TaxTMI 
TaxTMI 
1980 (7) TMI 258
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....ble to pay to the State of Rajasthan excise duty on the stock of manufactured cloth lying in the Mills on April 1, 1949 and also on the cloth manufactured during the period from April 1, 1949 to March 31, 1950, at the rates set forth in the Schedule to the Ordinance. It is averred that the total amount, which became payable on account of the excise duty under the Ordinance for the said period, works out to Rs. 2,14,520/- but nothing was paid by the defendant to the State of Rajasthan. The plaintiff goes on to state that under Articles 278 and 295 of the Constitution of India, the President of India entered into an agreement with the then Raj Pramukh of Rajasthan on February 25, 1950, whereby the parties agreed to accept the recommendations of the Indian States Finance Enquiry Committee 1948-49, contained in Part I of its report read with Chapters I, II, III of Part II of its report, in so far as they applied to the State of Rajasthan together with the recommendations contained in Chapter V of Part II of the said report. It is alleged that by virtue of the said agreement, the Union of India became entitled to recover the excise duty which was payable by the defendant to the State of....
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....e ground that the Superintendent had no authority to issue a notice of demand he was not an officer under the Ordinance under which the duty was sought to be levied and collected. The defendant also challenged the jurisdiction of the civil court to try and decide the suit. Bar of limitation was also pleaded. Besides the above mentioned objections, the defendant pleaded that the plaint was not properly signed, verified and presented. 4. The plaintiff filed an additional written statement on January 7, 1976, and on the pleadings of the parties, the trial Court framed the following issues on March 11, 1967 :- (1) Is the plaintiff entitled to duty on 13455678 yards instead of on 1340589 yards as admitted by the defendant today and also on 273600 yards instead of on 228000 yards, as admitted by the defendant to-day? (2) Was excise duty payable to the State of Rajasthan? (3) Is the plaintiff entitled to recover that excise duty for reasons given in para 4 of the plaint? (4) Is the suit not triable by a civil court for reasons given in para 14 of the written statement ? (5) Is the suit barred by time ? (6) (A) Was the person signing ....
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....in limitation under Article 112 of the Limitation Act, which prescribes a period of 30 years; 6. That the plaint was signed and verified by a duly authorised person and was also presented by an authorised person in accordance with law. 7. That the excise duty could be levied retrospectively and the same can be recovered by a suit; and 8. That assessment of excise duty was duly made and the duty was demanded according to law by the Central Excise Officer by notice of demand Ex. 2 and this was enough compliance with the provisions of law. 7. As a result of the aforesaid findings, the learned District Judge decreed the plaintiff's suit for Rs. 2,14,520/-, on account of the excise duty in question and further directed that the plaintiff shall get interest at 6% on the decretal amount from the date of the suit till realisation. 8. The learned Counsel for the appellant has reiterated practically all the objections which the defendant had taken in the trial court. At the commencement of his arguments, he contended that the Ordinance was promulgated on September 5, 1949, but the duty has been levied retrospectively with effect from April 1, 1949. Exc....
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....sted by the Government with the powers of an Excise Officer under this Ordinance;" "Section 3. - Duties specified in the First Schedule to be levied, - (1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods which are produced or manufactured in Rajasthan whether in stock on the first day of April 1, 1949, or thereafter produced or manufactured, and at the rates set forth in the First Schedule. (2) ...    ...    ...    .... (3) ...    ...    ...    ...." "Section 10. Recovery of sums due to Government - In respect of duty and any other sums of any kind payable to the Government under any of the provision of this Ordinance or of the Rule s made thereunder, the officer empowered by the Government to levy such duty or require the payment of such sums may deduct the amount so payable for 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 recover the amount by attachment and sale of excisab....
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....pervise the carrying out of regulations made under this Ordinance and prescribe the scale of such accommodation; (viii) provide for the appointment, licensing, management and supervision of bonded warehouses and the procedure to be followed in entering goods into and clearing goods from such warehouses; (ix) provide for the distinguishing of goods which have been manufactured under licence of materials which have been imported under licence and of goods on which duty has been paid, or which are exempt from duty under this Ordinance; (x) so far as such imposition is essential for the proper levy and collection of duties imposed by this Ordinance, impose on persons engaged in the production or manufacture, storage or sale (whether on their own account or as brokers or commission agents) of excisable goods, their duty of furnishing information, keeping records and making returns, and prescribe the nature of such information and the form of such record and returns, the particulars to be contained therein; and the manner in which they shall be verified; (xi) require that excisable goods shall not be sold or offered or kept for sale in the United States except in prescribed c....
