TaxTMI 
TaxTMI 
1972 (8) TMI 45
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....Goods of Special Importance) Act of 1957. The Collector maintained an office at the factory itself for the levy and collection of tax. The Company was required to furnish quarterly consolidated price lists which used to be accepted for purposes of enabling the Company to clear its goods, but, according to the Collector, these used to be verified afterwards by obtaining evidence of actual sales in the market before issuing final certificates that the duty had been fully paid up. The particulars of the cigarettes to be cleared were furnished by the Company on forms known as A.R. I. forms required by Rule 9 of the Central Excise Rules. For facilitating collection of duty, the Company maintained a large sum of money in a current account with the Central Excise authorities who used to debit in this account the duty leviable on each stock of cigarettes allowed to be removed. This current account, known as "personal ledger account", was maintained under the third proviso to Rule 9 which lays down : 9(1)* * * Provided also that the Collector may, if he thinks fit, instead of requiring payment of duty in respect of each separate consignment of goods removed from the place ....
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....Rs. 40,726.48 as basic Central Excise duty and Rupees 16,958.50 as additional duty for short levy in respect of various brands. 3. The Company applied to the Calcutta High Court under Article 226 of the Constitution against the three notices mentioned above, one of which specifically under Rule 10-A and the other two under Rule 10 of the Central Excise Rules. A learned single Judge of that Court quashed the notices by his order of 15-2-1960 on the ground that the Company had not been given any opportunity of being heard so as to be able to meet the material collected behind its back formed the basis of the demands under the aforesaid three notices. On a joint request of both sides, the High Court did not decide the question whether notices of demand were time barred. But, the learned Judge said : "Nothing in this order will prevent the respondent from proceeding to take any step that be necessary for such assessment or for the realisation of the revenue in accordance with the law." 4. The learned Judge had also held that neither the basis adopted by the Company nor that put forward by the Collector was correct. The learned Judge pointed out the correct basis which wa....
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....ct of 3143,500 of "Carlton, Gold Seal" cigarettes. (v) from 1st January 1958 to 31st January, 1958 in respect of 1471,250 of "John peel" cigarette. (vi) from 1st January, 1958 to 16th January, 1958 in respect of 8200,000 of "Light House" cigarettes. (vii) from 1st January, 1958 to 16th January, 1968 in respect of 9070,000 <|><|>of "Gold Link" cigarettes. 8. Please note that a sum of Rs. 10,05,133.25 nP (Rupees 10 lacs, five thousand one hundred thirty-three and twenty-five naya paise only) as basic Central Excise duty and a total sum of Rupees 3,43,208.25 (Rupees three lacs, forty-three thousand, two hundred eight and twenty-five naya paise only) as additional duty had been provisionally debited in your account on the basis of the price lists supplied to us by you for the quarters. (i) beginning October, 1957 dated 17th October, 1957, (ii) beginning January, 1958 dated nil, (iii) beginning April, 1958 dated 14th April, 1958, (iv) beginning July, 1958 dated 14-7-1958, and (v) beginning October, 1958 dated nil. 2. We now propose to complete the assessments for the said periods from the evidence in our....
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....ell as the Division Bench of the Calcutta High Court said that there was not enough material on record to conclude that there was any "provisional assessment" under rule 10B (deleted on 1-8-1959 and substituted by Rule 9-B) which laid down : "10B. Provisional Assessment of Duty : (1) Notwithstanding anything contained in these rules - (a) Where the owner of any excisable goods makes and subscribed a declaration before the proper Officer to the effect that he is unable for want of full information to state precisely the real value or description of such goods in the proper Form ; or (b) Where the owner of any goods has furnished full information in regard to the real value or description of the goods, but the proper Officer requires further proof in respect thereof; or (c) Where the proper Officer deems it expedient to subject any excisable goods to any chemical or other test, the proper officer may direct that the duty leviable on such goods may, pending the production of such information are proof or pending the completion of any such test, be assessed provisionally. (2) When the owner of any goods in respect of which the duty ....
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....fused to permit an argument that the impugned notice of 24-4-1960 fell under Rule 10-A. The ground given for this refusal was that such a case was neither taken before the learned single Judge nor could be found in the grounds of appeal despite the fact that the appellant had ample opportunity of amending its memorandum of appeal. The appellant has, however, relied on a previous intimation given to the Counsel for the respondent that such a contention would be advanced at the hearing of the appeal and also on an application dated 21-3-1966 praying for permission to add the alternative ground that the impugned notice fell under Rule 10-A. We think that this refusal was erroneous for several reasons. Firstly, the Company having come to Court for a Writ of Prohibition on the ground that the impugned notice was issued without jurisdiction had necessarily to establish the case, which it set up in paragraph 25 of its Writ petition, that the notice was not authorised by the rules including' Rule 10-A. As the notice of 21-4-1960 was followed on 4-5-1960 by a correction by another notice of certain statement both the notices were assailed in paragraph 25 (ii) in the following words : ....
