Haldia Petrochemicals Limited vs Assistant Commissioner
2022 Latest Caselaw 3783 Cal

                     IN THE HIGH COURT AT CALCUTTA
                       Constitutional Writ Jurisdiction
                               Appellate Side



Present :-   Hon'ble Mr. Justice Md. Nizamuddin


                              W.P. A No. 4249 of 2022


                         Haldia Petrochemicals Limited
                                               Vs.
         Assistant Commissioner, CGST & CX, Haldia-II Division, Haldia
                           Commissionerate & Ors.


      For the Petitioner              :- Mr. J. P. Khaitan, Sr. Adv.
                                         Mr. Agnibesh Sengupta, Adv.
                                         Mr. Ajay Gaggar, Adv.
                                         Mr. Hiranyak Gangopadhyay, Adv.


      For the Respondent              :-   Mr. Bhaskar Prosad Banerjee, Adv.
                                           Mr. Tapan Bhanja, Adv.

      For the Union of India          :- Mr. Raj Kr. Sain, Adv.


      Judgement On                    :-       30.06.2022


   MD. NIZAMUDDIN, J.

Heard learned Advocates appearing for the parties.

The main legal issues involved in this Writ Petition are as to whether the

respondent Central Excise Authority can recover demand relating to central

excise duty, interest and penalty without service of adjudication order dated

17th October, 2012 and without establishing from any material documents

about actual proof of any service of the said adjudication order upon the

petitioner in compliance of the statutory formalities required under Section

37C of the Central Excise Act, 1944. It is the specific case of the petitioner that

it never received the aforesaid adjudication order on the basis of which the

impugned demand arises and further raises the issue as to whether the

respondent CGST authority can recover amount in excess of the statutory

amount which is required to be deposited in filing Appeal against the

adjudication order in question and the demand arises out of the same in terms

of CBDT circulars dated 29th February, 2016 and 31st July, 2017 if the

petitioner has filed any appeal against the said adjudication order by making

statutory deposit.

It is the case of the petitioner that a show-cause notice dated 8th April, 2011

was issued to the petitioner proposing to disallow CENVAT credit of Rs.

9,35,24,895.78/- taken by the petitioner in respect of Naphtha during the

period April, 2006 to January, 2011 which was used for manufacturing of

electricity and that the petitioner replied to the said notice by its letter dated

18th April, 2011 and also appeared for personal hearing on 25th July, 2012

before the respondent authorities concerned but thereafter petitioner did not

receive any further notice or order from them.

Petitioner submits that on 28th March, 2014 on coming to know about a

decision of Mumbai Bench of the Tribunal favourable to the petitioner on the

issue, wrote to the Commissioner on 28th March, 2014 requesting him to

provide opportunity of personal hearing and allow to make submission on the

basis of the aforesaid decision. By a letter dated 22nd May, 2014,

Superintendent (Adjudication) informed the petitioner for the first time that

under show-cause notice dated 8th April, 2011, already an adjudication order

had been passed on 17th October, 2012. In response to the aforesaid letter

petitioner wrote a letter on 30th May, 2014 to the respondent authorities

concerned that it had not received any such order dated 17th October, 2012 but

the petitioner did not receive any response to the said letter and instead on 18th

June, 2014 Superintendent (Adjudication) wrote to the petitioner enquiring

from it as to whether any appeal has been filed against the said adjudication

order dated 17th October, 2012 and whether any stay had been granted and if

not then petitioner was asked to deposit the amount arising out of the

aforesaid adjudication order.

