Orissa High Court
M/S. Viraj Steel & Energy Private Ltd vs Joint Commissioner Of State Tax .... ... on 15 May, 2025
Author: B.P. Routray
Bench: B.P. Routray
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.9367 of 2025
M/s. Viraj Steel & Energy Private Ltd. .... Petitioner
represented through its authorized
representative Binod Bihari Pati
-Versus-
Joint Commissioner of State Tax .... Opposite Parties
(Appeal), Sambalpur and others
Advocates appeared in this case:
For Petitioner : Mr. Kartik Kurmy, Advocate
For Opposite Parties : Mr. Sunil Mishra, Standing Counsel
Mr. S. Dash, Addl. Standing Counsel
CORAM:
HON'BLE THE CHIEF JUSTICE
AND
HON'BLE MR. JUSTICE B.P. ROUTRAY
JUDGMENT
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Date of Judgment: 15th May, 2025
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HARISH TANDON, CJ.
1. Having suffered an order passed by the appellate authority under
Section 107 of the GST Act, 2017 on 28th February, 2025 rejecting the
same on the ground of limitation, the instant writ petition is filed not
only assailing the said order, but also the show cause notice dated 27th
March, 2023 issued by opposite party No.2 on the basis whereof the
order was passed on 29th March, 2023 in FORM GST-DRC-07 imposing
the penalty of Rs.27,65,016/- (CGST Rs.13,82,508/- + OGST Rs.
13,82,508/-) and redemption fine of Rs.79,87,824/- (CGST
Rs.39,93,912/- + OGST Rs.39,93,912/-) in exercise of power under
Section 130 read with Section 122 of the OGST Act, 2017, after having
paid the penalty as well as the redemption fine as demanded.
2. A prelude to the initiation of proceeding can be reasonably traced
from a search and seizure operation conducted on 22nd March, 2003 at
the factory/registered office premises of the petitioner located at village
Gurupali, PO-Lapanga, District-Sambalpur, Odisha by a team consisting
of the enforcement officials of the Enforcement Range, Samabalpur, the
mining officials of the Deputy Director of Mines, Sambalpur and local
police personnel. During the said search and seizure operation, the
enforcement officials detected a shortage of 341.360 MT of Billet
fetching a value of Rs.1,53,61,200/- and seized various
documents/notebooks/registers/files/loose slips under Form GST-INS-02
which was duly countersigned by the authorized persons of the
petitioner. The descriptions of the seized documents were vividly
reflected in the Annexures appended to FORM-GST-INS-02 which has
not been disputed by the petitioner in the writ petition.
2.1. In furtherance of the said search and seizure operation, the show
cause notice dated 27th March, 2023 was issued in FORM GST-DRC-01
along with its annexures for the period March, 2023 to show cause why
the purported shortage detected in relation to supply of MS Billet should
not be confiscated under Section 130 of the OGST Act and the penalty of
the amount as indicated hereinabove be not imposed. It is further
indicated therein that in lieu of the confiscation, the redemption fine as
disclosed hereinabove be also not imposed. After the receipt of the show
cause notice dated 27th March, 2023, the petitioner caused a letter
intimating to the revenue authority that as an authorized person and upon
consulting the management of the Company, the stock discrepancies are
admitted and the Company has agreed to pay the calculated amount of a
penalty and fine in lieu of the confiscation under Section 130 read with
Section 122 of the OGST Act for the shortage of the stock of goods
noticed at the business premises of the petitioner at the time of search
and seizure operation. Since the petitioner agreed to pay the penalty and
the redemption fine in lieu of the confiscation, the authority issued the
demand order on 29th March, 2023 vividly reflecting the conduct of the
petitioner in evading the tax in clandestine manner.
2.2. It is pertinent to record that pursuant to the said demand order
dated 29th March, 2023, the petitioner made deposit of the entire
demanded amount which includes the redemption fine in lieu of the
confiscation and after such deposit having made, the documents seized at
the time of search and seizure operation were released to the petitioner.
2.3. After having availed the right conferred under Section 130 of the
OGST Act, the appeal was filed before the appellate authority under
Section 107 of the said Act on 7th February, 2025 i.e. almost two years
after the date of the said conclusion of the proceeding raising several
points including the authority of the enforcement officials in imposing
the redemption fine and penalty when the goods were not available for
confiscation. Obviously, the appellate authority rejected the said appeal
on 28th February, 2025 having filed beyond the statutory period of
limitation, more particularly, that the authority lacks jurisdiction to
condone the delay beyond the outer limit set forth in sub-Section (4) of
Section 107 of the said Act.
2.4. Upon dismissal of the appeal on the ground of inordinate delay
and lack of power in condoning the delay beyond the outer cap fixed
under sub-Section (4) of Section 107 of the said Act, the writ petition is
filed not only challenging the order of the appellate authority, but the
show cause notice which culminated into a demand order on the premise
that the moment the goods are not available, there may not arise any
occasion either for seizure or for confiscation in terms of Section 130 (2)
of the Act and, therefore, the show cause notice and the demand order
are palpably illegal having issued in gross violation of the statutory
provision and, therefore, partakes a character of a nullity. It is further
stated that once the foundation is found invalid, illegal and infirm being
violative of the statutory provision, all subsequent decisions/order shall
automatically fall.
3. On the backdrop of the aforesaid facts pleaded in the writ petition,
the respective counsels were invited to address the Court and after the
closure of the oral submissions, the written notes of argument are filed
by the respective parties which are taken on record.
