TMI Blog2017 (8) TMI 1479X X X X Extracts X X X X X X X X Extracts X X X X ..... himself is that the said Rule is a charging provision and except the said Rule, there was no other provision for imposing the said penalty/damages for short lifting of liquor quantity. If it is a charging provision, as it appears to be, there is no reason to treat the ‘Rule’ 14(2) as anything different from a ‘Section’ or ‘enactment’ or a ‘provision’ covered by the scope of Section 6 of the General Clauses Act, 1897 - In 1897, when India was not independent and no ‘Rules’ under delegated powers to the State Government were framed at that time therefore absence of word ‘Rule’ in Section 6 of the General Clauses Act, 1897 in the context of situation then obtaining should not allow the levy of Penalty/damages under Rule like Rule 14 (2) of present Excise Rules to lapse by holding that Section 6 of the General Clauses Act does not apply to Rules. It is only after the State Re-organization Act, 1956 that States in India started enacting such Rules under their delegated powers under the relevant Acts. Merely because it is a ‘Rule’ enacted by the State Legislature under the delegated powers under Section 71 of the Karnataka State Excise Act, 1965, it does not lose the legislative sanct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of the prescribed quantity of liquor from the State Beverage Corporation. That is why there is no need to go into the question of mens rea or opportunity of hearing or raising an objection in that regard - This Court also does not find any merit in the contention No.III that measure of Penalty under Rule 14 (2) cannot be assailed on different price range for different types of liquor. It is for the Legislature to adopt such measure and no illegality or arbitrariness is seen in such a measure adopted in Rule 14(2) in the present case. This Court is of the view that while upholding the levy, about its mathematical computation and assessment, the petitioners can be given even now an opportunity of hearing. Therefore, the Respondent authorities are directed to pass speaking adjudication orders, in cases where Objections are now filed about the quantum of penalty and damages under Rule 14 (2) of the Excise Rules of 1968, within a period of one month from today - Petition disposed off. - W.P.No.27575/2017, W.P.No.28172/2017 C/W W.P.No.27988/2017, W.P.No.29609/2017, W.P.No.31513/2017, W.P.No.31515/2017, W.P.No.31517/2017, W.P.No.31518/2017, W.P.No.25895/2017 AND W.P.No.26805/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty short lifted, is imposed and if there are two such monthly defaults, the licence itself was liable to be cancelled and the second proviso to Rule 14 provided that the licencing authority shall give a reasonable opportunity of being heard, before levying the penalty or canceling the licence. 9. As stated above, the said Rule 14(2) itself stands deleted from the statute book with effect from 1.8.2014 and the impugned demand notices and the order was passed by the Deputy Commissioner are all after the said deletion of the said Rule 14(2) of the Rules. So no enforcement of that Proviso can be claimed as of right now. Even otherwise, this court is of the opinion that if the petitioner had any objection to the fact of the short lifting of the liquor, it was fully open to her to raise such an objection after the first demand notice Annexure-D dated 20.5.2016 was served upon her. But, not only after the Annexure-D demand notice dated 28.5.2016, even after second demand notice Annexure-E dated 16.8.2016, the petitioner never raised any demur or objection before the respondent authority against the demand of penalty for such short lifting for condoning or waiving such penalty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l shop licenses in Form CL-2 and Bar licences in Form CL-9 shall lift for sale [from a distributor licensee (CL-11) or a distributor licensee for vend of foreign liquor (CL-11A)], the minimum quantity of liquor (excluding fenny, wine and beer) fixed per month for the shop based on the license fee prescribed for each type of license, overheads, other expenses incurred, location of the shop, area of operation, sale of liquor in the previous years, and similar factors to ensure that illicit liquor is not obtained by the licensees and sold in the shop, to ensure that no attempt is made to undersell the liquor and thereby wholesome liquor obtained only from authorized sources is sold to the consumers. In case the licensee fail to lift the minimum quantity of liquor so fixed per month, he shall be liable to pay a penalty at the rate of ₹ 100.00 for every bulk litre on the quantity short lifted: Sl.No. Type of Licence Licence fee Minimum quantity of liquor to be lifted in a month (excluding fenny, wine and beer) (1 case = 9 B.L) (01) Retail Shop (CL-2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n concealed the material facts from this court, interalia, the fact of the subsequent order having been passed on the Undertaking given by the petitioner herself on 28.06.2016 and such order having been passed by the Deputy Commissioner on 30.06.2016. 