Litigation – a national pastime?
Today we are carrying an interesting case (See Breaking News). An assessee challenged a levy. The Supreme Court ordered the assessee to pay 50% of the duty and to execute a bond for the balance 50%. Ultimately the party lost the case and the Superintendent asked the assessee to pay up. The assessee went to a civil court and from there to the High Court and then to the Commissioner (Appeals) and finally the Tribunal. A litigation that started in 1981 was decided by the Tribunal this month. There is a fair chance of litigation of two more rounds. The Tribunal held that the assessments were provisional and so there was no need of a Show Cause Notice.
DDT today recalls an interesting case from our archives – an order from the Hon’ble High Court of Andhra Pradesh. –
The High Court in a writ petition ordered the Central Excise department to refund an amount of Rs. 18.49 Lakhs to the assessee relating to excise duty paid. The department went in appeal to the Supreme Court, but in the meanwhile respecting the High Court order refunded the money to the assessee. The Supreme Court allowed the appeal and set aside the High Court order.
The Range Superintendent sent a letter to the assessee asking for the return of the refunded amount of Rs. 18.49 Lakhs. The assessee refused to pay up saying that the demand was time barred. The department then sent a detailed letter stating that the rejection of refund claim stood restored consequent to the Supreme Court judgement and the assessee was asked to pay up with threat of coercive action.
The assessee took the matter in writ petition to the Supreme Court on the plea that
1. There is no provision under the Central Excise Act to recover the duty refunded to it in accordance with a judgement of Court of law, other than the Section 11A
2. If Section 11A is applied, the time limit of six months precludes the recovery at this distance of time under the Act
3. Therefore, the Central Government can only have recourse to common law remedy of civil suit in which appropriate defences are open to the petitioner
4. When the law under which the duty was collected and refunded does not specifically provide for ‘re-restitution’, it is not open to the Revenue to take the law into their own hands by resorting to coercive process of recovery
5. during the pendency of the appeal in the Supreme Court, the petitioner not having knowledge of the appeal, passed on the benefit of refund to its dealers and therefore, there is no unjust enrichment
6. that the Revenue ought to have sought specific directions of the Supreme Court for the recovery of duty instead of unilaterally starting the recovery proceedings.
The High Court was not impressed. It observed that
• the petitioner cannot invoke the extraordinary jurisdiction of the Court under Art. 226 to circumvent and defeat the judgment of the Supreme Court, which binds one and all
• Any relief granted by the High Court ought not to run counter to the spirit of the judgement of Supreme Court and the effect thereof cannot be nullified by denying effective execution
• The question is not whether the amount should be recovered under the doctrine of restitution or on applying a specific provision contained in the Act or the Rules.
• The real question is whether this Court should in exercise of its jurisdiction under Art. 226 lend its helping hand to a party who does not want to disgorge the unwarranted benefit which it got under the judgement of the High Court, despite the reversal of the judgment by the Apex Court
• The absence of specific direction by the Supreme Court authorising the respondents to recover back the money shall not make any difference
• The plain and logical consequence of the judgment setting aside the judgment of the High Court which ordered refund is to restore status quo ante and imposing a duty and obligation on the assessee who got the refund under the overruled judgment to pay back that amount.
• In the absence of specific order placing restrictions or conditions on the entitlement to recover back the amount refunded during the pendency of appeal, the unsuccessful assessee cannot approach this Court to scuttle the recovery instead of discharging its obligation voluntarily
• The petitioner has no legal or moral right to approach this Court under Article 226 raising hyper-technical grounds to wriggle out of the situation in which it is placed in the aftermath of the judgment of the Supreme Court.
• The argument that there is no provision in the Act to call back the amounts refunded under a superseded judgment and the reasoning that both the assessee as well as the Revenue should confine their claims for refund and restitution within the four corners of the Act, cannot be accepted
• The claim for refund arising in the course of proceedings under the Act stands on a different footing from the obligation to pay back the amount which the assessee is not entitled to retain as a necessary consequence of the judgment of the highest Court
• it is unbelievable that an ordinary prudent businessman would, during the pendency of the appeal in the Supreme Court, take the risk of refunding the excess excise duty collected from its dealers/distributors
The party of course took the matter back to the Supreme Court in appeal against the High Court’s order but lost there too and finally paid up after nearly twenty years. Before parting, as they say in judicial orders, it is worth recalling a very interesting quote from the High Court’s order,
Legal ingenuity knows no bounds. It baffles an ordinary person whether the pleas such as those put forward in the present case could be available at all. The petitioners having got the refund pursuant to the judgment of this court which was later on reversed by the Supreme Court tries to resist the move of the Excise Department to recover back the amount refunded to it.