4. Learned counsel appearing for the petitioner submits that the
demand order dated 29th March, 2023 imposing the penalty under
Section 130 (1) read with Section 122 (xviii) of the OGST Act, 2017 and
the redemption fine under sub-Sections (2), (3), (4), (5), (6), (7) of
Section 130 of the said Act for shortage of 341.360 MT of MS Billet in
the stock, on the basis of a show cause notice dated 27th March, 2023, are
in clear contravention to the Clauses contained in (i), (ii) and (iv) of
Section 130 (1) of the Act and, therefore, liable to be quashed and set
aside. It is further submitted that on the alleged shortage of goods, a
separate proceeding has been initiated under Section 74 of the CGST
Act/OGST Act, 2017 upon issuing a show cause notice dated 30th May,
2024 and, therefore, the interest of the revenue is fully protected despite
the fact that the petitioner is pursuing its remedy available under the said
Act which is not a subject matter of the instant writ petition. It is
arduously submitted that Section 130 of the Act contains two parts
wherein the first part is relatable to goods liable to confiscation, on the
other hand, the second part contains the provision relating to the
condition precedent for confiscation and imposition of redemption fine
on physical availability of the goods sought to be confiscated. It is thus
submitted that if the goods are not available for confiscation, the
authority cannot impose redemption fine under the second part of
Section 130 of the Act. In support of the contention that the assessee
cannot be compelled to pay the redemption fine in lieu of a confiscation
when the goods are not physically available for confiscation, the reliance
is placed upon the judgment rendered in Chinku Exports v.
Commissioner of Customs, Calcutta, 1999 (112) ELT 400 (Tribunal)
which was affirmed by the apex Court and such judgment is reported in
2005 (184) ELT A36 (SC); Commissioner of Customs (Import),
Mumbai v. Finesse Creation INC., 2009 (248) ELT 122 (Bom.) which
was further affirmed by the Supreme Court and such order is reported in
2010 (255) ELT A120 (SC); Commissioner of Customs, Bangalore v.
G.M. Exports, 2012 (279) ELT 493 (Kar.); Commissioner of Customs,
Amritsar v. Raja Impex (P) Ltd., 2008 (229) ELT 185 (P&H) and Shiv
Kripa Ispat Pvt. Ltd. v. Commissioner of Central Excise and Customs,
Nasik, 2009 (235) ELT 623 (Tri.-LB).
4.1. It is strenuously argued that once the civil appeal is dismissed by
the Supreme Court against the order passed in Chinku Exports (supra),
it would invite the concept of merger and the decision of the apex Court
would operate in the field, which can be supported by a judgment of the
Supreme Court rendered in Kunhayammed v. State of Kerala, 2001
(129) ELT 11 (SC). The counsel further submits that the redemption fine
can be imposed even if the goods are not available, but on the special
facts that after the confiscation of the goods, the same was released upon
execution of a bond. In other words, it is contended that if the goods so
confiscated was released on bond/undertaking given by the assessee,
subsequent confiscation cannot be impinged as the goods are not
physically available which would find support from the judgment of
Gujarat High Court in case of Synergy Fertichem Pvt. Ltd. v. State
of Gujarat, 2019 SCC OnLine (Gujarat) 6127.
4.2. Learned counsel for the petitioner is very much vocal in his
submission that no tax shall be levied or collected by the State save by
the authority of law under Article 265 of the Constitution of India and,
therefore, even if the assessee has consented or there appears to be a
mistake committed by the parties, the constitutional provision cannot be
whittled down and placed reliance upon the judgment of the Supreme
Court in case of District Magistrate, Haridwar v. Harish Malhotra,
(2015) 11 SCC 513 and Bonanzo Engg. & Chemical P. Ltd. v.
Commissioner of Central Excise, 2012 (277) ELT 145 (SC). Learned
counsel submits that the matter can be seen from an another angle.
According to him, the moment the foundation of issuance of a show
cause notice contemplating to confiscate the goods which is not
physically available is illegal and/or infirm, all subsequent proceedings
founded thereupon shall also be regarded as illegal and/or invalid as once
the illegality strikes at the root of the jurisdiction, all structures standing
thereupon would fall. To buttress the aforesaid submission, the reliance
is placed upon the judgment of the apex Court in Kalabharati
Advertising v. Hemant Vimalnath Narichania, (2010) 9 SCC 437;
Kiran Singh v. Chaman Paswan (1954) 1 SCC 710; and Chiranjilal
Shrilal Goenka v. Jasjit Singh, (1993) 2 SCC 507. On the
maintainability of the writ petition, the reliance is placed upon a
judgment of the Supreme Court in Union of India v. Vicco
Laboratories, 2007 (218) ELT 647 (SC) and Magadh Sugar and
Energy Limited v. State of Bihar, (2022) 16 SCC 428 that if the show
cause notice is issued without jurisdiction, there is no fetter on the part of
the aggrieved person to approach the writ Court. Lastly, it is submitted
that even if the penalty and the redemption fine are deposited under
protest, in the event of the show cause notice being an outcome of
illegality and violative of the provisions of the statute, there is no fetter
put on the part of the writ Court to interfere with the same and quash and
set aside the subsequent orders founded thereupon.