14. Thus the petitioner has presented this Writ Petition with incomplete picture of the facts. 15. It is well settled that those who have approached under Article 226 of the Constitution of India, exercising writ jurisdiction has to come to the court with absolutely clean hands and complete facts presented to the Court and if the court finds that there is a concealment of material facts, the court can refuse to go into the merits of the case at all and dismiss such Writ Petition only on the short ground of concealment of material facts. 16. In either of the case, this court is not inclined to entertain this petition on the short ground of alleged breach of principles of natural justice and on the contrary, this court is fully satisfied that the case does not merit any relief in the present case. Therefore, the Writ Petition is liable to be dismissed. Accordingly, the petition is dismissed. No costs. 4. Mr. K.P. Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of M/s. Rayala Corporation (P) Ltd. (supra), in a case relating to prosecution under the provisions of Foreign Exchange Regulation Act, 1947 (hereinafter referred to as FERA for short), the Hon ble Supreme Court considered the question whether the proceedings for prosecution of the delinquent could be validly continued under Rule 132-A of Defence of India Rules 1962 after the said Rule 132-A as a whole ceased to be in existence as a result of the Notification issued by the Ministry of Home Affairs on 30/03/1965. 6. Mr. Kumar submitted that the said question was answered in the negative by the Hon ble Supreme Court in the following manner. The relevant extract from paragraphs 12 and 14 of the said judgment in the case of M/s. Rayala Corporation (P) Ltd. (supra) are quoted below for ready reference. 12. There remains for consideration the question whether proceedings could be validly continued on the complaint in respect of the charge under Rule132-A (4) of the D.I. Rs. against the two accused. The two relevant clauses of Rule 132-A are as follows: 132A. (2) No person other than an authorized dealer shall buy or otherwise acquire or borrow from, or sell or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s interpretation, the complaint made for the offence under Rule 132A (4) of the D.I. Rs., after 1st April, 1965 when the rule was omitted, has to be held invalid. 14. On the other hand, Mr. Desai on behalf of the respondent relied on a decision of the Privy Council in Wicks v. Director of Public Prosecutions, 1947 AC 362. In that case, the appellant, whose case came up before the Privy Council, was convicted for contravention of Regulation 2A of the Defence (General) Regulations framed under the Emergency Powers (Defence) Act, 1939 as applied to British subjects abroad by section 3 (1 )(b) of the said Act. It was held that, at the date when the acts, which were the subject-matter of the charge, were committed, the regulation in question was in force, so that, if the appellant had been prosecuted immediately afterwards, the validity of his conviction could not be open to any challenge at all. But the Act of 1939 was a temporary Act, and after various extensions it expired on February 24, 1946. The trial of the accused took place only in May 1946, and he was Convicted and sentenced to four years' penal servitude on May 28. In these circumstances, the question raised in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in the case of Kolhapur Canesugar works (supra) and relied upon by Mr. Kumar pertain to the provisions for levy of Excise Duty under the provisions of the Central Excise Act, 1944. Under Section 11-A of the said Act read with Rule 10 and 10-A of Central Excise Rules (omitted by Notification dated 06/08/1977) was involved in the case. 8. The Hon ble Supreme Court extracted the Show Cause Notice given to the assessee in para.8 of the judgment as under: 8. As the matter stood thus the notice dated 27th April, 1977 was issued by the Superintendent, Central Excise, A.G. - I Kolhapur, which reads as follows : NOTICE TO SHOW CAUSE To M/s. Kolhapur Canesugar Works Ltd. Kashba Savada, Kolhapur Whereas the Kolhapur Cane Sugar Works Ltd., Kolhapur Holder of L4 No.2/Sug/93 had presented their claim on 12.7.76 for rebate of Central Excise duty on sugar produced in excess during the season 1973-74 by them as new factory commencing production for the first time after 1-10-1973 as per provision of S. No.6 of the table of notification No. 189/73 dated 4-10-1973 and that they were granted a rebate of ₹ 61,14,930/- by the Superintendent, Central Excise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esire a personal hearing. 