Sadhana Textile Mills Pvt Ltd.& ... vs Union Of India & Ors
2017 Latest Caselaw 74 Bom

 suresh                                           27-WP-963.1999.doc

          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
              ORDINARY ORIGINAL CIVIL JURISDICTION
                       WRIT PETITION NO.963 OF 1999


 1. Sadhana Textile Mills Private Ltd.,
     an existing Company, under the
     provisions of the Companies Act, 
     1956, and having its Registered
     Office at Pandurang Budhkar Marg,
     Worli, Bombay - 400 018.

 2. Sanjay Purshottam Badiani, 
     of Bombay Indian Inhabitant,
     a Shareholder of Petitioner No.1,
     residing at "Pratap Mansion",
     10, Laburnam Road, Gamdevi,
     Bombay - 400 007.                              ....  Petitioners

          - Versus -

 1. Union of India
     through the Secretary,
     Ministry of Finance, Department
     of Revenue & Banking, North
     Block, Central Secretariat,
     New Delhi.

 2. The Commissioner of Central
      Excise, Bombay IV, having his 
      office at Central Excise Building,
      115, Maharshi Karve Road,
      Opp: Churchgate, Bombay-400 020,
      being the designated authority 
      under Kar Vivad Samadhan Scheme
      under Finance Act No.2 of 1998.               ....  Respondents




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  suresh                                                  27-WP-963.1999.doc

 Mr. S.U. Kamdar, Senior Counsel with Mr. Y.S. Kamdar,
 Mr. N.C. Parekh, Mr. S.A. Vyas, Mr. N.J. Marjadi &
 Ms Palak Patel i/by M/s. Mansukhlal Hiralal & Co.
 for the Petitioners.
 Mr. Swapnil Bangur with Mr. Sham V. Walve for 
 Respondent No.2.


                                     CORAM: S.C. DHARMADHIKARI &
                                                    B.P. COLABAWALLA, JJ.

DATE : FEBRUARY 27, 2017

ORAL JUDGMENT ( Per Shri S.C. DHARMADHIKARI, J.

) :

1. By this petition under Article 226 of the Constitution

of India, the petitioners are seeking a writ, order or direction

calling for the papers and proceedings pertaining to order/letter

dated 8-2-1999 and after ascertaining its legality and validity to

quash and set aside the same.

2. The petitioners are also seeking a writ of mandamus

or any writ or direction in the nature thereof directing the

respondents to forthwith accept and act upon the petitioners'

declaration furnished under a scheme which is styled as Kar

Vivad Samadhan Scheme, 1998 and to pass the requisite orders

suresh 27-WP-963.1999.doc

in terms thereof. In other words, a long standing dispute

between the petitioners and the Department be settled in

accordance with the Scheme.

3. The petitioners state that by the impugned order

dated 8-2-1999, the Office of the Commissioner of Central

Excise, Mumbai-IV, informed the petitioners that Declaration

No.46/98, dated 10-12-1998, filed by the petitioners under Kar

Vivad Samadhan Scheme, 1998 for settlement was considered,

but it was noticed that a sum of Rs.54,67,867/-, claimed by the

petitioners as tax arrears under dispute are in fact the outcome

of the Hon'ble Supreme Court's Judgment in Writ Petition

Nos.2693 of 1993 and 12744 of 1984. Since the Hon'ble

Supreme Court of India has given a decision in favour of the

Revenue, these dues are payable. The matter has already been

decided by the Hon'ble Supreme Court and the amount in

arrears is the balance amount of total duty payable by the

petitioners. It cannot be said that the amount in question is in

dispute as no appeal is pending against the same in the Supreme

Court. Hence, the tax arrears in question are not in dispute as on

suresh 27-WP-963.1999.doc

the date of filing of the declaration. So, the benefit of the

Scheme cannot be extended to the declarant.

4. One of the grounds raised to challenge this order by

the petitioners is that the declaration was maintainable. The

petitioners are fully eligible to avail of the Scheme by filing a

declaration because there is an admitted tax arrears, according

to the excise authorities, in the above sum and prior to

1-4-1998. The alleged tax arrears have not attained finality

inasmuch as the petitioners have disputed the same by filing an

appeal before the Commissioner (Appeals). Importantly, the

Department admitted that a sum of Rs.55 lakhs recoverable as

tax arrears prior to 1-4-1998 has been disputed. The letter dated

8-2-1999 (impugned letter) also disputes this position. Hence,

there is an application fully maintainable and covered by the

Scheme. When this writ petition was placed before us,

Mr. Kamdar, learned Senior Counsel appearing in support of the

same, relied on two Judgments of the Hon'ble Supreme Court of

India. The first in the case of Swastika Enterprises and Ors. Vs.

Commissioner of Customs and Ors., reported in (2015) 10

suresh 27-WP-963.1999.doc

SCC 573 and the later was a Judgment in the case of NRC Ltd.

Vs. Union of India, reported in 2015 (325) E.L.T. 474 (S.C.).

5. In both these Judgments, the Hon'ble Supreme Court

has held that requirement of availing of the Scheme and

provided by Section 95 of the Finance Act, 1998 cannot be said

to be not fulfilled. The Scheme will not apply only in respect of

tax arrears under any indirect tax enactment. It will apply in a

case where show cause notice or notice of demand under any

indirect tax enactment has been issued. Once a show cause

notice has been issued and there is a dispute raised, then, the

matter could not be said to be not within the Scheme because of

a date stipulated by the Revenue for the Scheme to come into

effect. In other words, the Hon'ble Supreme Court had, in both

Judgments, held that there was a clear demand notice, which

was issued. Mr. Kamdar, relying upon these two Judgments but

which the petitioners do not admit to be covering the dispute,

would submit that the petitioners have become liable to pay to

the Department a total sum of Rs.98,86,101.79. Out of this

amount, the Department has already encashed the Bank

suresh 27-WP-963.1999.doc

Guarantees furnished by the petitioners from time to time in the

sum of Rs.44,18,233.81. The Department's case is that balance

excise duty of Rs.54,67,867.98 is payable. The petitioners have

disputed this position. They have said that in law they are not

liable to pay any duty whatsoever and the claim in that regard of

the Department is time barred. Thus, the petitioners' stand is

that a mere demand notice is not a show cause notice and it

cannot be treated as a show cause notice. That is how initially it

was pointed out that the position remains the same and they are

not bound and liable to merely comply with the demand notice

of the Department. Moreover, the petitioners have filed an

appeal against the order of the Assistant Commissioner of

Central Excise, dated 9-11-1998. The petitioners have thus

disputed the demand and the appeal is pending.

6. In the light of the above factual position and the two

Judgments of the Hon'ble Supreme Court of India, it is conceded

equally by the Department that their stand, as contained in the

impugned letter, is unsustainable in law. The matter is covered

by the said two Judgments. In the circumstances, we allow this

suresh 27-WP-963.1999.doc

writ petition and quash and set aside the impugned letter dated

8-2-1999. We direct that the declaration of the petitioners shall

now be proceeded with and decided in accordance with law.

7. On 5-5-1999, an interim order was passed by this

Court on the condition that 50% of the amount is to be

deposited in this Court within a period of six weeks. We are

informed that the same has been deposited in this Court and

duly invested. Now, on conclusion of this Judgment, the

Revenue can collect the same with accrued interest. The

Prothonotary & Senior Master to act on an authenticated copy of

this Judgment and allow the Revenue to take away the sum with

accrued interest.

8. Rule is made absolute in terms of prayer clauses (a)

and (b). No order as to costs.

(B.P. COLABAWALLA, J.) (S.C. DHARMADHIKARI, J.)