5. Mr. Sunil Mishra, Standing Counsel appearing for the opposite
parties refuted the contention of the petitioner in contending that there is
no infirmity and/or illegality in issuance of the show cause notice dated
27rd March, 2023 by the authority for confiscation of the
goods/documents/books or the things under Section 130 of the said Act.
Mr. Mishra would further submit that Section 67 of the OGST Act, 2017
confers powers upon the proper officers as indicated therein to arrive at
the reason to believe that any goods liable to confiscation or any
documents or books or things which in his opinion shall be useful for or
relevant to any proceeding under the said Act to search and seize the
same. He further submits that there is no challenge thrown in the writ
petition on the authority of the competent persons to search and seize the
materials mentioned in Section 67 of the said Act bestowing power upon
the authority to confiscate the same for the other proceedings to be
initiated under the provision of Section 130 and/ or Section 122 of the
OGST Act, 2017. He thus submits that at the time of search and seizure,
the authorized revenue authority confiscated the unaccounted shortage of
stocks, the books and the documents from the premises and issued a
notice under Form-GST-INS-02 along with the annexures containing the
description of the materials. He vehemently submits that immediately
upon the service of the show cause notice dated 27th March, 2023, the
petitioner admitted the stock discrepancies and conveyed a clear
intention of payment of penalty and fine in lieu of confiscation and on
the basis of such admission, the authorities issued the demand order
dated 29th March, 2023 and the payment was made by the petitioner not
only of the penalty but the redemption fine in lieu of confiscation. Mr.
Mishra would submit that after the compliance of the demand order, the
confiscated materials which include books and the documents seized at
the time of the search and seizure operation were released in lieu of
confiscation.
5.1. Mr. Mishra is very much vocal that having sat for a considerable
period of time, the petitioner filed an appeal against the demand order
before the appellate authority under Section 107 of the OGST Act, 2017
after a gap of almost two years along with an application for condonation
of delay which was rightly rejected by the appellate authority as it sans
power to condone the delay beyond the stipulated period provided in the
said provision. According to Mr. Mishra, a person should not be
permitted to approbate and reprobate at the same time by challenging the
show cause notice in the writ petition after having accepted and
implemented the demand order dated 29th March, 2023. Mr. Mishra,
vociferously submits that a litigant should not be permitted to achieve a
thing which cannot be achieved directly taking recourse to an indirect
manner. He thus submits that the appellate authority has rightly rejected
the appeal being barred by limitation and that the said authority is
denuded of power to condone the delay beyond the outer limit set forth
in Section 107 (4) of the Act.
5.2. Mr. Mishra further submits that Section 130 of the Act has to be
read by giving meaning to the words or expressions used therein which
not only includes the goods received in contravention to any provision of
Act or the Rules with an intent to evade payment of tax, but also the
supplies in the same line. It is thus submitted that where the goods are
supplied without issuing the invoices resulting into a shortage of the
goods with an intent to evade tax, it is not mandatory that the goods must
be found in physical condition and, therefore, the interpretation sought to
be made by the petitioner would tantamount to frustration of the spirit of
the said provision. He further submits that the provision contained under
Section 130 of the Act has to be read in conjunction with Section 122
and Section 67 (2) of the said Act and the interpretation so sought to be
made by the petitioner if accepted would render the provision contained
under Section 130 of the Act a dead letter. In support of the contention
that the confiscation can be made even when the goods are not
physically available, Mr. Mishra relies upon a judgment of the Gujarat
High Court rendered in case of Synergy Fertichem Pvt. Ltd. (supra) and
Madras High Court judgment in M/s. Visteon Automotive Systems India
Limited v. CESTAT, Chennai, 2017 SCC OnLine (Madras) 37615. Mr.
Mishra thus submits that in view of the facts involved in the instant case,
the petitioner cannot take a rebound and challenge the show cause notice
and, therefore, the writ petition deserves dismissal.
6. Both the counsels appearing for the respective parties advanced
lengthy arguments on the powers of the competent authorities to
confiscate the goods which are not physically available and imposition
of the redemption fine in lieu of such confiscation under Section 130 of
the Act. Recently, the trend has developed in assailing the show cause
notice and the demand order in the writ jurisdiction after exhausting the
statutory remedy of appeal provided in the Act belatedly, when the
appellate authority declined to condone the delay beyond the outer limit
set forth under Section 107 (4) of the Act on the pretext that once the
foundation of initiating the proceeding is found invalid and illegal, all
subsequent decisions taken thereupon are liable to fall and, therefore, the
writ Court is not denuded a power to decide such fundamental issue in
exercise of power of judicial review. The arguments are advanced that
once the order passed by the authority is per se illegal and attracts the
principles of nullity, such action or a decision is amenable to be
challenged before the Court or even in collateral proceeding. The
authorities on the above proposition have been sighted to achieve a
desired result taking a shelter under Article 226 of the Constitution of
India as a collateral proceeding. The three Judge Bench of the Supreme
Court rendered in Kiran Singh (supra) as cited for the proposition that
the decree passed by the Court having inherent lack of jurisdiction is
always perceived as nullity and its invalidity can be set up, anywhere or
everywhere, it is sought to be enforced and even in a collateral
proceeding. The relevant excerpt from the said judgment is reproduced
as under:
"6. The answer to these contentions must depend on what
the position in law is when a court entertains a suit or an
appeal over which it has no jurisdiction, and what the
effect of Section 11 of the Suits Valuation Act is on that
position. It is a fundamental principle well established
that a decree passed by a court without jurisdiction is a
nullity, and that its invalidity could be set up whenever
and wherever it is sought to be enforced or relied upon,
even at the stage of execution and even in collateral
proceedings. A defect of jurisdiction, whether it is
pecuniary or territorial, or whether it is in respect of the
subject-matter of the action, strikes at the very authority
of the court to pass any decree, and such a defect cannot
be cured even by consent of parties. If the question now
under consideration fell to be determined only on the
application of general principles governing the matter,
there can be no doubt that the District Court of Monghyr
was coram non judice, and that its judgment and decree
would be nullities. The question is what is the effect of
Section 11 of the Suits Valuation Act on this position."