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.... be instituted for anything done or ordered to be done under this Ordinance after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of." "30. Repeal and, savings. - All laws dealing with matters covered by this Ordinance, in force at the commencement thereof in any part of Rajasthan are hereby repealed; But any duty levied, assessment made, thing done or action taken under or in pursuance of any such law hereby repealed shall, unless otherwise provided by or under this Ordinance, be valid and be deemed to have been levied, made, done or taken, as the case may be, under or in pursuance of this Ordinance as if it were then in force." "31, Interpretation. - The provision of the General Clauses Act, 1897, of the Central Legislature shall mutatis mutandis apply so far as it may be, to the interpretation of this Ordinance in the same manner as they apply to the interpretation of a Central Act of the Indian Legislature." 10. It is worthy of note that no Rule s were framed under the Ordinance. However, by notification dated September 15, 1949, issued under section 5 read with section 26 of the Ordinance, th....
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....r to cover the duty due on the goods intended to be removed from the place of production, manufacture or storage." "10. Recovery of duty short-levied, or erroneously refunded. - When duty has been short-levied through inadvertence, error, collusion or misconstruction 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; after having been levied, has been, owing to any such cause, erroneously refunded, the person chargeable with the duty so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or repay the amount paid to him in excess, as the case may be, on written demand being made within three months from the date on which the duty was paid or adjusted in the owner's account-current, if any or from the date of making the refund." "11. No refund of charges erroneously levied or paid, unless claimed within three months. - No duty which has been paid, or has been adjusted in an account-current maintained with the Commissioner under Rule 9, and of which the repayment wholly or in part is claimed in consequence of the same having been paid thro....
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....of the Ordinance. It has also been urged by him that it must be presumed, in the facts and circumstances of the case, that the Jaipur Rules were duly published, as required under the Jaipur Act and it was not necessary to publish the same in extension over again under the Ordinance. In this connection strong reliance has been placed on Union of India v. Maharaja Kishangarh Mills Ltd. (supra). It has also been urged that the excise duty in the present case became a debt for which the Union of India can file a civil suit. 13. We shall first take up the question of maintainability of the suit. The learned Counsel for the appellant has contended that the Ordinance itself provides for remedies for adjudication of the disputes and the method for recovery of- the tax and therefore the jurisdiction of the civil court is barred. In support of his contention, he has relied on Venkataraman and Co. v. State of Madras, State of Kerala v. Ramaswami Iyer and Sons, Premier Automobiles v. K.S. Wadke, and Union of India v. Elgin Mills Co.. We have gone through all these authorities and are of opinion that the principle of law laid down therein has no application to the facts and the circumst....
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....t, collection and refund of the tax and for the purpose of making assessment of the tax, the authorities have power to decide all questions arising before them and the orders of the appellate authorities, subject to the exercise of the revisional jurisdiction, are declared final. It was further observed that liability to pay tax arises by virtue of the provisions and the quantum of the liability may be determined under the Act alone. The jurisdiction of the Civil Court in these matters was therefore impliedly barred by the scheme of the Act. 16. In Premier Atomobiles v. K.S. Wadke, it was held with reference to the provisions of the Industrial Disputes Act, 1947, that what the Union sought to challenge by the institution of a suit was the termination of the award and it was clear that the suit was in relation to the enforcement of a right created under the Act. Consequently, the Supreme Court observed that the remedy in Civil Court was barred and the only remedy available to the workmen was the raising of an industrial dispute which was actually raised shortly after the institution of the suit. 17. In Union of India v. Elgin Mills Co., it was held that the Central E....
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....e notice to all the parties interested in the fund is given. On these aspects, however, we do not propose to express any views. As already observed, after an assessment to made upon the assessee quantifying the tax due from him and a demand for the payment thereof is issued within the period specified therein, it creates a debt payable by the assessee in favour of the State. It is well established that once a debt is created, the State has the right to recover it by any of the modes open to it under the general law unless as a matter of policy only a specific mode for the exclusion of any other is prescribed by the law. No such prohibition is enacted in S. 32 of the Act." (Underlining is ours) It may be mentioned here that their Lordships expressed their agreement with the view taken in Inder Chand v. Secretary of State, wherein the Patna High Court had held that a suit was maintainable by the Crown for recovery of the income-tax dues against the assessee and also in Chaganti Raghva Reddy v. State, <$FA.I.R. 1959 A.P. 631. AIR 1959 A.P. 631 wherein a similar view was taken. Their Lordships went on to observe that in principle as will as in the consistent views of the High Courts....