It is the case of the petitioner that it again wrote a letter to the Range

Superintendent that it had not received any adjudication order and requested

him for furnishing it a copy of the same so that it could examine and file

appeal, if required. After hearing nothing in response to the aforesaid

response/request petitioner again wrote a letter on 21st July, 2014 which was

also not responded by the respondent authorities. Thereafter on August 28,

2014 petitioner's advocate made prayer before the Commissioner to furnish it

the attested/certified true copy of the aforesaid adjudication order so as to

enable the petitioner to prefer appeal before the Tribunal but no reply was

received either by the petitioner or its advocate in spite of repeated requests for

furnishing the copy of the aforesaid adjudication order dated 17th October,

2012, nor the respondents at any point of time sent any document in support

of or in proof of service of such adjudication order on the petitioner.

In the affidavit-in-opposition dated 25th March, 2022 to this Writ Petition,

the respondent authorities concerned annexed certain documents to show that

they had enquired from the postal authorities about actual delivery of the

aforesaid adjudication order alleged to have been sent by them by the Speed

Post. It also appears from the documents annexed to the aforesaid affidavit-in-

opposition filed by the respondents that the postal authority also could not

provide any document to the respondent authorities concerned in proof of

actual service or delivery of the aforesaid adjudication order/consignment on

the petitioner.

Petitioner submits that in spite of repeated requests made by the petitioner

to the respondent authorities concerned no copy of the adjudication order in

question was provided to it neither any document was served upon the

petitioner to establish that the adjudication order in question was actually

delivered or served upon the petitioner and the respondent authorities

concerned sitting tight over the repeated requests of the petitioner for providing

it the copy of the adjudication order in question since August, 2014 and all of a

sudden after seven years, the Assistant Commissioner by a letter dated 2nd

November, 2021, enquired from the petitioner as to whether any appeal was

pending in support of the adjudication order dated 17th October, 2012 and in

response to the same petitioner again informed the Assistant Commissioner

that it had not received any order and again requested for furnishing it with a

certified copy of the same to enable the petitioner to file an appeal before the

Tribunal.

It is the case of the petitioner that it was surprised on receiving an order

dated 18th November, 2021 after seven years by which petitioner was informed

that while dealing with a different refund claim of the petitioner in respect of a

sum of Rs. 4,75,37,789/- which was sanctioned for refund, the same has been

adjusted against the demand relating to the aforesaid adjudication order dated

17th October, 2012 which was never served upon the petitioner and in the

aforesaid order dated 18th November, 2021 it was also mentioned for the first

time that the aforesaid adjudication order dated 17th October, 2012 was

dispatched to the petitioner by Speed Post with acknowledgment due (A/D).

By a letter dated 23rd November, 2021 petitioner again requested the

respondent authorities concerned for providing it a copy of the

acknowledgment due relating to the alleged service or delivery of the aforesaid

adjudication order dated 17th October, 2012 to which respondents during the

pendency of the this Writ Petition which was filed on 8th March, 2022, on 22nd

March, 2022, issued a corrigendum in respect of the aforesaid adjudication

order dated 18th November, 2021 taking a different stand that the aforesaid

adjudication order dated 17th October, 2012 was sent by speed post without

any acknowledgment due while earlier the authorities had taken the stand that

the same was sent by speed post with A/D.

Petitioner submits that petitioner again by its letter dated 22nd February,

2022 requested the respondent authorities concerned for providing it a certified

copy of the aforesaid adjudication order dated 17th October, 2012 so that it

could seek suitable legal remedy against the same and instead of complying

with the aforesaid request of the petitioner for providing it a copy of the

adjudication order dated 17th October, 2012 out of which the respondents are

claiming the demand in question, on 5th March, 2022, the respondent

authorities concerned proceeded to attach the petitioner's bank account with

the State Bank of India. Thereafter on 8th March, 2022 this Writ Petition was

filed by sending the copies of the Writ Petition to the respondents by speed post

on 8th March, 2022 and in spite of such service the respondent authorities

concerned collected demand draft for the amount of Rs. 13,92,79,904.56/-

from the petitioner's bank against which by an interim order of this Court

dated 10th March, 2022 status quo is being maintained. Petitioner submits that

apart from the said demand draft provided at the instance of the respondent

authorities, the State Bank of India kept a further sum of Rs.