6.1. Although the judgment rendered by the three Judge Bench in
Kiran Singh (supra) was an authority before a radical amendment had
been brought in the Code of Civil Procedure in the year 1977, yet the
ratio of the said judgment was considered to have its application and
recognized in a subsequent judgment of the Supreme Court in
Chiranjilal Shrilal Goenka (supra) in the following:
"18. It is settled law that a decree passed by a court
without jurisdiction on the subject-matter or on the
grounds on which the decree made which goes to the root
of its jurisdiction or lacks inherent jurisdiction is a coram
non judice. A decree passed by such a court is a nullity
and is non est. Its invalidity can be set up whenever it is
sought to be enforced or is acted upon as a foundation for
a right, even at the stage of execution or in collateral
proceedings. The defect of jurisdiction strikes at the very
authority of the court to pass decree which cannot be
cured by consent or waiver of the party."
6.2 In Kalabharati Advertising (supra), the legal maxim sublato
fundamento, cadit opus meaning thereby in case a foundation is
removed, the superstructure falls, was applied in a situation where the
decree passed by a Court lacking inherent jurisdiction over the subject
matter would always be regarded as a nullity and non est in the eye of
law in the following:
"21. In Badrinath v. State of T.N. [(2000) 8 SCC 395 :
2001 SCC (L&S) 13] this Court observed that once the
basis of a proceeding is gone, all consequential acts,
action, orders would fall to the ground automatically and
this principle of consequential order which is applicable
to judicial and quasi-judicial proceedings is equally
applicable to the administrative orders."
7. There is no quarrel to the settled proposition of law as enunciated
in the above report that the Court lacking inherent jurisdiction in relation
to a subject matter if passes a decree which is per se nullity and,
therefore, amenable to be assailed even at the stage of execution of the
said decree or order and can further be challenged in any collateral
proceedings. It is no longer res integra that the Court can only assume
jurisdiction conferred by law and even by consent of parties such
jurisdiction cannot be assumed. The jurisdiction exercised by the Court
flows from the authority of law which can neither be exercised nor be
assumed on the consent of the parties. It also admits no ambiguity in law
that the Court exercising jurisdiction not vested in it in passing an order
is regarded as a nullity and non est in the eye of law. It may have its
equal application upon the statutory authority exercising powers
provided in the statute and in the event such power is not so conferred,
yet the same is exercised which may be assailed and/or challenged
before the higher forum provided in the statute and also otherwise. Such
broad and fundamental principles discerned from the aforesaid reports
are to be applied on a factual matrix and not in abstract manner. The
Court cannot shut its sight on the conduct of the parties in relation to the
proceedings, more particularly, after exhausting all the remedies
available in the statute. Had it been a case that the authority lacks
inherent jurisdiction or powers which does not require a deep scrutiny
into it, it is open to the writ Court to interfere, but the position would be
different in the event the power can be traced from the statutory
provisions and the challenge is founded upon irregular exercise of such
power in a collateral proceeding. A distinction must be drawn between
an inherent lack of powers or jurisdiction and the exercise of powers so
conferred in an erroneous manner. In the latter situation, it can be
corrected by approaching the appellate forum under the statute and
should not be permitted to be opened under the extraordinary jurisdiction
conferred upon the High Courts under Article 226 of the Constitution.
Even though the proceedings may be maintainable under Article 226 of
the Constitution of India, yet we see no absolute fetter on the part of the
High Court exercising writ jurisdiction in refusing to entertain the writ
petition. The support can be gainfully lend to a judgment of the apex
Court in Vicco Laboratories (supra) where the show cause notice was
challenged invoking the jurisdiction under Article 226 of the
Constitution of India and a plea was taken that the Court should not
interfere with such show cause notice as the authorities have not applied
its conscious mind as yet, the apex Court clarified that normally the
Court should relegate the parties to participate in the proceeding, but in
the event, the show cause notice is issued either without jurisdiction or in
abuse of process of law, there is no absolute bar that the writ Court
would refuse to entertain the plea at such a stage in the following:
"30. Normally, the writ court should not interfere at the
stage of issuance of show cause notice by the authorities.
In such a case, the parties get ample opportunity to put
forth their contentions before the concerned authorities
and to satisfy the concerned authorities about the absence
of case for proceeding against the person against whom
the show cause notices have been issued. Abstinence from
interference at the stage of issuance of show cause notice
in order to relegate the parties to the proceedings before
the concerned authorities is the normal rule. However,
the said rule is not without exceptions. Where a show
cause notice is issued either without jurisdiction or in an
abuse of process of law, certainly in that case, the writ
court would not hesitate to interfere even at the stage of
issuance of show cause notice. The interference at the
show cause notice stage should be rare and not in a
routine manner. Mere assertion by the writ petitioner that
notice was without jurisdiction and/or abuse of process of
law would not suffice. It should be prima facie
established to be so. Where factual adjudication would be
necessary, interference is ruled out."
