating a unit of manufacture of textiles from the said plot as a 100% Export Oriented Unit (EOU) and since the demands raised under the Central Excise Act have not been cleared by the said M/s. Mahalaxmi Processors, an attachment notice dated 11.12.2013 has also been issued against the said manufacturer viz., M/s. Mahalaxmi Processors under the Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995 and .....

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Central Excise Department and on the other hand, the respondents No.2 and 3 have refused to either grant the application for issuance of NOC and/or reject the said application, the petitioner has filed the present petition. 4. Mr. Devan Parikh, senior advocate, learned counsel with Mr. S. N. Thakkar, learned advocate for the petitioner, invited the attention of the court to the notice of demand to defaulter dated 11.12.2013 to point out that the said notice has been issued in respect of dues wh .....

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ean that it can be exercised at any time; such power has to be exercised within a reasonable time. It was submitted that, therefore, the action of the respondents in seeking to recover the dues of M/s. Mahalaxmi Processors from the plot in question is barred by limitation. 4.1 Reference was made to the lease deed dated 21.6.1999 executed between M/s. Amitex Silk Mills Private Limited and M/s. Mahalaxmi Processors to point out that there is nothing on record to show that M/s. Amitex Silk Mills Pr .....

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August, 2007 whereafter, Shri Tehelram Thakordas Arora ceased to have any interest in the said property. It was submitted that, therefore, on the date when the notice of attachment to the defaulter came to be issued on 11.12.2013, the property was already vested in the petitioner company and Shri Tehelram Thakordas Arora had no interest in the said property. It was submitted that in any case M/s. Mahalaxmi Processors had no interest in the said property and hence, GIDC cannot refuse to register .....

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r of business of the trader either in whole or in part, whereas it is not the case of the respondents that the petitioner has purchased the business as a going concern from M/s Mahalaxmi Processors. It was submitted that under the circumstances, the liabilities of M/s. Mahalaxmi Processors cannot be foisted upon the petitioner. 4.3 Reference was made to the provisions of section 11E of the Act which provides for creating a first charge on the property of an assessee or person in respect of any a .....

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ld not arise. It was submitted that section 11E of the Central Excise Act was brought on the statute book with effect from 8.4.2011 whereas the subject property was transferred in favour of the petitioner in the year 2007, much before the coming into force of section 11E of the Act and hence, the said provision would have no applicability to the facts of the present case. 4.4 In conclusion, the learned counsel contended that since at no point of time M/s. Mahalaxmi Processors had any right, titl .....

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to the impugned notice dated 11.12.2013 to submit that such notice has been issued to M/s. Mahalaxmi Processors and hence, the petitioner has no locus to challenge the same. It was submitted that as on the date when the notice came to be issued, liabilities to the extent of ₹ 1,87,05,178/- had crystallised against M/s. Mahalaxmi Processors. It was submitted that by the impugned communication dated 20.5.2014 the Superintendent of Central Excise has merely informed the fourth respondent GIDC .....

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the terms and conditions recorded therein. Reference was made to the statement under section 302(2) of the Companies Act, 1956 (Annexure R-2 to the affidavit in reply of the respondent) to point out that Shri Tehelram Thakordas Arora was closely related to the Directors of M/s. Amitex Silk Mills Private Limited and was also one of the Directors. It was submitted that, therefore, the contention that M/s. Amitex Silk Mills Private Limited had no interest in the property in question is, therefore, .....

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n respect of the subject land. It was, accordingly, urged that the petition being devoid of merits deserves to be dismissed. 6. A perusal of the record of the case reveals that a lease deed dated 29.6.1990 came to be executed by GIDC in favour of one Shri Tehelram Thakordas Arora in respect of plot No.821 at Sachin Industrial Area. Subsequently, by a Deed of Assignment dated 1.8.2007 Shri Tehelram Thakordas Arora transferred the plot in question in favour of the petitioner Prakhar Estates Privat .....

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e refused to grant such registration unless the petitioner obtained a "No Objection Certificate" from the respondents. Though the petitioner applied for such, "No Objection Certificate" from the respondents No.1 to 3, such application was neither granted nor rejected. The petitioner was, therefore, constrained to approach this court by way of the present petition. 7. The short question that arises for consideration in the present case is, whether the respondent Central Excise .....

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rocessors during the period from 2003 to 2008. It appears that the respondent authorities at the relevant time have not taken any action for recovering the same from M/s. Mahalaxmi Processors. Much belatedly, on 11.12.2013 a notice of demand to defaulter came to be issued to M/s. Mahalaxmi Processors raising a demand of ₹ 1,87,05,178/-. In connection with the said demand, the Superintendent of Central Excise has informed the GIDC not to change the ownership of the said premises unless a &q .....

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tioner and Shri Tehelram Thakordas Arora ceased to have any right, title or interest in the said property. Insofar as M/s. Mahalaxmi Processors is concerned, nothing has been brought on record by the respondents to establish that M/s. Mahalaxmi Processors had any right, title or interest in the plot in question. 10. Section 11 of the Central Excise Act, 1944 on the basis of which the respondents seek to enforce a condition for obtaining NOC from the Department prior to transfer of ownership of t .....

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s of Revenue Act, 1963 (54 of 1963) to levy such duty or require the payment of such sums may deduct or require any other Central Excise Officer or a proper officer referred to in Section 142 of the Customs Act, 1962 (52 of 1962) to deduct the amount so payable from 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 be in the hands or under disposal or control of such other officer, or may recover the amou .....

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vided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in th .....

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ch person, or may become due to such person, or who holds or may subsequently hold money for or on account of such person, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held, or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount; (ii) every person to .....

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this sub-section has been issued, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be a person from whom duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or the rules made thereunder have become due, in respect of the amount specified in the notice and all the consequences under this Act shall follow." 11. Sub-section (1) of section 11 of the Act envisages attachment and sale of exci .....

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ts, machineries, vessels, utensils, implements and articles in the custody or possession of a person to whom the business or trade either wholly or in part of the defaulter is transferred. Thus, for the purpose of resorting to the provisions of section 11 of the Act, the first condition precedent is that the properties described therein must belong to the defaulter. To take recourse to the proviso to sub-section (1) of section 11 of the Act, the business or trade of the defaulter should either w .....

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e that M/s. Mahalaxmi Processors has any existing right, title or interest in the subject property. Having regard to the fact that the subject property was not of the ownership of M/s Mahalaxmi Processors; it is evident that the basic requirement for resorting to the provisions of sub-section (1) of section 11 of the Act is not satisfied. Moreover, what has been transferred in favour of the petitioner is the subject plot and not the business of M/s Mahalaxmi Processors. Under the circumstances, .....

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or 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. From the statement produced by the respondents, it is evident that a charge is sought to be created on the subject plot in respect of the dues of the period 2003 to 2008 in the year 2013, after a considerable delay, which by no stretch of imagination can be said to be a reasonable time. Therefore, the impugned action of the respondents is also ba .....

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ments of section 11 of the Central Excise Act are satisfied in the present case. Also as rightly submitted by the learned counsel for the petitioner, section 11E of the Act was brought on the statute book long after the subject plot stood vested in the petitioner and hence, would have no applicability to the facts of the present case. Considering the case from any angle, the respondent Central Excise authorities, do not have any authority in law to direct the fourth respondent GIDC not to regist .....

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