TaxTMI 
TaxTMI 
2024 (5) TMI 1
X X X X Extracts X X X X
X X X X Extracts X X X X
....gulations, 2011 (hereinafter referred to as "2011 Regulations"). 2. The facts, in brief, leading to the filing of the instant writ petition are as under: i. The proceedings were initiated against Petitioner No. 1/Company and Petitioners Nos. 2, 3 and 4, who were directors of the Petitioner No. 1/Company under the Competition Act, 2002 (hereinafter referred to as "2002 Act"). Inquiry was conducted and the Respondent/CCI vide Order dated 30.08.2018 directed the Petitioner No. 1 and their directors and employees identified in the proceedings to cease and desist from indulging into any act of cartelisation in the Dry Cell Batteries market in India. The Respondent/CCI also held that penalties will be imposed on the Petitioners, under Section 27(b) of the 2002 Act. Penalty of Rs. 9,64,06,682/- was imposed on Petitioner No. 1, Rs. 1,29,839 was imposed on Petitioner No. 2, Rs. 1,10,386/- was imposed on Petitioner No. 3 and Rs. 2,40,452 was imposed on Petitioner No. 4. The penalties were to be deposited within a period of 60 days of the receipt of the Order. The said Order dated 30.08.2018 was challenged by the Petitioners by filing Competition appeals being No. 88/2018 etc. bef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Form-I appended to the regulations has to be served on the enterprise through the Recovery Officer after the expiry of the period specified in the Order of penalty expires. He further contends that Regulation 3(2) of the 2011 Regulations provides that demand notice as set out in Form-I appended to the Regulations shall provide a time of 30 days from the date of service of the demand notice to the enterprise concerned to deposit the penalty in the manner specified in the said notice. He states that Regulation 3(3) of the 2011 Regulations provides that upon receipt of demand notice, the enterprise has to pay the penalty through challan as set out in Form-II appended to the Regulations, in favour of Pay & Accounts Officer (PAO), Ministry of Corporate Affairs. He states that unless the said procedure is followed, interest on penalty amount, as specified in Regulation 5 of the 2011 Regulations, cannot be imposed. 5. Learned Senior Counsel for the Petitioners also draws attention of this Court towards the analogous provisions of the Income Tax Act, 1961 regarding levy of interest on delay in payment of penalty. He more particularly draws attention of this Court to Sections 156 and 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y simple interest @ 1.5% for every month or part of a month comprised in the period commencing from the day immediately after the expiry of the period mentioned in demand notice and ending with the day on which the penalty is paid. She states that penalty imposed by the Respondent/CCI was crystallised and brought to the knowledge of the persons against whom the penalty was ordered to be paid. She, therefore, states that there is no necessity of giving a demand notice first directing the persons against whom the penalty has been imposed. She states that issuance of demand notice is only a Ministerial Order and it can have no effect on the obligation of the persons against whom the penalty is imposed to pay the amount of penalty within the time stipulated and the delay in payment of penalty would automatically attract interest. 10. Learned Counsel for the Respondent/CCI further contends that the analogy drawn by the learned Senior Counsel for the Petitioners between the procedure laid down in the Income Tax Act and the 2011 Regulations is unsustainable for the reason that under the Income Tax Act, when notice of demand is issued, the demand is raised after assessment. She states t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the order of imposition of penalty by the Commission at its last address known to the Commission and in the case of a joint account to all the joint holders of such account at their last addresses known to the Commission. (2) A demand notice issued under sub-regulation (1) shall provide a time of thirty days from the date of service of the demand notice to the enterprise concerned to deposit the penalty in the manner specified in the said notice: Provided that where the Commission has any reason to believe that it will be detrimental if the full period of thirty days aforesaid is allowed, it may direct the enterprise concerned that the sum specified in the demand notice shall be paid within such period being a period less than the period of thirty days aforesaid, as may be specified by the Commission in the demand notice. (3) Upon receipt of demand notice the enterprise shall pay the penalty, through challan as set out in Form II appended to these regulations, in favour of Pay & Accounts Officer (PAO), Ministry of Corporate Affairs, Head No. 1475.00.105.05, Sub-Head-05 - 'Penalties imposed by Competition Commission of India'. (4) One copy of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