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....sp; etc. 91200 lbs. 273600 yds. 1 lb. weight @/- 3 per yd. being taken equal to 3 yds.) 4,275.00 Total 2,14,520.00 Less amount paid to Rajasthan Government Nil Net payable amount (Rupees two lacs fourteen thousand five hundred five hundred and twenty only) Rs. 2,14,520.00 sd/- 7-2-51 Superintendent Central Excise : Jodhpur C. No. IV(a) 8 (13) 50/9, Dated 7-2-1951 Copy forwarded to the Inspector of Central Excise Incharge the Maharaja Shri Umaid Mills Ltd., Pali (Marwar) for information. He should countersign the treasury challan forms if presented by the Mills. The amount is creditable to the usual head of account `II - Union Excise Duties - Duty on cloth'. Copy submitted to the Deputy Collector/Asstt. Collector of Central Excise, Ajmer/Jodhpur, for favour of information.                             &....
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....t foreseen by the framers of the Act or the Rules. If the assessee disputes the correctness of the demand an assessment becomes necessary to protect the interests of the assessee. A case like the one before us falls more properly within the residuary class of unforeseen cases. We think that, from the provisions of section 4 of the Act read with Rule 10A, an implied power to carry out or complete an assessment, not specifically provided for by the Rule s, can be inferred. " 26. Now, in the present case, the goods had already been cleared before any proceedings, for collecting the tax, were taken. It may be recalled that the Rajasthan Excise Duties Ordinance 1949, was issued on September 5, 1949, whereas the duty was levied on the stock of goods on the 1st day of April, 1949. It is also clear from the facts narrated in the earlier part of this judgment that the Union of India became entitled to recover the duty in question which the State of Rajasthan was entitled to recover by virtue of an agreement entered into between the President of India and the Raj Pramukh of Rajasthan on February 25, 1950, whereby the parties agreed to accept the recommendations of the Indian States F....
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....the Departments concerned. The Centre must also take over all current outstandings (including pending assessments, refunds and arrears), liabilities, claims etc. and all productive and unproductive capital assets connected with these Departments." 27. However, the main attack of the learned Counsel for the appellant in this connection is that the tax in question did not become due to the State of Rajasthan from the Mills under the Ordinance and hence the Central Government also could not recover the tax. It has been argued that the excise duty in dispute does not fall within the ambit of the term `current outstandings' (including pending assessments, refunds and arrears) liabilities, claims etc., so as to give rise to a right of suit to the Union of India. 28. It is important to note that with effect from the prescribed date it has been provided in the agreement that the Centre will take over all federal sources of revenue and all federal items of expenditure in State together with administration of the Departments concerned. That clearly means that excise duty which was federal source of revenue was taken over by the Centre. It has been made further clear in the ag....
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....he charging sections. Section 22 etc. are the machinery sections to determine the amount of tax." Lord Dunedin in Whitney v. Inland Revenue Commissioners, stated the position in law as follows :- "Now, there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next there is the assessment. Liability does not depend on assessment, that ex-hypothesis has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery if the person taxed does not voluntarily pay." 31. In Cockerline and Co. v. Inland Revenue Commissioners, at page 19, Lord Hanworth, M.R., after quoting the passage from Lord Dunedin's judgment, reproduced above, observed as follows : - "Lord Dunedin, speaking, of course, with accuracy as to these taxes was not unmindful of the fact that it is the duty of the subject to whom a notice ....... is given to render a return in order to enable the crown to make an assessment upon him, but the charge is made in consequence of the Act upon the subject the assess....
