TMI Blog1979 (12) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... xtiles from November, 1960 and is the owner of 8 power-looms at Udhna. The 3rd petitioner carries on business in the name and style of M/s. Dilip Textiles as the sole proprietor since March, 1961 and owns 9 power-looms at Udhna. The 4th petitioner carries on business in the name and style of M/s. Kirti Textiles as the sole proprietor since March, 1961 and owns 6 power-looms at Udhna. The 5th petitioner carries on business in the name and style of M/s. Shree Raj Textiles as the sole proprietor since March/April, 1961 and initially owned 6 power-looms. Out of these, two were sealed by the Central Excise authorities in 1962, with the result that 4 power-looms are working in the shed of the 5th petitioner. The 6th petitioner carries on business in the name and style of M/s. Deepak Wcaving Factory, as the sole proprietor, which initially owned 6 power-looms, two of which were sealed by the Central Excise authorities in about April, 1962, with the result that 4 power-looms are in use. On 23rd May, 1964, a partnership firm of M/s. Shantikumar Dhairyawan Co. was formed wherein the 2nd petitioner, one Dhairyawan Ramdas Asher and the 4th petitioner were partners, for the purpose of distrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules and, inter alia, why sale proceeds amounting to Rs. 16,43,0001/- on the cotton fabrics sold by the petitioners should not be confiscated. The evidence relied on by the excise authorities was set out in the show cause notice, viz., books of accounts seized on 21st December, 1964 during the raid and the petitioners' statements recorded on 24th December, 1964, 26th December, 1964 and 5th January 1965. The show cause notice gave an opportunity to the petitioners to take inspection of the seized documents before furnishing their reply. 5. On 9th February, 1965, B. N. Rangwani, the Assistant Collector of Central Excise Bombay, who had issued the show-cause notice, addressed a letter to the 3rd petitioner that in respect of the show-cause notice, the 3rd petitioner should directly correspond with the Officer on Special Duty at Bombay. On 15th February, 1965, petitioners 2 to 6 filed their reply to the show-cause notice, requesting for "sympathetic consideration" of their case with "broad outlook". In this reply it was stated that petitioners 2 to 6 took their tax-marks and licences separately from genuine tax-marks owners in their individual names, that they had brought in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also filed its reply stating that the 1st petitioner had let out sheds in the building to petitioners 2 to 6, that the 1st petitioner was doing pirn and winding on `majuri' basis, that the 1st petitioner was not the manufacturer of any cloth nor did it have any tax mark or looms, that the 1 st petitioner was separately assessed to income tax and had a separate sales tax registration number and that the 1st petitioner was a separate entity from petitioners 2 to 6. 7. On 4th September, 1965, by a well-reasoned and detailed order passed by the Officer on Special Duty, he held that the units run by the petitioners were actually owned and run as one single unit. After taking into account all the facts and circumstances, including the inculpatory admissions made by the petitioners and the material seized during the raid, the officer on Special Duty came to the conclusion that the actual running of the power-looms was a joint endeavour as it was found to involve less expenditure to operate jointly than individually, that the various profit and loss accounts from 1961 onwards showed that all the expenditure for the manufacture of cotton fabrics was accounted for in a combined manner, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as one unit from 1961 to 1964. Mr. Shah urged that the impugned revisional order was perverse, arbitrary and capracious which, according to Mr. Shah, was highlighted by the fact that after 1964 the authorities had computed the petitioners as separate entities. Mr. Shah further urged that the revisional order had not dealt with the points in favour of the petitioner and hence should be set aside. Mr. Shah urged that the revisional authority had acted on conjecture, surmises and had based its finding on no evidence. According to Mr. Shah, the revisional authority erred in not relying upon the account books which had been accepted by the income tax authorities and instead, on relying on the material seized during the raid and on the incriminating statements of the petitioners before the excise authorities which according to Mr. Shah were extracted from the petitioners under coercion and misrepresentation. Mr. Shah relied on the authority of the Supreme Court in Omar Salay Mohemed Sait v. Commr. of Inc. Tax, (1959) 37 I.T.R. 151, where it was held that on no account should the Tribunal base its findings on suspicions, conjectures and surmises nor should it act on no evidence at all or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rissa High Court in Jami Narasaya Prusty Brothers v. State of Orissa, (1958), 9 S.T.C. 648, where it was held that errors apparent on the face of the record would be a ground for interference in exercise of writ jurisdiction. 