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.... 15. Rule 10 of the Central Excise Rules, ran as follows : "10. Recovery of duties or charges short-levied or erroneously refunded. - When duties or charges have 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 or charge, after having been levied, has been owing to any such cause, erroneously refunded, the person chargeable with the duty or charge, so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or pay the amount paid to him in excess, as the case may be, on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owners account current, if any or from the date of making the refund.'' 16. Rule 10-A read as follows: "10-A. Residuary powers for recovery of sums due to Government. - Where these rules do not make any specific provision for the collection of any duty, or of any deficiency in duty if the duty has for any reason been shor....
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....all allow the goods to be cleared. 52A. Goods to be delivered on a gate pass-(1) No excisable goods shall be delivered from a factory except under a gate pass in the proper form or in such other form as the Collector may in any particular case or class of cases prescribe signed by the owner of the factory and countersigned by the proper officer. 19. It will be noticed that in Chapter III, the term "assessment"' was used only in the former Rule 10-B corresponding to the present Rule 9-B, while dealing with provisional assessment of duty. But Rule 52 shows that an "assessment" is obligatory before every removal of manufactured goods. The rules, however, neither specify the kind of notice which should precede assessment nor lay down the need to pass an assessment order. All we can say is that rules 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. 94=(AIR 1961 SC 552) "the assessment of a tax on person or property is at least of a quasi-judicial character". 20. Section 4 of the Act lays down what would determine the value of excisable goods. But, the Act itself does not specify a procedure f....
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.... was no question of a proceeding barred by the limitation prescribed for making a demand for a short levy in certain specified circumstances. The Division Bench, while repelling this contention held : "In the present case, it appears that the procedure adopted was that the respondents issued a price list quarterly. In that price list, they gave their own estimate as to the value of the goods. For the time being, the excise authorities accepted the value so given, and gave a provisional certificate to that effect intending to check the market value and then finally determine the value later on. The procedure for issuing price list or approving the same provisionally and accepting payment therefore according to the estimate of the manufacturer, is a procedure which is not to be found either in the Act or the Rules." 22. It may be observed that this finding, that the procedure of a provisional acceptance of the Company's estimates was adopted, seems inconsistent with another finding that what took place was a final adjustment of accounts within the purview of the 3rd proviso to Rule 9, set out above, constituting a "levy" according to law. The Division Bench appears to....
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....Section 3 (1) specifically says "There shall be levied and collected in such a manner as may be prescribed the duty of excise... It is to be noted that sub-section (1) uses both the expressions "levied and collected" and that clearly shows that the expression 'levy' has not been used in the Act or the Rules as meaning actual collection." 24. We are therefore, unable to accept the view that merely because the "account current", kept under the third proviso (erroneously mentioned as second proviso by the Division Bench) to Rule 9, indicated that an accounting had taken place, there was necessarily a legally valid or complete levy. The making of debit entries was only a mode of collection of the tax. Even if payment or actual collection of tax could be spoken of as a de facto ''levy" it was only provisional and not final. It could only be clothed or invested with validity after carrying out the obligation to make an assessment to justify it. Moreover, it is the process of assessment that really determines whether the levy is short or complete. It is not a factual or presumed levy which could, in a disputed case, prove an "assessment". This has to be done by proof of....
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....ally designed "for the enforcement of the demand like the one arising in the circumstances of the case". 28. We think that Rule 10 should be confined to cases where the demand is being made for a short levy caused wholly by one of the reasons given in that rule so that an assessment has to be reopened. The findings given by the Calcutta High Court do not show that in the case before us there was either a short levy or that one of the grounds for a short levy given in R. 10 really and definitely existed. No doubt the Division Bench gave a reason for the way in which the claims became time barred in the following words: "It is quite possible, that the excise authorities, in an attempt to help the appellant by facilitating the movements of goods, inadvertently allowed the claims to be barred by limitation. That however, is not a matter which can affect the question of limitation. The bar of limitation has been imposed by Statute. The morality of the case or the conduct of the patries is therefore irrelevant unless the law provides that the court on that ground can afford relief." 29. This finding was presumably given to show that the impugned notice fell within the purv....
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....y". This amendment made on 11-10-1969, indicates that the quasi-judicial procedure, for a finding on an alleged inadvertence, error, collusion, or mis-construction by an officer, or mis-statement by the assessee as the cause of an alleged short levy resulting from as assessment can now be embarked upon and not necessarily completed within the prescribed period. We are however, concerned with the procedure before this amendment took place. At that time, it was certainly not clear whether a case would fall under Rule 10 even before the short levy or its cause was established. Furthermore, in the present case, the reason for an alleged short levy could be a change of basis of proposed assessment under instructions from higher authorities mentioned above. Even that change of basis was held by the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10A itself which as pointed out in N.R. Sanjana's case, AIR 1971 S.C. 2039 (supra), was a change in the law. One could go back still further and come to the conclusion that the real reason for the alleged short levy ....