...." xxx "THE COMPETITION COMMISSION OF INDIA FORM I (See regulation 3) DEMAND NOTICE [Under The Competition Act, 2002 (12 of 2003)] To .................................. .................................. .................................. Subject: Notice of demand for the recovery of penalty imposed u/s..............of the Competition Act, 2002 (12 of 2003) - regarding. WHEREAS vide order dated ....................... in the matter of ............................................................(case No. ...........) the Competition Commission of India (the Commission) has imposed a penalty of Rs................(Rupees.......................) on............................. (Name of the concerned enterprise) having its office at (address) and having......................... PAN number under section(s)..................... of the Competition Act, 2002 (12 of 2003) (the Act); and WHEREAS a copy of the said order was duly served upon you on (date); and in terms of the above mentioned order, the penalty of Rs. ................(Rupees. ...............) was payable on (date); and WHEREAS y....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id stipulation was introduced in Form-I on 25.06.2014. The specific insertion of the said clause intimating that the interest is due and payable on failure to pay the amount of penalty read with the mandatory provision of Regulation 3(1) of the 2011 Regulations makes it clear that unless and until a person, against whom a penalty has been imposed, is informed by giving a notice in Form-I appended to the Regulations, interest is not leviable. 15. Regulation 3(2) of the 2011 Regulations provides that a demand notice under sub-regulation (1) shall provide a time of 30 days from the date of service of the demand notice to the enterprise concerned to deposit the penalty in the manner specified in the said notice. The same is reflected in Form-I which stipulates the date within which the amount has to be paid and it further stipulates that in case of failure to deposit the amount of penalty within the time stipulated, interest is chargeable. 16. It is pertinent to mention that the amount of interest which is stipulated in the notice is the amount that is stipulated in Regulation 5 of the 2011 Regulations. Regulation 5 also specifically states that if the amount specified in the dem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s are not maintainable in law and are invalid and the same along with the recovery certificates are liable to be quashed. 18. In Ram Swarup Gupta v. Behari Lal Baldeo Prasad [(1974) 95 ITR 339 (All) (DB)] a Division Bench of the Allahabad High Court referred to the effect of the Taxation Laws (CVRP) Act, 1964 on the law laid down by this Court in Seghu Buchiah Setty case [(1964) 52 ITR 538 : AIR 1964 SC 1473] and held: (ITR p. 342) "The effect of these provisions is to dispense with the need of issuing a fresh notice of demand and the recovery certificate and to allow the original recovery proceedings to continue, but only for the amount found due after reduction in the appeal, and it is for this purpose that the taxing authority is required to send intimation of the fact of the reduction to the assessee and to the Tax Recovery Officer. As the proceedings for recovery can be continued only for the amount that finally remains due, and not for any amount in excess thereof, the requirement of sending intimation to the Tax Recovery Officer becomes an essential duty of the taxing authority and must be held to be a mandatory condition. Non-compliance of that condition w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was held that the liability to pay penal interest did not arise. It is necessary to emphasise that this is not a case of payment of interest at the ordinary statutory rate but a case of penal interest and it is, therefore, that the Act provides that the liability to pay the same arises only after there has been a failure to comply with the provisions of a notice in that behalf." 19. The Apex Court in Mumbai Agricultural Produce Market Committee v. Hindustan Lever Ltd., (2008) 5 SCC 575 has observed as under: "20. So far as the question of payment of interest is concerned, it must be referable to the statute. When the statute controls the levy, the interest payable thereupon, as envisaged thereunder must also govern the field. The general principle of restitution may not apply in this case." 20. The Apex Court in Steel Authority of India Limited v. Commissioner of Central Excise, Raipur (2019) 6 SCC 693 has observed as under: "26. In short, therefore, the principle may be taken to be established that while levy of interest is a part of the adjective law, yet to levy interest there must be substantive provision. Demand for interest can be made only if the leg....