Judgement

RANGANATH MISRA, J.:- The fate of this appeal under S. 35(L), Central Excises and Salt Act, 1944, depends upon the meaning and scope of the Explanation appearing in S. 11 A of the Act.

2. The High Court of Karnataka by its order dated 4-6-1976 in Writ Petition No. 2632 of 1976 gave the following direction :

"Pending disposal of the aforesaid Writ Petition, it is ordered by this Court that collection of excise duty as a fabric be and the same is hereby stayed. It is further ordered that the petitioner shall however continue to pay excise duty as yarn and shall further maintain an account in square metres for future clearance."

The said writ petition was ultimately dismissed by the High Court on 16-2-1981. The operative part of the Courts final order ran thus :

"For the reasons aforesaid, we make the following order :-

(i) Rule discharged;

(ii) We decline to interfere at this stage leaving open to the petitioner to urge all the contentions in reply to the show cause notices."

3. On 20th May, 1982, a notice to show cause was issued to the appellant by the Assistant Collector, being Notice No. 913, and with this the Collector sought to raise a demand for the period from 20th June. 1976 to 28th February, 1981 apart from for the period between 1-4-1975 to 18-8-1975 in respect of which an earlier show cause notice dated 29-1-1976 had already been issued.

4. It is not disputed by the Revenue that the appropriate period of limitation to apply to the facts of the case is, six months- as provided in S. 11A of the Act and that the Notice issued on 20th of May, 1982 was beyond that period. Reliance was placed on the Explanation for obtaining extension of that period. The Explanation reads thus :

"Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years,, as the case may be."

The provision in the Explanation incorporates a well-known principle of law. Section 15, Limitation Act, 1908 (also of, S. 15, Limitation Act, 1963) incorporates the same principle. This Court in Sirajul Haq Khan v. Sunni Central Board of Waqf, U.P., 1959 SCR 1287, dealt with the effect of an order of injunction in the matter of computation of limitation. At page 1302 (of SCR) : (at P. 205 of AIR) of the Reports, Gajendragadkar, J. as he then was, spoke for the Court thus :

"It is plain that, for excluding the time under this section, it must be shown that the institution of the suit in question had been stayed by an injunction or order; in other words, the section requires an order or an injunction which stays the institution of the suit. And so in cases failing under S. 15, the party instituting the suit would by such institution be in contempt of Court.

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But, in our opinion, there would be no justification for extending the application of S. 15 on the ground that the institution of the subsequent suit would be inconsistent with the spirit or substance of the order passed in. the previous litigation ..............."

In the instant case, the order of stay passed by the Karnataka High Court had only stayed the collection of the excise duty, which is a stage following levy under the scheme of the Act. Obviously there was no interim direction of the High Court in the matter of issue of notice for the purpose of levy of duty. The relevant portion of S. 11 A provided :

"(1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice :

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(2) The Assistant Collector of Central Excise, shall, after considering the represe