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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SUNIL E. DESHMUKH, ABHAY AHUJA, JJ.
M/s Runwal Constructions – Appellant
Versus
Union of India – Respondent
Writ Petition No. 1335 of 2009
Decided on : 22-04-2021.
Constitution of India,1950 – Article 226 - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – Section 26E - Maharashtra Value Added Tax Act, 2002 – Section 37 and 37(1) - Central Excise Act, 1944 -Claim of Excise duty – Property - Petitioner has filed petition for following principal relief, Issue Writ of Certiorari and/or any other appropriate writ, order or direction in the nature of Certiorari calling for papers and proceedings relating to impugned notices - Petitioner, is a Partnership firm registered under the Indian Partnership Act, 1932 and carries on business of construction and development. 2nd Respondent is the office of Assistant Commissioner of Central Excise having claim of Excise duty dues against Respondent viz. M/s. Bluemoon Engineers Limited and is now claiming same from the Petitioner - It appears that certain property belonging to company known as M/s. HMP Engineering Ltd., had been mortgaged to Indian Bank as security for certain facilities provided by the Bank to Respondent No. 3 -Company - In exercise of its rights as a mortgagee, Bank intended to sell said property to recover its dues from Respondent -Whether the appellant had agreed to discharge dues payable to Excise department by borrower.
Finding of the Court: In view of discussion, where court have found that in view of decision of Supreme Court in the case of Rana Girders (supra), Petitioner would not be liable to excise duty dues of Respondent No.3- borrower, having purchased only land and not entire business of borrower in the public auction, decision of the Nagpur bench in the case of Medineutrina (supra) would not whelm the present case as the said decision has not considered-As far as the reliance of the learned Counsel- Petitioner on the decision of this Court in the case of State Bank of India v/s. State of Maharashtra (supra) is concerned, there appears to be no doubt about conclusion in the said decision that if any Central Statute creates priority of a charge in favor of a secured creditor, the same will rank above charge in favor of a State for a tax due thereunder - That the mortgage of the secured creditor will get prior charge over the revenue – Order accordingly
Result: Excise duty - Proviso to section 11 refers to transfer or disposal of business or trade in whole or in part. It does not refer to the transfer or disposal of mere assets – Proviso not applicable
JUDGMENT :
Abhay Ahuja, J.
1. By this petition filed under Article 226 of the Constitution of India, 1950, the Petitioner is challenging notices dated 29th/30th January, 2008, 17th October, 2008 and 14th May, 2009 by which the Respondent No. 2 purports to prohibit and/or restrain Petitioner from transferring or charging the property situated at Mulund, Mumbai for alleged non-payment of Excise duty by Respondent No. 3.
2. Petitioner has filed the petition for following principal relief:
3. Petitioner, is a Partnership firm registered under the Indian Partnership Act, 1932 and carries on business of construction and development. 2nd Respondent is the office of the Assistant Commissioner of Central Excise having claim of Excise duty dues against Respondent No. 3 viz. M/s. Bluemoon Engineers Limited (earlier known as “HMP Engineering Ltd.”) and is now claiming the same from the Petitioner.
4. It appears that certain property admeasuring 24,280.94 square meters situated at Mulund, Mumbai (the “said property”) belonging to company known as M/s. HMP Engineering Ltd., (name was subsequently changed to Blue Moon Engineers Ltd. i. e. Respondent No.3 ) had been mortgaged to Indian Bank (for short “the Bank”) as security for certain facilities provided by the Bank to Respondent No. 3 -Company. In exercise of its rights as a mortgagee, the Bank intended to sell said property to recover its dues from Respondent No. 3.
5. At an auction conducted by the Debt Recovery Tribunal (for short “DRT’), Kolkata, Petitioner’s offer was accepted. Petitioner was declared successful bidder. The same was confirmed by the DRT by an order of confirmation of sale dated 14.09.2004 and vide Certificate of Sale of immovable property dated 05.11.2004, it was certified that by aforesaid order of the DRT, Petitioner was declared purchaser of the property for a consideration of Rs. 12 crores paid by the Petitioner.
6. The certificate of the Sale dated 05.11.2004 was stamped and subsequently registered with the office of Sub-Registrar of Assurances, Kurla - 2 on 05.01.2005.
7. Petitioner submits that pursuant to the purchase, it has also issued a public notice dated 31.03.2005 inviting claims in respect of said property.
8. By letter dated 7th April, 2005 addressed to Petitioner’s Advocate, Respondent No. 2 informed that there was an amount of more than Rs. 1.75 crores payable by Respondent No. 3-Company to the Respondent No. 2 as and by way of Excise Duty and therefore the Petitioner could not claim any title to the property unless said Excise duty claim was settled.
9. Thereafter, Petitioner received a notice dated 29th/30th January, 2008 from the Assistant Commissioner directing Petitioner to pay an amount of Rs. 1,41,40,767.59 and penalty of Rs. 33,93,609/- to the 2nd Respondent stating that Petitioner had purchased the property with all statutory liabilities.
10. It is submitted that at the time of the purchase, Petitioner was unaware of the Excise duty payable by Respondent No. 3 - Company and is not liable to pay any Excise duty and/or alleged arrears of Respondent No. 3 claimed by Respondent No. 2 from Petitioner. It is with this background, after receiving the notice dated 29th/30th January, 2008, Petitioner by letter dated 31.01.2008, immediately informed Respondent No. 2 that the property was acquired at an auction held by the DRT, Kolkata and the same was acquired only with workers liability which had already been paid/settled; that Petitioner had nothing to do with the payment of any Excise duty or arrears thereof which is the liability of Respondent No. 3.
11. Petitione
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