15,51,15,350.78/- under attachment.

Petitioner has challenged the aforesaid action of recovery of demand by the

respondent authorities concerned alleged to be arising out of the aforesaid

adjudication order dated 17th October, 2012 which according to the petitioner

was never served upon it in spite of repeated requests and sitting over the same

and not taking any step for recovery of the alleged demand from 2014 till

middle of November, 2021 that is almost for more than 7 years.

Petitioner challenges the impugned action of adjusting of another refund

with the demand in question arising out of the aforesaid adjudication order

dated 17th October, 2012 in excess of 20 per cent of the demand which is the

maximum amount of pre-deposit to be made by the petitioner for filing of any

appeal against demand in an adjudication order and which petitioner has filed

by making statutory pre-deposit as required under the law for filing statutory

Appeal after receiving the adjudication order in question during the hearing of

this Writ Petition. Petitioner also challenges impugned action of recovery of the

demand in question without serving a copy of the order upon the petitioner to

avail its statutory right of filing an appeal against the same and according to

the petitioner the maximum amount which petitioner was required to make

payment by way of pre-deposit for filing such appeal is 20 per cent which has

been deposited by the petitioner and for the first time in course of hearing of

this Writ Petition adjudication order in question was served upon the petitioner

and against which Appeal is pending and petitioner submits that during the

pendency of the said appeal the respondent authorities concerned cannot

recover from the petitioner's from its another refund more than 20 per cent of

the demand in question.

Petitioner submitted that relevant provisions of Section 37C of the Central

Excise Act, 1944 provides, inter alia, that an order shall be deemed to have

been passed on the date on which it is delivered by post. At the material period,

the aforesaid section provided for sending the order by registered post with

acknowledgement due. It is the case of the petitioner that the order in question

alleged to have been sent by speed post was not sent with A/D as proof of

delivery according to the respondents and that in any event the petitioner did

not receive it nor is there any proof of delivery of the same to the petitioner.

Petitioner has relied on the following decisions on the proposition of law that

limitation for the purpose of preferring appeal commences only upon actual

delivery of the order and it is incumbent upon the authorities to show proof of

delivery:-

(i) Premier Garment Processing V. CESTAT, Chennai, 2015 (39) STR 812

(Mad), Paragraphs 9, 10 and 11;

(ii) Regent Overseas Pvt. Ltd. V. Union of India, 2017 (3) TMI 557 (Guj) -

Paragraph 8;

(iii) Ram Pyare Yadav V. Union of India, 2014 (36) STR 63 (All) - Paragraphs

3, 4, 6 and 7;

(iv) Triveni Glass Ltd. V. Commissioner of C. Ex., Allahabad, 2011 (272) ELT

187 (All) - Paragraphs 3,4,5,7 and 10;

(v) Rao and Khan Motors (P) Ltd. V. Commissioner of Central Excise &

Service Tax, 2018 (12) TMI 1240- Madras High Court - Paragraphs

2,6,12 and 13;

(vi) R.P. Casting Pvt. Ltd. V. CESTAT, New Delhi, 2016 (344) ELT 168 (Raj) -

Paragraphs 8,9 and 10;

(vii) Vinod Choudhury V. Union of India, 2016 (336) ELT 388 (Raj) -

Paragraphs 4,5 and 6.

It is well settled principle of law that if a statute provides for something to

be done in a particular manner, then it has to be done in that manner and in

no other manner [Chandra Kishore Jha v Mahavir Prasad, (1999) 8 SCC at

273]. The provisions of Section 27 of the General Clauses Act, 1897 will not

apply in this case having regard to the precise language of Section 37C of the

aforesaid Act at the relevant period.