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....all be levied and collected in such manner as may be prescribed duties of excise......" `prescribed' means prescribed by Rule s under the Act. An examination of the Rule s under Central Excises Act, 1944 reveals that apart from Rule 10 or Rule 160, there is no power or authority to collect the duty in respect of excisable goods which have already been removed from the warehouse. Neither Rule 10 nor Rule 160 prescribes the mode of collecting duty in respect of such goods." The learned Judges further observed, - "There is no Rule at all to cover a case of the kind created by sub-section (2) of section 7 under which the Union Government is empowered to collect duties which have not been collected but which would have been collected even after the goods have been cleared and removed from the warehouse. The Collector or the Central Excise Officers are empowered to exercise powers conferred by the Rule s and if the Rule s have not provided, as to cover a case of this kind they cannot proceed to collect a tax, though it has been properly levied and is payable to the Government." It may be pointed out that Rule 10 referred to by the learned Judges of the Nagpur High Court did not ....
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....cede assessment nor lay down the need to pass an assessment order. All we can say is that Rule s of natural justice have to be observed for, as was held by this court in K.T.M. Nair v. State of Kerala, 1961 (3) SCR 77 at p. 54 (AIR 1961 SC 552) `the assessment of a tax on person or property is at least of a quasi-judicial character." "20. The term `levy' appears to us to be wider in its import than the term `assessment'. It may include both `imposition' of a tax as well as assessment. The term `imposition' is generally used for the levy of a tax or duty by legislative provisions indicating the subject matter of the tax and the rates at which it has to be taxed. The term `assessment' on the other hand, is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the object of the tax in a particular case and determining its amount. The Division Bench appeared to equate `levy' with an `assessment' as well as with the collection of a tax when it held that `when the payment of tax is enforced, there is a levy'. We think that although the connotation of the term `levy' seems wider....
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....p. Societies, Trivendrunm and another, Ratan chand and others v. Panchayat Samiti, Sojat and others, and Orient Paper Mills Ltd. v. Deputy Collector, Central Excise and others. We do not consider it necessary to discuss the facts and principle of law laid down in these authorities, as, in our opinion, it is trite that a party, to whose prejudice an order is intended to be passed, is entitled to a hearing. These Rule s apply equally to judicial tribunals and bodies of persons invested with authorities to adjudicate upon the matters involving civil consequences. If there is power to decide and determine to the prejudice of a personal, duty to act judicially is implicit in the exercise of such powers. This is of course a basic concept of the Rule of law. But, in the present case, we are of opinion that there has been no violation of principles of natural justice. The duty has been calculated on the date supplied by the Mill itself and no prejudice whatsoever has been caused to the Mills in calculating the duty. The goods, as already noticed, had been cleared away and the assessee himself submitted a statement of the goods only with one objection viz, that in case offends and seconds c....
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........... ................................... Take notice that on behalf of the Government of Jaipur, I hereby demand payment by you of the sum of Rs...........................(Rupees.............) being the excise duty on the under mentioned........................weighed in my presence this day. This sum must be paid into............... Treasury within ten days from the date of chis demand and on production of the Treasury receipt you may apply to me for a permit to remove the goods for sale of manufacture. Assessment particulars : Quantity of...................Lbs. No. of packages................... Variety........................... Tariff classification............. Rate of duty..................... ...........................Customs and Excise Deptt. Receipt Receipt the sum of Rs............................................. (Rupees..........................................................." ...................Signature ............Treasury No....................... .......................19." A perusul of Ex. 2, demand notice, would show that it contains all the necessary particulars of assessment. It further appears to us t....
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....ed by section 27 of the Jaipur Act and consequently, they did not become law. In this connection, he has invited our attention to section 27 of the Jaipur Act which provides that all Rules made and notifications issued under this Act, shall be made and issued by publication in the Jaipur Gazette and thereupon all such Rules and Notifications shall have effect as if enacted in this Act. Learned Counsel has also referred to section 28 of the Ordinance, which is in the same terms as section 27 of the Jaipur Act. He has also urged that under section 30 of the Ordinance, Jaipur Rules stood repealed. In our opinion, none of these contentions has any force. In the first place, it would be reasonable to presume under section 114 of the Evidence Act after passage of such a long time and section 114, illustration (e) provides that the Court may presume that an official act has been regularly performed and that Jaipur Rules must have been duly published as required by section 27 of the Act. We are further of opinion that it was not necessary to publish them over again, in extension, under section 28 of the Ordinance. A Notification had been issued in the Rajasthan Gazette, Part IV, dated Marg....
