THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY
WRIT PETITION No.5089 of 2006
O R D E R:(per Hon'ble Sri Justice P.SAM KOSHY)
Heard learned counsel appearing on behalf of Mr.Vedula Srinivas,
learned counsel for the petitioner and Mr.Dominic Fernandis, learned
Standing Counsel for the respondents. Perused the material on record.
2. The instant writ petition has been filed seeking for issuance of Writ of Mandamus declaring the paper publication dated 13.03.2006 made by the 2nd respondent, going in for publishing an auction notice for recovery of government dues from defaulters. In the said auction notice, the property of the petitioner i.e., land admeasuring of 4.88 Acres situated in Sy.No.26B, part of 361/1 and 362/1 I.D.A., Phase-I, Patancheru, Medak District, was attached.
3. The facts of the case are that the above property originally belongs to Indian Ocean Alginates Limited. The said company went into winding up vide C.P.No.28/1984. The aforesaid subject land allotted to the aforementioned company and was put to auction by Andhra Pradesh Financial Corporation. The petitioner herein being the highest bidder got the aforesaid property in the auction purchase and 2 Registered Sale Deed was executed on 20.11.1996. The petitioner was in peaceful possession and occupation of the said property for about a period of ten years. Suddenly the Impugned Paper Publication was published, putting up the said property again for auction for recovery of the government dues from defaulters. In the instant case, the defaulter is said to be the Indian Ocean Alginates Limited and not the petitioner in any manner. It is this paper publication which has been put to challenge in the present writ petition.
4. When the matter is taken up for hearing, it has been informed by the learned counsel for the petitioner that a similar batch of writ petitions i.e.,W.P.Nos.5247 of 2006, 3428, 6180 and 18108 of 2007 were all clubbed together and heard by the Division Bench of this Court and the batch of writ petitions stood allowed vide order dated 15.11.2022. The Division Bench of this Court in the said batch matters in paragraph Nos.10 to 13 has held as under:
10. In the course of the hearing today, we find that issue raised in this batch of writ petitions has been answered by the Supreme Court in Rana Girders Limited v. Union of India 1. That was also a case where similar notice was challenged by the auction purchaser. The notice was issued to the auction purchaser because the borrower had failed to discharge the excise duty liability. Supreme Court considered two earlier decisions in Macson Marbles (P) 1 (2013) 10 Supreme Court Cases 746.3
Ltd. v. Union of India 2 as well as Union of India v. SICOM Limited 3 and thereafter held as follows: "21. A harmonious reading of the judgments in Macson and SICOM would tend us to conclude that it is only in those cases where the buyer had purchased the entire unit i.e. the entire business itself, that he would be responsible to discharge the liability of Central Excise as well. Otherwise, the subsequent purchaser cannot be fastened with the liability relating to the dues of the Government unless there is a specific provision in the statute, claiming "first charge for the purchaser". As far as the Central Excise Act is concerned, there was no such specific provision as noticed in SICOM as well. The proviso to Section 11 is now added by way of amendment in the Act only w.e.f. 10-9-2004. Therefore, we are eschewing our discussion regarding this proviso as that is not applicable insofar as present case is concerned. Accordingly, we thus, hold that insofar as legal position is concerned, UPFC being a secured creditor had priority over the excise dues. We further hold that since the appellant had not purchased the entire unit as a business, as per the statutory framework he was not liable for discharging the dues of the Excise Department."
11. Supreme Court thereafter held that as far as dues of central excise are concerned, those are neither related to plant and machinery nor to the land and building. Thus, it did not arise out of the said properties. Dues of central excise became payable on the manufacturing of excisable items by the erstwhile owner. Therefore, the excise duties were in respect of those items which were produced and not the plant and machinery which were used for the purpose of manufacturing. It has been held as follows: "23. We may notice that in the first instance it was mentioned not only in the public notice but there is a specific clause inserted in the sale deed/agreement as well, to the effect that the properties in question are being sold free from all encumbrances. At the same time, there is also a stipulation that "all the statutory liabilities arising out of the land shall be borne by the purchaser in the sale deed"
and "all the statutory liabilities arising out of the said properties shall be borne by the vendee and the vendor shall 2 (2008) 15 SCC 481 3 (2009) 2 SCC 121 4 not be held responsible in the agreement of sale". As per the High Court, these statutory liabilities would include excise dues. We find that the High Court has missed the true intent and purport of this clause. The expressions in the sale deed as well as in the agreement for purchase of plant and machinery talk of statutory liabilities "arising out of the land" or statutory liabilities "arising out of the said properties" (i.e. the machinery). Thus, it is only that statutory liability which arises out of the land and building or out of plant and machinery which is to be discharged by the purchaser. Excise dues are not the statutory liabilities which arise out of the land and building or the plant and machinery. Statutory liabilities arising out of the land and building could be in the form of the property tax or other types of cess relating to property, etc. Likewise, statutory liability arising out of the plant and machinery could be the sales tax, etc. payable on the said machinery. As far as dues of the Central Excise are concerned, they were not related to the said plant and machinery or the land and building and thus did not arise out of those properties. Dues of the Excise Department became payable on the manufacturing of excisable items by the erstwhile owner, therefore, these statutory dues are in respect of those items produced and not the plant and machinery which was used for the purposes of manufacture. This fine distinction is not taken note of at all by the High Court."
12. This decision has been followed by this Court in W.P.No.5340 of 2007, Gopal Agarwal v. Commissioner of Customs and Central Excise, Hyderabad, decided on 29.12.2014. While setting aside similar notice, this Court had however left it open to the excise authorities to take any other steps permissible in law for recovery of the arrears of excise duty.
13. That being the position and following the decision of the Supreme Court in Rana Girders Limited (supra) as well as of this Court in Gopal Agarwal (supra), impugned notices dated 24.08.2006 in W.P.No.3428 of 2007; dated 12.03.2006 in W.P.No.5247 of 2006; dated 07.03.2007 in W.P.No.6180 of 2007; and dated 14.03.2007 in W.P.No.18108 of 2007 are hereby set aside. However, it would be open to respondent Nos.1 & 2 to take such steps as may be permissible in law for recovery of outstanding excise duty from M/s. Midwest Alloys Pvt. Limited.
55. On due consideration of the facts, we find that the Division Bench had allowed the batch of writ petitions taking into consideration the judgment of the Hon'ble Supreme Court on the issue which has been referred to in the preceding paragraph by the Division Bench itself and it stands reproduced also herein above.
6. Given the fact that the Division Bench of this High Court has already taken a decision on the issued raised in the present writ petition, we do not find any good ground to take a different view than that has been taken by the Division Bench earlier. We are endorsing the said view and inclined to allow the present writ petition. The Impugned paper publication dated 13.03.2006, so far as the petitioner's property is concerned thus stands set aside/quashed.
7. Accordingly, the Writ Petition stands allowed. No order as to costs.
8. As a sequel, miscellaneous applications pending if any in this writ petition, shall stand closed.
_________________ P.SAM KOSHY, J ________________________________ LAXMI NARAYANA ALISHETTY, J 15.09.2023 HFM/AQS 6 9 THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE A. LAXMI NARAYANA WRIT PETITION No. 5089 of 2006 (per the Hon'ble Sri Justice P.SAM KOSHY) 15.09.2023 HFM/AQS