Petitioner emphasises on the specific mention in the supplementary affidavit

dated April 19, 2022, of the respondent authorities where they have made

allegations which relates to another adjudication order dated September 21,

2012 and on such basis further alleged that the petitioner's stand as regards

non-receipt of adjudication order dated October 17, 2012, was not tenable. The

said supplementary affidavit has been duly dealt with by the petitioner by an

affidavit dated April 20, 2022. The fact of the matter is that just like the

adjudication order dated October 17, 2012, the petitioner did not also receive

the other adjudication order dated September 21, 2012. When settling the

matter, dealt with in the order dated September 21, 2012 under the Sabka

Vishwas (Legacy Dispute Resolution) Scheme, in the settlement from the

petitioner, mentioned the date of the letter of the Range Superintendent,

namely, July 25, 2014, by which the petitioner was informed of the passing of

the order dated September 21, 2012, as the date of its receipt. Petitioner

submitted that the respondents cannot be absolved of their statutory obligation

to show proof of delivery of adjudication order dated October 17, 2012 by

making allegations against the petitioner in respect of a different adjudication

order which also was not received by the petitioner.

Petitioner submitted that without service of the adjudication order, it was

not possible for the petitioner to prefer an appeal. It was also not permissible

for the respondent authorities to take any step for recovery on the basis of

adjudication order in question which was not served upon the petitioner. An

order which has not been served cannot have any consequences.

Petitioner submitted that in respect of the same issue, for the subsequent

period, petitioner has either finally succeeded before the Commissioner

(Appeals) or is enjoying unconditional stay or stay upon pre-deposit of 7.5 per

cent of the duty demanded. In the instant case, in spite of the illegal recovery of

Rs. 4,75,37,789/- on November 18, 2021 by adjustment of the refund due to

the petitioner, before preferring the appeal on April 19, 2022, petitioner made a

pre-deposit of 7.5 per cent of the disputed duty amounting to Rs. 70,15,000/-.

That apart, the petitioner's annual revenue payment is in the range of Rs. 700

to Rs. 1000 crore. There is no jeopardy to the revenue at all.

In terms of circular dated September 16, 2014 issued by the Central Board

of Excise and Customs, if 7.5 per cent of the disputed duty has been deposited

and appeal has been preferred, no coercive measure for recovery of the balance

amount shall be taken during the pendency of the appeal. In the instant case,

the order dated October 17, 2012 was served on March 25, 2022 as annexure

to the affidavit-in-opposition, pre-deposit of 7.5 per cent was made on April 13,

2022 and the appeal was filed on April 19, 2022 against the adjudication order.

In H.M. Leisure V State of West Bengal, 2020 (37) GSTL 403 (Cal), it was

held by this Court that within the period allowed for preferring appeal, the

authorities can recover only the pre-deposit amount and excess recovery has to

be refunded.

In Graphite India Ltd. V Deputy Commissioner of Income Tax, (WPO 113 of

2018 decided on February 15, 2022), refund was directed by this Court of the

amount recovered in excess of 20 per cent of the demand required to be

deposited in terms of CBDT Circulars dated February 29, 2016 and July 31,

2017.

Learned advocate appearing for the respondents opposes this Writ Petition

and the prayer made therein mainly on the ground that there is inordinate

delay in filing the Writ Petition and the adjudication order in question out of

which demand in question arises is an appealable order and petitioner should

exhaust the alternative remedy by way of Appeal and submits that law relating

to service of adjudication order by speed post is settled and he relies on several

decisions in support of his contention but facts in none of those cases are

similar to the present case i.e., that during the relevant period as per law

prevailing either there was actual service or there was proof of service with

acknowledgment due and those judgments are mainly on the amended

provisions of Section 37C of the Act now prevailing and not relating to pre-

amended period. On the main ground of challenge by the petitioner that the

action of recovery of demand arising out of adjudication order in question was

never served at the relevant point of time. When the adjudication order in

question was passed, as per Section 37C of the Central Excise Act, 1944,

prevailing during the relevant period under which it was statutory obligation on

the part of the respondent authority to dispatch the adjudication order with

acknowledgement due in proof of service of the same which could not be

established by Mr. Banerjee, learned Advocate appearing for the respondent

authority by producing acknowledgement due in proof of service of the same.