7.1. Even in Magadh Sugar and Energy Limited (supra), the three
Judge Bench of the Supreme Court reiterated and reinstated the situation
under which the High Court can exercise its jurisdiction under Article
226 of the Constitution of India in the following:
"20. While a High Court would normally not exercise its
writ jurisdiction under Article 226 of the Constitution if
an effective and efficacious alternative remedy is
available, the existence of an alternative remedy does not
by itself bar the High Court from exercising its
jurisdiction in certain contingencies. This principle has
been crystallised by this Court in Whirlpool
Corpn. v. Registrar of Trade Marks [Whirlpool
Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1]
and Harbanslal Sahnia v. Indian Oil Corpn.
Ltd. [Harbanslal Sahnia v. Indian Oil Corpn. Ltd., (2003)
2 SCC 107] Recently, in Radha Krishan
Industries v. State of H.P. [Radha Krishan
Industries v. State of H.P., (2021) 6 SCC 771] a two-
Judge Bench of this Court of which one of us was a part
of (D.Y. Chandrachud, J.) has summarised the principles
governing the exercise of writ jurisdiction by the High
Court in the presence of an alternative remedy. This
Court has observed : (Radha Krishan Industries
case [Radha Krishan Industries v. State of H.P., (2021) 6
SCC 771] , SCC p. 795, para 27)
"27. The principles of law which emerge are that:
27.1. The power under Article 226 of the Constitution
to issue writs can be exercised not only for the
enforcement of fundamental rights, but for any other
purpose as well.
27.2. The High Court has the discretion not to
entertain a writ petition. One of the restrictions
placed on the power of the High Court is where an
effective alternative remedy is available to the
aggrieved person.
27.3. Exceptions to the rule of alternative remedy
arise where : (a) the writ petition has been filed for
the enforcement of a fundamental right protected by
Part III of the Constitution; (b) there has been a
violation of the principles of natural justice; (c) the
order or proceedings are wholly without jurisdiction;
or (d) the vires of a legislation is challenged.
27.4. An alternative remedy by itself does not divest
the High Court of its powers under Article 226 of the
Constitution in an appropriate case though
ordinarily, a writ petition should not be entertained
when an efficacious alternative remedy is provided by
law.
27.5. When a right is created by a statute, which itself
prescribes the remedy or procedure for enforcing the
right or liability, resort must be had to that particular
statutory remedy before invoking the discretionary
remedy under Article 226 of the Constitution. This
rule of exhaustion of statutory remedies is a rule of
policy, convenience and discretion.
27.6. In cases where there are disputed questions of
fact, the High Court may decide to decline
jurisdiction in a writ petition. However, if the High
Court is objectively of the view that the nature of the
controversy requires the exercise of its writ
jurisdiction, such a view would not readily be
interfered with."
21. The principle of alternate remedies and its exceptions
was also reiterated recently in the decision in Commr. of
State Tax v. Commercial Steel Ltd. [Commr. of State
Tax v. Commercial Steel Ltd., (2022) 16 SCC 447]
In State of H.P. v. Gujarat Ambuja Cement Ltd. [State of
H.P. v. Gujarat Ambuja Cement Ltd., (2005) 6 SCC 499]
this Court has held that a writ petition is maintainable
before the High Court if the Taxing Authorities have
acted beyond the scope of their jurisdiction. This Court
observed : (Gujarat Ambuja Cement case [State of
H.P. v. Gujarat Ambuja Cement Ltd., (2005) 6 SCC 499]
, SCC pp. 517-18, para 23)
"23. Where under a statute there is an allegation of
infringement of fundamental rights or when on the
undisputed facts the Taxing Authorities are shown to
have assumed jurisdiction which they do not possess
can be the grounds on which the writ petitions can be
entertained. But normally, the High Court should not
entertain writ petitions unless it is shown that there is
something more in a case, something going to the
root of the jurisdiction of the officer, something which
would show that it would be a case of palpable
injustice to the writ petitioner to force him to adopt
the remedies provided by the statute. It was noted by
this Court in L. Hirday Narain v. CIT [L. Hirday
Narain v. CIT, (1970) 2 SCC 355] that if the High
Court had entertained a petition despite availability
of alternative remedy and heard the parties on merits
it would be ordinarily unjustifiable for the High Court
to dismiss the same on the ground of non-exhaustion
of statutory remedies; unless the High Court finds
that factual disputes are involved and it would not be
desirable to deal with them in a writ petition."
7.2. What emerges from the above report that ordinarily the High
Court should refuse to entertain the writ petition under Article 226 of the
Constitution of India if the efficacious alternative remedy is provided in
the statute. Ordinarily, the High Court should relegate the parties to
exhaust the statutory remedy so provided unless the challenges thrown in
the writ petition to the action of the authorities is in gross violation of the
fundamental rights guaranteed under Part-III of the Constitution;
violation of principles of natural justice; vires of the Act or the
subordinate legislation and the order or the proceeding is wholly without
jurisdiction. It is highlighted that the High Court may decline to entertain
the writ petition if it involves a disputed question of facts subject to the
objective satisfaction of the High Court that it invites the exercise of the
jurisdiction. Even though the power of the writ Court is not brindled in
absolute sense, yet the High Court may refuse to entertain the writ
petition in the event the point raised therein is amenable to be assailed
before the statutory forum provided the case of such nature as envisaged
in the above report is made out. The plea of jurisdiction striking at the
root of the powers exercised by the statutory authority can be determined
by the writ Court provided there appears to be a complete lack of such
power and once the Court find a little departure, it should ordinarily
relegate the parties to the forum available in the statute.
