TIOL-DDT 167 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b><font color="#663399" size="3">TIOL-DDT
167</font><br>
28 07 2005<br>
Thursday</b></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Litigation – a national pastime?</b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 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. <br>
<br>
<b>DDT</b> today recalls an interesting case from our archives – an
order from the Hon’ble High Court of Andhra Pradesh. – </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2003/2003-TIOL-113-HC-AP-CX.htm">2003-TIOL-113-HC-AP-CX</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<br>
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. <br>
<br>
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. <br>
<br>
The assessee took the matter in writ petition to the Supreme Court on the
plea that <br>
<br>
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<br>
<br>
2. If Section 11A is applied, the time limit of six months precludes the recovery
at this distance of time under the Act <br>
<br>
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<br>
<br>
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
<br>
<br>
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 <br>
<br>
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.<br>
<br>
<b>The High Court was not impressed. It observed that <br>
</b><br>
• 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<br>
<br>
• 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<br>
<br>
• 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. <br>
<br>
• 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<br>
<br>
• The absence of specific direction by the Supreme Court authorising
the respondents to recover back the money shall not make any difference<br>
<br>
• 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. <br>
<br>
• 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<br>
<br>
• 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.
<br>
<br>
• 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<br>
<br>
• 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<br>
<br>
• 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<br>
<br>
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,<br>
<br>
<font color="#FF6666"> 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.</font><br>
<br>
<font color="#006633"><b>Anti Dumping - hook and loop tape fasteners</b></font><br>
<br>
The provisional anti dumping duty imposed on narrow woven fabrics having pile
weave made up of manmade fibres, used as a fastening tape (also known as hook
and loop tape fasteners or Velcro tapes or fastening tapes) originating in,
or exported from Peoples Republic of China and Chinese Taipei by notification
No.8/2005-Customs, dated the 14th February, 2005, is now confirmed from the
original date of imposition. <br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_076.htm">NOTIFICATION
NO. 76/2005-CUSTOMS, Dated : July 25, 2005</a><br>
<br>
<font color="#006633"><b>IT Returns in Maharashtra can be filed by 31st August<br>
</b></font><br>
The Income Tax department has reacted quickly to the Mumbai floods. Income
Tax assessees in Maharashtra can now file their returns due in July by 31st
August 2005, clarifies CBDT in letter No. 2201/1/2005- IT A-II dated 27.7.2005.
The drenched Mumbaites have a respite. The CBDT had issued a similar letter
dated 8.7.2005 extending the date for assessees in Gujarat. Will CBEC follow
suit?<br>
<br>
<font color="#006633"><b>Import of seeds for sowing – free</b></font><br>
<br>
The DGFT has amended ITC(HS) to make import of seeds for planting and sowing
free subject to the new Policy on Seed Development, 1988 and in accordance
with import permit granted under Plants, Fruits and Seeds (Regulation of import
into India) Order, 1989.<br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2005/dgft05not016.htm">DGFT
NOTIFICATION NO. 16 (RE-2005)/2004-2009, Dated: July 26, 2005</a><br>
<br>
<font color="#006633"><b>CBEC’s retention orders of Assistant Commissioner/Deputy
Commissioners</b></font><br>
<br>
The CBEC yesterday issued what it called transfer and posting orders of 42
ACs/Dcs. What in fact it did was to retain many of the officers transferred
in the last order. This order once again proves that the CBEC is simply sitting
on a large workforce that doesn’t work or are not needed. A classic
example is Guntur where there is no Commissioner for the last six years. The
fact that this Commissionerate was running rather efficiently without a Commissioner
for the last six years is ample proof that there is really no need for a Commissioner
there. Why can’t the government abolish that post and many others which
are not filled? <br>
<br>
Coming back to yesterday’s transfer order, out of the 42 names, 34 are
retained in their old stations. The CBEC order says, “All the officers
should be relieved <b>immediately</b>”. These are the officers who were
not immediately relieved in the last transfer order. Now these 34 officers
who are retained in their present stations were posted to places where there
were vacancies obviously. Strangely CBEC has not posted anyone to these posts.
For example 11 officers posted to Kolkota are retained in their old places.
And nobody is posted in their places. So these 11 posts are vacant in Kolkotta.
Three officers posted to NACEN, Faridabad are retained which means NACEN will
have to do without those three ACs. Three ACs who were posted to Vizag are
retained with no substitute posting to Vizag. This means Vizag has to do without
the services of three ACs which it will eminently manage to. <br>
<br>
<font color="#FF6666">AS PER DEPARTMENT OF EXPENDITURE MINISTRY OF FINANCE
LETTER NO.(4)E.COORD(I)/2001 DATED 27 MARCH 2001, ANY POST LYING VACANT FOR
MORE THAN ONE YEAR IS TREATED AS DEEMED ABOLISHED POST.</font><br>
<br>
<b>Why is the Board not abolishing these posts?</b><br>
<br>
<font color="#FF6666"><b>Until Tomorrow with more DDT<br>
<br>
Have a nice day. <br>
<br>
Mail your comments to</b></font> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a>
</font> </p>
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