Revenue recovery notice invalid where the wrong entity was treated as defaulter for excise dues

A revenue recovery demand notice against a state financial corporation was found unsustainable because it wrongly treated the corporation itself as the defaulter for excise dues attributable to the industrial unit. Although Section 29(5) of the State Financial Corporations Act, 1951 was noted for the limited proposition that the corporation may be deemed owner of the concern, the notice on its face exposed all corporate assets to recovery on an incorrect basis. The wider question of general liability was left undecided, but the erroneous identification of the defaulter rendered the notice illegal and liable to be quashed.

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Issues: Whether the demand notice issued under the Revenue Recovery Act could validly treat the petitioner corporation as the defaulter and proceed against its assets for excise dues admittedly referable to the industrial unit.

Analysis: The notice proceeded on the footing that the corporation itself was the defaulter, although the facts recorded showed that the industrial unit was the person in default. Section 29(5) of the State Financial Corporations Act, 1951 was referred to for the proposition that the corporation may be deemed owner of the concern for limited purposes, but the Court found it unnecessary to decide the wider question of liability in general. On the face of the notice, the incorrect description of the petitioner as the defaulter meant that not merely the unit's assets but all the assets of the corporation were being exposed to recovery proceedings. The notice was therefore unsustainable.

Conclusion: The demand notice was illegal and liable to be quashed.

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