8. In the present case, there is no dispute on the conferment of power
upon the proper officer to make inspection, search and seizure upon the
formation of a reason to believe that a taxable person has suppressed any
transaction relating to the supply of goods and services or both or the
stock of goods in hand or any goods liable to confiscation or any
documents, books or things which in his opinion shall be useful and
relevant to any proceeding under the Act, sub-Section (2) of Section 67
is quoted as under:
"67. Power of inspection, search and seizure
xxx xxx xxx
(2) Where the proper officer, not below the rank of Joint
Commissioner, either pursuant to an inspection carried
out under sub-section (1) or otherwise, has reasons to
believe that any goods liable to confiscation or any
documents or books or things, which in his opinion shall
be useful for or relevant to any proceedings under this
Act, are secreted in any place, he may authorise in
writing any other officer of State tax to search and seize
or may himself search and seize such goods, documents
or books or things:
Provided that where it is not practicable to seize any
such goods, the proper officer, or any officer authorised
by him, may serve on the owner or the custodian of the
goods an order that he shall not remove, part with, or
otherwise deal with the goods except with the previous
permission of such officer:
Provided further that the documents or books or things
so seized shall be retained by such officer only for so
long as may be necessary for their examination and for
any inquiry or proceedings under this Act."
9. It is thus evident and eminent from the aforesaid provision that the
power is conferred upon the proper officer to make search and seizure on
a perceive reason to believe the eventualities provided in Section 67
liable to confiscation. It therefore cannot be said that the power to
confiscate is eminently and/or evidently absent in the said proper officer
and, therefore, exercise of such power cannot be fundamentally flawed
on the ground of complete lack of inherent jurisdiction and powers. Even
Section 122 of the Act exposes the taxable person liable for a penalty in
the event it supplies any goods or services or both without issue of any
invoices or issues an incorrect or false invoice with regard to any supply
apart from the other incidents provided therein. Section 130 of the Act
contains an exhaustive provision relating to the confiscation of goods or
a conveyance and a levy of penalty which imbibes within itself the
eventuality of supplying or receiving any goods in contravention to any
provisions of the Act or the Rules made thereunder with intend to evade
payment of tax. Sub-Section (2) of Section 130 of the Act postulates an
option to pay a redemption fine in lieu of the confiscation. The conjoint
reading of the provision as aforesaid are the expositions of the powers
and the jurisdiction conferred upon the proper authorities not only to the
inspection, search and seizure, but also the confiscation the goods and
the payment of redemption fine in lieu of such confiscation. It is thus not
a case of a complete lack of jurisdiction or powers, but hovers around the
exercise of such powers or jurisdiction in relation to goods liable to
confiscation and the meaning to be assigned to the word 'goods'. The
word 'goods' is defined in Section 2 (52) of the said Act to mean every
kind of movable property other than money and securities and includes
actionable claim, growing crops, grass and things attached to or forming
part of the land which are agreed to be severed before supply or under a
contract of supply.
10. The canon of statutory interpretation in relation to a meaning to be
assigned to a word given in the said statute which contain the
expressions, "means and includes" should be given a broader meaning.
The word 'include' in a definition provision is always regarded as
expansive definition and, therefore, a word of wide connotation. It
imbibes within itself, the things which apart from the other meaning, but
included within the meaning of the said word and, therefore, to be
considered in a wider perspective. The expression "every kind of
movable property" has to be understood on the meaning assigned to the
goods in the said definition section and, therefore, any restrictive
meaning ascribed to the said word would oppose the legislative intent.
Although the goods in its grammatical meaning is understood in the
larger perspective, but the moment the definition is given in the statute,
wherever such word is appearing in the said statute, it should be ascribed
the meaning as given thereunder and no external aid should be resorted
to. The tangible movable property of every description or kind is
included within the definition of goods and, therefore, the expression
supplies or receives any goods in contravention to the provision of the
Act has to be understood in such literal sense and support from an
external aid should be avoided. In catena of judgments relied upon by the
respective parties on the powers of the authorities to confiscate the goods
and payment of redemption fine in lieu thereof delivered in a case of a
Customs Act are relied upon by the respective parties on the doctrine of
pari materia. The decision rendered by the Supreme Court in Weston
Components Ltd. v. Commissioner of Customs, New Delhi, 2000 (115)
ELT 278 (SC) is relied upon by the several High Courts and the
Supreme Court on the proposition when the goods are not physically
available for confiscation whether the redemption fine in lieu of such
confiscation is permissible in law. The apex Court in the said decision
held as under:
"It is contended by the learned counsel for the
appellant that redemption fine could not be imposed
because the goods were no longer in the custody of the
respondent-authority. It is an admitted fact that the
goods were released to the appellant on an application
made by it and on the appellant executing a bond.
Under these circumstances if subsequently it is found
that the import was not valid or that there was any
other irregularity which would entitle the customs
authorities to confiscate the said goods, then the mere
fact that the goods were released on the bond being
executed, would not take away the power of the
customs authorities to levy redemption fine."