5. If no cause is shown against the action proposed to be taken within ten days of the receipt of this notice, or they do not appear before the Assistant Collector, Central Excise, Kolhapur, when the case posted for hearing, the case will be decided on ex-parte. Sd/ 27-4-77 Superintendent, Central Excise, AGI, Kolhapur 9. In the aforesaid factual backdrop, the Hon ble Supreme Court held in paragraphs 13 to 15 as under:- 13. As noted earlier, prior to 6th August, 1977 the relevant provisions in the rule were Rules 10 and 10-A. In Rule 10 a provision was made for recovery of duties or charges short-levied or erroneously refunded. It was laid down therein that when duties or charges have been short-levied through inadvertence, error, collusion, or misconstruction on the part of an officer, or through misstatement as to the quantity, description or value of such goods on the part of the owners, or when any such duty or charge, after having been levied, has been owing to any such cause, erroneously refunded, the proper officer may, within three months from the date on which the duty or charge was paid or adjusted in the owner's acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Courts for the reasons stated in the judgments. The Full Bench of the Gujarat High Court in Saurashtra Cement and Chemical Industries, (1993 (42) ECC 126) (supra), as it appears from the discussions in the judgment, tried to distinguish the decision of the Constitution Bench in M/s. Rayala Corporation (supra) for reasons, we are constrained to say not sound in law. The decision of the Constitution Bench is directly on the question of applicability of Section 6 of the General Clauses Act in a case where a rule is deleted or omitted by a notification and the question was answered in the negative. The Constitution Bench said that Section 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule . (page 656 of the Supreme Court Report). 33. The Full Bench appears to have lost sight of the position that all the relevant terms i.e. 'Central Act', 'Enactment' 'Regulation', and 'Rule' are defined in Sub-section 3(7), 3(19), 3(5), 3(50) and 3(51) respectively of the General Clauses Act. When the term Central Act or Regulation or Rule is used in that Act reference has to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (42) ECC 126) (Gujarat) (FB) (supra), in Falcon Tyres Ltd., (1992 (60) ELT 116) (Kant) (supra) and the other decisions taking similar view. It is not correct to say that in considering the question of maintainability of pending proceedings initiated under a particular provision of the rule after the said provision was omitted the Court is not to look for a provision in the newly added rule for continuing the pending proceedings. It is also not correct to say that the test is whether there is any provision in the rules to the effect that pending proceedings will lapse on omission of the rule under which the notice was issued. It is our considered view that in such a case the Court is to look to the provisions in the rule which has been introduced after omission of the previous rule to determine whether a pending proceeding will continue or lapse. If there is a provision therein that pending proceedings shall continue and be disposed of under the old rule as if the rule has not been deleted or omitted then such a proceeding will continue. If the case is covered by Section 6 of the General Clauses Act or there is a pari materia provision in the statute under which the rule has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Central Excise and another [(2016) 3 SCC P.643]. The following extracts from these aforesaid two judgments quoted below after noticing the below quoted provisions of Sections 2 (19), 2(50), 2(51) 6, 6-A and 24 of the General Clauses Act, 1987. 2(19): enactment shall include a Regulation (as hereinafter defined) and any Regulation of the Bengal, Madras or Bombay Code, and shall also include any provision contained in any Act or in any such Regulation as aforesaid; 2(51): rule shall mean a rule made in exercise of a power conferred by any enactment, and shall include a Regulation made as a rule under any enactment; 2(50): Regulation shall mean a Regulation made by the President [under article 240 of the Constitution and shall include a Regulation made by the President under article 243 thereof and] a Regulation made by the Central Government under the Government of India Act, 1870, or the Government of India Act, 1915, or the Government of India Act, 1935. 6. Effect of repeal. Where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , been withdrawn form the re- extended to such area or any part thereof, the provisions of such Act or Regulations shall be deemed to have been repealed and re- enacted in such area or part within the meaning of this Section). 