10. There can possibly be no quarrel with any of the ratios propounded by these cases relied on by Mr Shah. However, what must be considered is whether any of these ratios apply to the facts and circumstances of the matter before me. The answer is an unhesitating negative. 11. Amongst the documents, books and papers seized in the raid on 21st December, 1964, were certain loose sheets containing figures and calculations which was one of the aspects taken into consideration by the revisional authority in holding that the various units of the petitioners were in fact one unit leaving little room for doubt that all the looms were in fact being operated jointly and that the so-called separate factories was merely a facade in order to derive full benefit of the concessional rates of excise duty admissible for small units and hence the units should be assessed to excise duty as one unit. It was on these loose sheets of papers that Mr. Shah concentrated the majo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are figures showing fixed salaries, wages and partners' compensation. 13. Regarding the third sheet (Ex. C to the petition), Mr. Shah urged that the reference therein only to 24 looms was incorrect as there were in fact 35 running looms in 1961 and 31 to 33 looms after 1961. It may be noted that in this sheet also appear figures showing the fixed salaries, wages and partners' compensation. Coming to the fourth sheet (Ex. D to the petition), Mr. Shah urged that the building which was shown in this sheet at a value of Rs. 83,820, belonged only to the 1st petitioner. Pausing here for a moment, it may be mentioned that in this statement the amounts in the partners account, has been shown by initials, viz. H.R., R.G., D.R., D.R., the middle two being the initials of petitioners 2 and 3. These amounts are shown to the very paise as also sales to various parties. For instance, a sale to Randhir Bros. has been shown at Rs. 13,518.83, to Canara Bank Ltd. at Rs. 9020.63, to the Khatau Mills (D.W.F.) at Rs. 1297.52, to Khatau Mills (K.T.) at Rs. 5311.05, to one J.B. Contractor at Rs. 5698.35 and to one Maganlal Dalichand at Rs 1284.62. The exactness of these figures as also those of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssional rates of excise duty admissible for small units." (The underlining is mine.) 15. These findings of the revisional authority based on the material before it, demonstrably bring to the forefront that all the factors urged by the petitioners and all the arguments placed by them before the revisional authority, were taken into consideration and that after analysing and sifting the material on record and the submissions made by the petitioners, it came to the conclusion that the petitioners had operated the looms as one unit and that the petitioners' version of their being separate and distinct units was a myth or in the words of the revisional authority, ``a-facade" with the object of deriving full benefit of concessional rates of duties which otherwise the petitioners would not be entitled to as one unit. There is nothing in this revisional order which discloses any non-application of mind, much less any perversity as suggested by Mr. Shah. It is on the evaluation of the entire evidence and the material before it that the revisional authority came to the conclusion it did. Mr. Shah's contention that the revisional authority should not have ignored the books of account acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mr. Shah's grievance that the revisional authority ignored not less than 17 points in the petitioners' favour is also without substance. In the memorandum of appeal filed before the revisional authority, the petitioners had detailed 17 points in their favour, namely, "(1) shed at Udyognagar partitioned into 5 separate parts, (2) rent paid to C.C. Industries separately, (3) separate electric meters, (4) paid pirn winding charges separately, (5) obtained separate permits from T.C, (6) obtained separate Tax marks, (7) obtained separate C. Ex. licences, (8) Excise duty on loom basis paid separately, (9) separate banking accounts, (10) separate books of accounts (11) purchased machinery, stores, yarn etc., separately, (12) sold cloth separately on separate bills and issued separate receipts, (13) separate Sales Tax numbers, (14) engaged labour separately and paid wages separately, (15) assessed separately by income tax, (16) each invested his own capital in his business, and (17) there was no inter-transfer of cloth". Mr. Shah urged that there was nothing whatsoever in the revisional order which indicated that these 17 points or any of them had