11. The Bombay High Court in Finesse Creation INC (supra) held
that there is no fetter on the part of the authority to confiscate the goods
not physically available, but such situation would arise when the goods
which were physically available were released on execution of a bond or
undertaking and not otherwise in the following:
"5. In our opinion, the concept of redemption fine
arises in the event the goods are available and are to
be redeemed. If the goods are not available, there is no
question of redemption of the goods. Under Section
125 a power is conferred on the Customs Authorities in
case import of goods becoming prohibited on account
of breach of the provisions of the Act, rules or
notification, to order confiscation of the goods with a
discretion in the authorities on passing the order of
confiscation, to release the goods on payment of
redemption fine. Such an order can only be passed if
the goods are available, for redemption. The question
of confiscating the goods would not arise if there are
no goods available for confiscation nor consequently
redemption. Once goods cannot be redeemed no fine
can be imposed. The fine is in the nature of
computation to the state for the wrong done by the
importer/exporter."
12. In Chinku Exports (supra), the Tribunal in unequivocal term held
when the goods are not available physically for confiscation then in
absence of any bond or security for release thereof, the power of
confiscation should not be exercised and consequently, redemption fine
in lieu of confiscation cannot be imposed.
13. The Punjab and Haryana High Court in Raja Impex (P) Ltd.
(supra), upon taking note of the judgment of the apex Court in Weston
Components Ltd. (supra) and the judgment of the Tribunal in Chinku
Exports (supra) held thus:
"12. It may also be noticed here that in the case of M/s.
Weston Components Ltd. v. Commissioner of Customs,
New Delhi (supra), the goods were released to the
assessee on an application made by it and on the
execution of a bond by the assessee and in those
circumstances, the Hon'ble Apex Court held that the
mere fact that the goods were released on the bond
being executed would not take away the power of
custom authority to levy redemption fine. A reading of
the judgment/order of the Hon'ble Apex Court in M/s.
Weston Components Ltd. v. Commissioner of Customs,
New Delhi (supra), would show that the Apex Court
has taken the view that redemption fine can be imposed
even in the absence of the goods as the goods were
released to the appellant on an application made by it
and on the appellant executing a bond. Since the goods
were released on a bond the position is as if the goods
were available. The ratio of the above decision cannot
be understood that in all cases the goods were
permitted to be cleared initially and later proceedings
were taken for under-valuation or other irregularity,
even then redemption fine could be imposed. We are,
therefore, not inclined to accept the contention raised
by the appellant on this issue and set aside the
redemption fine.
13. The reliance of learned counsel for the
revenue upon the provisions of Section 125 of the Act is
also misconceived. Section 125 of the Act is applicable
only in those cases which have been cleared by the
concerned authorities subject to furnishing
undertaking/bond etc. However, in the present case,
admittedly, the goods were cleared by the respondent-
authorities without execution of any bond/undertaking
by the assessee. Thus, in view of the fact and
circumstances of the case, we find no error in teh
impugned orders. No substantial question of law arises
for our determination in the present appeal and the
same is hereby dismissed."
14. We need not multiply the other judgments so cited on such
proposition as the distinction is noticeable that in relation to a
confiscation of the goods under the Customs Act, in the event, the goods
are released on bond or on undertaking and subsequently the same is
held liable to confiscate, there is no fetter on the part of the authorities in
confiscating such goods even in absence of its physical presence and
imposition of redemption fine in lieu thereof. Even in case of Synergy
Fertichem Pvt. Ltd. (supra), the Division Bench of the Gujarat High
Court dealing with the case concerning the powers of the authority under
Section 130 of the Act held that pre-requisite condition enshrined in
Section 130 of the Act is that the goods are liable to be confiscated and
the fine in lieu thereof, if paid, may not invite such confiscation and held
as under:
"174. The per-requisite for making an offer of fine
under Section 130 of the Act is pursuant to the finding
that the goods are liable to be confiscated. In other
words, if there is no authorisation for confiscation of
such goods, the question of making an offer by the
proper officer to pay the "redemption fine", would not
arise. Therefore, the basic premise upon which the
citadel of Section 130 of the Act rests is that the goods in
question are liable to be confiscated under the Act. It,
therefore, follows that what is sought to be offered to be
redeemed, are the goods, but not the improper conduct
of the owner to transport the goods in contravention of
the provisions of the Act or the Rules. We must also bare
in mind that the owner of the goods is liable to pay
penalty under Section 122 of the Act. The fine
contemplated is for redeeming the goods, whereas the
owner of the goods is penalized under Section 122 for
doing or omitting to do any act which rendered such
goods liable to be confiscated under Section 130 of the
Act. In the aforesaid context, we may refer to and rely
upon a decision of the Madras High Court in the case of
M/s. Visteon Automotive Systems vs. The Customs,
Excise & Service Tax Appellate Tribunal, C.M.A
No.2857 of 2011, decided on 11th August, 2017, wherein
the following has been observed in para-23;
"23. The penalty directed against the importer
under Section 112 and the fine payable
under Section 125 operate in two different fields.
The fine under Section 125 is in lieu of confiscation
of the goods. The payment of fine followed up by
payment of duty and other charges leviable, as per
sub-section (2) of Section 125, fetches relief for the
goods from getting confiscated. By subjecting the
goods to payment of duty and other charges, the
improper and irregular importation is sought to be
regularised, whereas, by subjecting the goods to
payment of fine under sub-section (1) of Section
125, the goods are saved from getting confiscated.