14. The definitions of enactment, Rule, Regulation and Repeal from Mysore General Clauses Act, 1899 are also quoted below: 2(19): enactment shall include a Regulation (as hereinafter defined) and any Regulation of the Bengal, Madras or Bombay Code, and shall also include any provision contained in any Act or in any such Regulation as aforesaid; 2(51): rule shall mean a rule made in exercise of a power conferred by any enactment, and shall include a Regulation made as a rule under any enactment; 2(50): Regulation shall mean a Regulation made by the President [under Article 240 of the Constitution and shall include a Regulation made by the President under Article 243 thereof and] a Regulation made by the Central Government under the Government of India Act, 1870, or the Government of India Act, 1915, or the Government of India Act, 1935. 6. Effect of repeal. Where this Act, or any (Central Act) or Regulation made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence before the accused were convicted in respect of the charge made under the said Rule. The said Rule 132-A was omitted by a Notification dated 30-3- 1966. What was decided in that case is set out by para 17 of the said judgment, which is as follows: (SCC p.424) 17. Reference was next made to a decision of the Madhya Pradesh High Court in State of M.P. v. Hiralal Sutwala but, there again, the accused was sought to be prosecuted for an offence punishable under an Act on the repeal of which Section 6 of the General Clauses Act had been made applicable. In the case before us, Section 6 of the General Clauses Act cannot obviously apply on the omission of Rule 132-A of the DIRs for the two obvious reasons that Section 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule. If Section 6 of the General Clauses Act had been applied, no doubt this complaint against the two accused for the offence punishable under Rule 132-A of the DIRs could have been instituted even after the repeal of that Rule. 26. It will be clear fro a reading of this paragraph that the Madhya Pradesh High Court judgment was disti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on applies whether the repeal be express or implied, entire or partial or whether it be repeal simpliciter or repeal accompanied by fresh legislation. The Section also applies when a temporary statute is repealed before its expiry, but it has no application when such a statute is not repealed but comes to an end by expiry. The section on its own terms is limited to a repeal brought about by a Central Act or Regulation. A rule made under an Act is not a Central Act or Regulation and if a rule be repealed by another rule, Section 6 of the General Clauses Act will not be attracted. It has been so held in two Constitution Bench decisions. The passing observation in these cases that Section 6 only applies to repeals and not to omissions needs reconsideration for omission of a provision results in abrogation or obliteration of that provision in the same way as it happens in repeal. The stress in these cases was on the question that a rule not being a Central Act or Regulation, as defined in the General Clauses Act, omission or repeal of a rule by another rule does not attract Section 6 of the Act and proceedings initiated under the omitted rule cannot continue unless the new rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission. This being the case, obviously the word repeal in both Section 6 and Section 24 would, therefore, include repeals by express omission. The absence of any reference to Section 6-A, therefore, again undoes the binding effect of these two judgments on an application of the per incuriam principle. 16. In a later case in the case of Shree Bhagwati Steel Rolling Mills (supra), it was again argued before the Hon ble Supreme Court that the judgment in the case of Fibre Boards Private Limited (supra) also requires reconsideration. But negativing the said contention and following its earlier view in the case of Fibre Boards Private Limited (supra), the Hon ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills(supra) again reiterated the position relating to repeal and omission and enactment including Regulations held as under: 12. From this it is clear that when Section 6 of the General Clauses Act speaks of the repeal of any enactment, it refers not merely to the enactment as a whole but also to any provision contained in any Act. Thus, it is clear that if a part of a statute is deleted. Section 6 would nonetheless apply. Secondly it is clear, as ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular piece of legislation. The Prevention of Corruption Act was passed in the year 1988, that is long after 1969 when the Constitution Bench decision in Rayala Corpn. had been delivered. It