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.... as neither the assessment nor the demand of duty could be made within the four corners of the Rules, and therefore assuming for argument's sake, that the Rules were not published and thereby did not become a part of the statute, it does not affect the recovery of the tax in question by suit. 41. Learned Counsel for the appellant also urged that the plaintiff did not allege in the plaint that the assessment had been made and it was for the first time that in the rejoinder, the plea was taken that the duty had been assesed. We may observe straightaway that we are not impressed by this contention. In paras 2, 3 and 5 of the plaint, it has been clearly averred that the liability to tax was quantified at Rs. 2,14,520/- and there is also reference to that effect in the notice of demand Ex. 2, which contains particulars of assessment. 42. Learned Counsel has also urged that there is provision for an appeal under section 24 of the Ordinance and also for revision in section 25. He submits that if a regular assessment order had been passed, the Mill would have gone in appeal against the assessment order, but since no assessment order in the eye of law was passed, the defenda....
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.... officer, authority, tribunal or Court is, the decision of the Central Government thereon shall be final : Provided further that where under any such law, tax is chargeable on the total income including agricultural income, the assessment shall be made by the corresponding officer or authority referred to in the preceding proviso only in respect of income other than agricultural income and the tax payable on such income shall be an amount bearing to the total amount of tax which would have been payable under the State law if a combined assessment had been made, the same proportion as such income bears to the total income including the agricultural income, so however that for this purpose any reduction of tax allowed on the agricultural income by the State law shall not be taken into account. (2) If immediately before the 1st day of April, 1950, there is in force in any State other than Jammu and Kashmir a law corresponding to, but other than, an Act referred to in sub-section (1) or (2) of section 11, such law is hereby repealed with effect from the said date; and if immediately before the said date there is in force in the State of Jammu and Kashmir a law corresponding to th....
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....he liabilities which had devolved upon the Central Government by virtue of the agreement entered into between the President and the Rajpramukh on February 25, 1950, referred to above. We have no doubt in our minds that after the transfer of the department from the State Government to the Central Government, the `proper officers' would be the officers of the Central Government within whose jurisdiction the defendant Mills was situated. It may be pertinent to point out that in Union of India v. Maharaja Kishangarh Mills Ltd. the notice of demand was served by the Superintendent of the Central Excise but the notice was not held to be invalid on the ground that it had been issued by an unauthorized person. 45. Reliance has also been placed on section 6 of the General Clauses Act, which is applicable to the Ordinance by virtue of S. 31 of the Ordinance, which provides, inter alia, that repeal of an enactment shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed, nor shall affect any investigation or legal proceeding in respect of any such right, privilege, obligation, liability, penalty or punishment. In supp....
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....s of assessment. At any rate, there is no prohibition against making an assessment after the goods have been cleared. It is also pertinent to note that the second proviso to Rule 9 permits clearance of goods without payment of duty at the time of clearance and the account-current of the duties payable can be settled at intervals not exceeding one month. In Orient Paper Mills v. Union of India, Hidayatullah, J. as he then was, observed as follows :- "It will thus be seen that in the case of manufactured goods the payment of duty and the clearance of goods may be synchronous or the payment may be postponed although the goods may be removed." In a case like the present, the assessment of the goods already cleared is a matter separate from and independent of the question of the mode of recovery of the duty. We are, therefore, of opinion that the contention of the learned Counsel that because the goods had already been cleared, no assessment could be made cannot be accepted. 47. The next contention raised by the learned Counsel for the appellant is that the suit is barred by limitation under section 29(2) reads as under :- "No suit, prosecution, or other legal proceedin....
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....n prescribed under Art. 112 of the Limitation Act is 30 years. Thus, in agreement with the lower court, we hold that the suit is within limitation as the amount in question fall due in the year 1949 and the suit has been brought well within 30 years on September 2, 1966. 49. The next objection of the learned Counsel for the appellant is that the plaint was not properly presented and, therefore, the suit is liable to be dismissed. It may be necessary to state a few facts giving rise to this objection. The suit was presented on September 2, 1966 by Shri Narain Chand Mehta, Advocate. The Vakalatnama filed along with the plaint is in favour of Shri Than Chand Mehta as well as Shri Narain Chand Mehta, and it is signed by Shri G.N. Kale, Assistant Collector, Central Excise, Jodhpur. The objection by the defendant is that Shri Narain Chand Mehta was not appointed by the President of India or any person duly authorized in accordance with law by the Union of India in this behalf. It is conceded that Shri G.N. Kale had authority to sign and verify the plaint but he had not been authorised to act for the Government, and, therefore, cannot be deemed to be the recognized agent, by whom ....