Hence, the availability of the goods is not
necessary for imposing the redemption fine. The
opening words of Section 125, "Whenever
confiscation of any goods is authorised by this Act
....", brings out the point clearly. The power to
impose redemption fine springs from the
authorisation of confiscation of goods provided for
under Section 111 of the Act. When once power of
authorisation for confiscation of goods gets traced
to the said Section 111 of the Act, we are of the
opinion that the physical availability of goods is
not so much relevant. The redemption fine is in fact
to avoid such consequences flowing from Section
111 only. Hence, the payment of redemption fine
saves the goods from getting confiscated. Hence,
their physical availability does not have any
significance for imposition of redemption fine
under Section 125 of the Act. We accordingly
answer question No.(iii). "
15. We may not lose sight of a Division Bench judgment of this Court
in Shri D. Murali Mohan Patanaik v. Secretary to Government of
Odisha, Finance Department and others (W.P.(C) No.34787 of 2022
decided on 31st January, 2023) wherein in an identical situation and on
somewhat parity of facts, the Court declined to exercise the power under
Article 226 of the Constitution of India in order to apply and appreciate
the decision of the coordinate Bench, it is our ardent duty to find the
facts parity. Undeniably, on the basis of a search and seizure, several
documents/materials were seized detecting the shortage of the sizable
quantity of MS Billet which was not accounted for nor any valid tax
invoices were issued and, therefore, intended to evade the payment of
tax. The materials/documents were sized under Form-GST INS-02.
Immediately, the show cause notice was issued on 27th March, 2023 as to
why the proceeding should not be initiated and confiscation of the goods
be not made. The petitioner communicated the authority that the
Company has admitted the stock discrepancies and agreed to pay the
calculated amount of penalty and fine in lieu of confiscation under
Section 130 of the Act. Solely on the basis of such confession on the
shortage of stocks and concession on payment of penalty and fine in lieu
of confiscation, the demand order was issued which was challenged
under Section 106 of the Act before the appellate authority beyond the
outer limit set forth under the said provision. The appellate authority
refused to condone the delay of nearly two years as the power of
condonation of the period in filing the appeal have put a outer limit
beyond which the appellate authority cannot exercise powers.
16. We find no ambiguity in the order of the appellate authority as the
law is somewhat settled that the moment the outer cap is fixed in the
statute beyond which the authority cannot travel, the rejection in this
regard cannot be faulted with. The discretion vested upon the authority
to condone the delay if brindled with an outer cap being fixed in the
statute, the authority cannot exercise the power beyond such limit.
17. The petitioner was conscious that the order of the appellate
authority in rejecting the application on the ground of limitation cannot
be assailed on the legal parameters took a circuitous route under Article
226 of the Constitution of India assailing the show cause notice and
imposition of the redemption fine in lieu of confiscation of a goods
which is not physically available.
18. In the identical circumstances, the coordinate Bench in case of
Shri D. Murali Mohan Patanaik (supra) as referred above found that
once the payment is made without protest it is not open to challenge the
entire procedure adopted for confiscation liable to be struck down.
Though the petitioner in the instant case pleaded that the said payment of
redemption fine and penalty was under protest, but we do not find from
the documents that any such protest was recorded; rather, there has been
categorical stand taken before the authority admitting the shortage of the
stocks and conceding the payment of penalty and the fine in lieu of
confiscation. The coordinate Bench in such perspective where the
payment is made without any protest refused to exercise the jurisdiction
under Article 226 of the Constitution of India in the following:
"7. Initially, Mr. Pattanaik, learned counsel for the
Petitioner repeatedly urged that he was aggrieved by the
above letter. When it was pointed out to him that there
was nothing in the letter about which he can be
aggrieved, his contention was that the Petitioner had
actually made payments under protest and was, on
account of the above letter, unable to file any appeal
against the demands already raised and which had been
paid by the Petitioner.
8. If the Petitioner wanted to contest the demand raised,
he ought to have adopted the procedure already outlined
under Rule 142 (1A) of the OGST Rules. For reasons
best known to him, he did not opt for that procedure.
Also, till date, he has actually not registered any protest
with the Department which ought to have been made
contemporaneous with the making of the payment. Three
months after making such payment, he has sent a vague
letter contending that the liability is "not acceptable"
which is neither here nor there since the Petitioner had
already made the full payment of the tax demanded.
9. The Petitioner has by his own conduct disabled
himself from availing the remedy available to him in
law, if indeed the payment was made under protest.
Since, there is no material to support the contention of
the Petitioner that he made payment of the demanded
tax under protest, the Court is not persuaded to accept
such submission at this stage."
19. The comity of the judicial discipline demands the adherence of the
decision of the coordinate Bench and the only option left to the
subsequent coordinate Bench in the event of any dissent to refer the
matter to the Chief Justice to constitute a Larger Bench. The subsequent
coordinate Bench must record a cogent reason for dissent and in the
event, noticeable materials are not eminent and evident, uniformity in a
decision is the virtue.
20. In view of the discussions made hereinabove, we do not find that
the instant case warrants invocation of extraordinary powers conferred
under Article 226 of the Constitution of India.
21. The writ petition thus fails. No order as to costs.
I agree.
(B.P. Routray) (Harish Tandon)
Judge Chief Justice
S.K. Guin/PA
Designation: Personal Assistant
Location: High Court of Orissa, Cuttack
Date: 15-May-2025 19:19:04