is, therefore, presumed that Parliament enacted Section 31 knowing that the decision in Rayala Corpn. had stated that an omission would not amount to a repeal and it is for this reason that Section 31 was enacted. This again does not take us further as this statement of the law in Rayala Corpn. is no longer the law declared by the Supreme Court after the decision in Fibre Board case. 23. Fibre Board case is a recent judgment which, as has correctly been argued by Shri Radhakrishnan, learned Senior Counsel on behalf of the Revenue, clarifies the law in holding that an omission would amount to a repeal. The converse view of the law has led to an omitted provision being treated as if it never existed, as Section 6 of the General Clauses Act would not then apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder. Nor may a legal proceeding in respect of any right or liability be instituted, continued or enforced in respect of rights, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This clearly indicates that there was purchase and sale of liquor clandestinely leading to evasion of huge amounts of excise duty. In order to plug these loopholes and in the interest of revenue, the State under the impugned notification referred only CL-2 and CL-9 licencees and excluded the other categories of licencees. This classification by the State can neither be said to be arbitrary nor discriminatory. To achieve the object which is expedient, the State in its wisdom included the CL-2 and CL-9 licencees in the impugned notification. It is clear that the differentiation has a rational relation to the object sought to be achieved by the impugned notification. Therefore, the contention of respondents that the impugned notification is violative of Article 14 of the Constitution is liable to be rejected . 18. It may be noted here that the question of vires of the said Rule 14(2) of the Excise Rules of 1968 is not even under challenge again before this Court in this case, but the only question is, whether it s omission or repeal with effect from 01.08.2014 divests the Excise Authorities to invoke the said Rule and demand the penalty/damages for short lifting of the liquo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder delegated powers to the State Government were framed at that time therefore absence of word Rule in Section 6 of the General Clauses Act, 1897 in the context of situation then obtaining should not allow the levy of Penalty/damages under Rule like Rule 14 (2) of present Excise Rules to lapse by holding that Section 6 of the General Clauses Act does not apply to Rules. It is only after the State Re-organization Act, 1956 that States in India started enacting such Rules under their delegated powers under the relevant Acts. Merely because it is a Rule enacted by the State Legislature under the delegated powers under Section 71 of the Karnataka State Excise Act, 1965, it does not lose the legislative sanction and sustainability as a charging provision and its omission or repeal cannot deprive the Respondents-Excise Department to invoke and apply this provision by virtue of Section 6 of the General Clauses Act for demanding the penalty/damages for the short lifting of the liquor, for the period during which the said Rule 14 (2) existed on the Statute Book. The same will be clearly saved by virtue of Section 6 of the General Clauses Act, 1897 enacted much prior to independence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o provide a remedy for such loss. It is not the object of the said section to punish the offender for having committed an economic offence and to deter him from committing such offences. The penalty imposed under the said Section 78(5) is a civil liability. Willful consignment is not an essential ingredient for attracting the civil liability as in the case of prosecution. Section 78(2) is a mandatory provision. If the declaration form 18A/18C does not support the goods in movement because it is left blank then in that event section 78(5) provides for imposition of monetary penalty for non-compliance. Default or failure to comply with section 78(2) is the failure/default of statutory civil obligation and proceedings under section 78(5) are neither criminal nor quasi-criminal in nature. The penalty is for statutory offence. Therefore, there is no question of proving of intention or of mens rea as the same is excluded from the category of essential element for imposing penalty. Penalty under section 78(5) is attracted as soon as there is contravention of statutory obligations. Intention of parties committing such violation is wholly irrelevant. Moreover, in the present case, we find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r at the check-post. As stated above, if the form is left incomplete and if the description of the goods is not given then it is impossible