2018 (2) TMI 1442 - HC - Central Excise

Court sets aside show cause notices, ruling for petitioners. Clarity in tax rate publication crucial.

Bharat Vijay Mills And 1 Versus Union of India And 2

Bharat Vijay Mills And 1 Versus Union of India And 2 - 2018 (14) G. S. T. L. 327 (Guj.) Issues Involved:1. Challenge to corrigenda issued by the Government of India.2. Legality of show cause notices issued by the Deputy Commissioner of Central Excise.3. Determination of the correct rate of duty for processed and unprocessed fabrics.4. Retrospective application of corrigenda.5. Compliance with publication requirements for notifications and corrigenda.Issue-Wise Detailed Analysis:1. Challenge to Corrigenda Issued by the Government of India:The petitioners challenged the corrigenda dated 15th January 1997 and 21st September 2000, issued by the Government of India, which corrected printing errors in the Finance Act of 1996. The corrigenda aimed to specify that the basic rate of duty for both processed and unprocessed fabrics would be 12%, contrary to the 10% printed in the official Gazette. The petitioners argued that these corrigenda were not made available to the public and contained further errors, failing to clarify the correct duty rates.2. Legality of Show Cause Notices Issued by the Deputy Commissioner of Central Excise:The petitioners also contested a series of show cause notices issued between November 1996 and February 1999, demanding additional excise duty based on the corrected rates. The notices claimed a short levy of duty amounting to Rs. 10,25,625 due to the petitioners paying 10% instead of 12%. The petitioners contended that they had collected and paid the duty as per the official Gazette, which stated a 10% rate, and the corrigenda were not properly communicated to them.3. Determination of the Correct Rate of Duty for Processed and Unprocessed Fabrics:The court examined the legislative process and found that the Parliament intended to revise the basic rate of duty to 12% for both types of fabrics. However, due to printing errors, the official Gazette incorrectly published the rate as 10%. The Government's affidavits confirmed that the correct rates were 12% for basic duty on both processed and unprocessed fabrics, with additional duty rates of 8% for processed fabrics and nil for unprocessed fabrics.4. Retrospective Application of Corrigenda:The court held that the corrigenda issued in 2000 could not be applied retrospectively to correct the errors from 1996. The petitioners had relied on the published rates and managed their affairs accordingly. The court emphasized that the public must be informed of tax rates through official publications, and retrospective corrections without proper notification would breach the principle of fair tax collection.5. Compliance with Publication Requirements for Notifications and Corrigenda:The court noted that the corrigendum dated 15th January 1997 was part of an unrelated ordinance and contained errors, failing to effectively communicate the correct duty rates. The subsequent corrigendum in 2000, which correctly identified the errors, came too late to be applied retrospectively. The court cited precedents emphasizing the importance of publishing notifications in the Official Gazette to ensure public awareness and compliance.Conclusion:The court set aside the show cause notices, ruling in favor of the petitioners. It concluded that the petitioners could not be held liable for the additional duty based on corrigenda that were not properly published or communicated. The judgment underscored the necessity of clear and timely publication of tax rates to ensure fair administration and compliance.