He failed to produce any document to establish that either adjudication order

was actually served or the adjudication order was sent by speed post with A/D.

He also could not explain the latches on the part of the respondent authority

concerned in taking any steps for recovery of the demand in question arising

out of the adjudication order dated 17th October, 2012 till November, 2021 and

neither he could produce any document before this Court to explain such

conduct of the respondent authority or show that any effective steps were

taken for recovery of demand in question after 2014 and also on the conduct of

the respondents sitting over the repeated representations of the petitioner

making repeated request for furnishing it the copy of the adjudication order in

question to enable it to file appeal by challenging the same. Respondents

cannot take advantage of its own wrong of latches and failure to establish by

any document in support of proof of actual service of adjudication order in

question on the petitioner and also for not taking step for recovery of demand

in question and sleeping over it for more than 7 years after 2014.

Defence of the respondents shifting its latches on the shoulder of the

petitioner is not tenable since petitioner after coming to its knowledge about

passing of the adjudication order in question dated 17th October, 2012, made

repeated requests to the respondent authorities concerned till 2014 which are

matters of record and hearing nothing from them on their repeated

representations making request for furnishing the order of adjudication in

question, petitioner is not duty bound to chase the respondents for furnishing

it the copy of the adjudication order in question and cause of action arose for

the petitioner for filing this Writ Petition only after receiving the order of the

Assistant Commissioner dated 18th November, 2021 by which the petitioner

was informed that its claim of refund in some other cases has been adjusted

with the demand in question arising out of the adjudication order dated 17th

October, 2012.

So far as question of filing of appeal and payment of demand against the

aforesaid adjudication order dated 17th October, 2012 which was never served

upon the petitioner and which was disclosed for the first time by the

respondents in their affidavit-in-opposition on 25th March, 2022 in course of

hearing of this Writ Petition, petitioner has already filed Appeal before the

Appellate authority concerned by making statutory pre-deposit by treating the

date of receipt of the said order annexed the affidavit-in-opposition to this Writ

Petition for the first time as the date of order which was served upon the

petitioner in course of hearing of this Writ Petition and as such respondents'

allegation of latches on the part of the petitioner in filing Appeal is not

sustainable in law and it is nothing but an attempt to cover up respondent's

own latches.

So far as action of the respondents' action of recovery of the amount of the

demand in question on the basis of adjudication order dated 17th October,

2012 is concerned which was never served on the petitioner earlier and since

now appeal has been filed by the petitioner by making statutory pre-deposit,

action of the respondents making recovery of demand more than the statutory

pre-deposit amount required to be made in filing Appeal against adjudication

order, from the other refundable amount by attachment of bank account and

recovery from the bank account of the petitioner by way of demand draft is not

sustainable in law in view of the facts and circumstances as appears from

record and discussion made above and the same are declared as arbitrary and

illegal and respondents authority considered are directed to take immediate

steps for refund of the amount recovered in excess of 20 per cent of the

demand from the petitioner on the basis of adjudication order dated 17th

October, 2012, from its bank and pass necessary order for withdrawal of

impugned order of attachment of bank account in question of the petitioner

within seven days from date since the statutory pre-deposit amount for filing

Appeal against the adjudication order dated 17th October, 2012 has already

been made by the petitioner which is matter of record. Appellate authority is

requested to dispose the Appeal in question expeditiously and preferably within

three months from the date of communication of this order.

In view of discussion, observation and direction made above this Writ

Petition being WPA No. 4249 of 2022 stands disposed of accordingly. No order

as to costs.

Urgent certified photocopy of this judgment, if applied for, be supplied to the

parties upon compliance with all requisite formalities.

(MD. NIZAMUDDIN, J.)