for the assessing officer to assess the taxable goods. Moreover, in the absence of value/price it is not possible for the A.O. to arrive at the taxable turnover as defined under section 2(42) of the said Act. Therefore, we have emphasized the words material particulars in the present case. It is not open to the assessees to contend that in certain cases of inter-State transactions they were not liable in any event for being taxed under the RST Act, 1994 and, therefore, penalty for contravention of section 78(2) cannot be imposed. As stated hereinabove, declaration has to be given in form 18A/18C even in respect of goods in movement under inter- State sales. It is for contravention of section 78(2) that penalty is attracted under section 78(5). Whether the goods are put in movement under local sales, imports, exports or inter- State transactions, they are goods in movement, therefore, they have to be supported by the requisite declaration. It is not open to the assessee to contravene and say that the goods were exempt. Without disclosing the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any extraordinary liability to which the law subjects a wrong-doer in favour of the person wronged, not limited to the damages suffered. (See Aiyar P. Ramanatha: The Law Lexicon, 2nd Edn., p.1431). 14. In support of the submission that the demand for the price of mineral raised and exported is in the nature of penalty, the learned counsel for the appellants has relied on the marginal note of Section 21. According to Justice Singh, G.P.: Principles of Statutory Interpretation (8th Edn., 2001, at p.147) though the opinion is not uniform but the weight of authority is in favour of the view that the marginal note appended to a section cannot be used for construing the section. There is no justification for restricting the section by the marginal note nor does the marginal note control the meaning of the body of the section if the language employed therein is clear and spells out its own meaning. In Director of Public Prosecutions v. Schildkamp, Lord Reid opined that a sidenote is a poor guide to the scope of a section for it can do no more than indicate the main subject with which the section deals and Lord Upjohn opined that a sidenote being a brief precis of the section forms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion but that cannot preclude compensation to the State under Section 21(5) of the MMDR Act. The MCR cannot be read to govern the MMDR Act. 151. What is the significance of this discussion? It was submitted that the CEC has taken the following view: .. it may be appropriate that 30% of the notional value of the iron and manganese produced by each of the lessees without/in excess of the environmental clearances may be directed to be recovered from the concerned lessees and with the explicit understanding the concerned lessees as well as the officers will continue to be liable for action under the provisions of the respective Acts. 152. Learned counsel for the petitioners and the learned Amicus were of opinion that the provisions of Section 21(5) of MMDR Act requires that the entire price of the illegally mined ore should be recovered from each defaulting lessee. Similarly, in its affidavit, the Union of India differs with the recommendation of the CEC. According to the affidavit of the Union of India this would be contrary to the statutory scheme and in fact 100% recovery should be made under the provisions of Section 21(5) of the MMDR. We may note that only to thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of mens rea or opportunity of hearing or raising an objection in that regard was considered appropriate in the aforesaid case in Lakshmi Bar and Restaurant case (supra), decided by this Court on 27/06/2017 and the requirement of giving such opportunity wherein Rule 14(2) was restricted in the case where the licence itself was sought to be cancelled for the said reason of short-lifting of the liquor. 28. This Court also does not find any merit in the contention No.III that measure of Penalty under Rule 14 (2) cannot be assailed on different price range for different types of liquor. It is for the Legislature to adopt such measure and no illegality or arbitrariness is seen in such a measure adopted in Rule 14(2) in the present case. 29. This Court has also noticed that in none of the cases, the petitioners have even raised any such objections or reasons for such short lifting of liquor. Had it been so raised, the authority concerned of the Excise Department could have been expected to pass appropriate orders in this regard. Having not done that, the petitioners cannot be permitted to raise the said plea of alleged breach of principles of natural justice to get the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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