been taken into consideration by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en taken in the arguments there is nothing in the revisional order which indicates that it had been considered by the revisional authority nor has any reason been given by the revisional authority for rejecting it. There is no merit in this ground of challenge. Reading the revisional order as a whole, it is clear that it is not solely on the petitioners inculpatory admissions that the revisional authority found against the petitioners. The revisional order brings to the forefront that these inculpatory admissions made by the petitioners in their signed statements were merely an added circumstance taken into consideration by the revisional authority. These statements merely corroborate the material seized during the raid and the totality of the evidence against the petitioners, on the basis whereof the revisional authority found against the petitioners, and not merely on the basis of those statements alone. 19. Mr. Shah's contention that the perversity of the impugned order is disclosed by the fact that after 1964 the petitioners were considered as separate units, is also without substance. There is on record an order dated 3rd/4th October, 1967 passed by the Assistant Collector w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules, namely, Rules 2A(a) (b), Rule 2(11), Rule 4, and Rules 43 and 44 of the Central Excise Rules. It is unnecessary to advert at any length to these rules for the simple reason that the raid having taken place in Bombay from where the incriminating material, viz., documents, papers, etc., were seized from the residence of the 2nd petitioner at Marine Drive and Head Office of the Ist petitioner at Hanuman Street, and the evasion of duty having been detected in Bombay, the Officer on Special Duty of the Bombay Collectorate was competent to hold the enquiry and pass his order. 21. The next ground urged by Mr. Shah was of limitation. He urged that the assessment had become barred by reason of the provisions of Rule 10 of the Central Excise Rules. Rule 10 provides for recovery of duties or charges short-levied or erroneously refunded and reads as under : "When duties or charges have been short-levied through inadvertence, error, collusion or mis-construction on the part of an officer or through mis-statement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied, has been owing to any such cause, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the decision of the Division Bench of the Madhya Pradesh High Court in Universal Cables v. Union of India, 1977 Tax. L.R. 1825, where it was held that the expression "other legal proceeding" in the context of Section 40(2) bears a restrictive meaning conveying the idea of judicial proceeding taken in a Court of law and does not cover proceedings before the departmental authorities. At page 1838 of the Report, it is observed as under :- "...`Other legal Proceeding' is ordinarily wide enough to include any proceeding taken in accordance with law, whether so taken in a Court of law or before any authority or tribunal. The question, however, is whether in the context of Section 40(2) this wide meaning should be given to the said expression. Now the language of Section 40(2) is : 'no suit, prosecution or other legal proceeding shall be instituted'. 'Suit' and `prosecution' which precede the expression `other legal proceeding' can be taken only in a Court of law. `Suit' and 'prosecution' belong to a class or category of legal proceeding which can be described as judicial proceedings or proceedings taken in a Court of law. This class or category is not exhausted by `suit' and `pros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision in Abdul Aziz Ansari v. State of Bombay, AIR 1958 Bombay 279, where it was held that the phraseology 'any legal proceeding' in Section 48(2)(ii) of the Sales Tax Act, 1953 was not confined merely to proceedings in a Court of Law, and would mean in its normal connotation, a proceeding in accordance with law and that assessment proceedings under the Sales Tax Act were such proceedings. This decision can be of no assistance to the petitioners in view of the fact that the phraseology of Section 48(2)(ii) of the Sales Tax Act is entirely different from the phraseology of Section 40(2) of the Central Excise Act. While in Section 40 (2) of the Central Excise Act, the words "other legal proceeding" are succeeded by the words "any suit, prosecution or" and hence must be read ejusdem generis in their plain context, no such construction is permissible in respect of Section 48(2) (ii) of the Sales Tax Act which reads as under :- "Notwithstanding the repeal of the said Act and the said entries, the said repeal shall not affect or be deemed to affect - **** (ii) any legal proceeding pending on the 1st day of November, 1952 in respect of any right, title, obligation or liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
