1996 Supreme(Mad) 621

High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. K.A. SWAMI AND THE HONOURABLE MR. JUSTICE RAJU
Eternit Everest Limited - Appellant
Versus
Union of India - Respondents
Writ Petition Nos. 11017 & 11018/92
Decided On : 25 June 1996

Headnote:

Whether Section 11D of the Central Excises and Salt Act, 1944, hereinafter referred to as 'the Act', is ultra vires and unconstitutional, so far as the other writ petitions are concerned, they relate to similar show-cause notices issued relating to different periods demanding different sums of amount as set out hereunder :- Held, that the Parliament had the necessary legislative competence to enact Section 11D in the Act and the challenge made in this regard is nothing but a sheer exercise in futility. It is by now well settled that a legislative measure need not necessarily be confined to any one topic of legislation or enumerated entries and it can encompass powers conferred under more than one entries. Consequently, it cannot be successfully contended for the petitioners that a law relating to Central Excise and Salt Act in question must be only referable to and have its source and origin in Entry 84 only and not any other entries or the powers inclusive of the undisputed residuary powers of Parliament under Article 248 of the Constitution read with Entry 97 of List I of the Constitution.

Fact of the Case:

The above batch of writ petitions have been filed by the very same writ petitioner, challenging the show cause notices issued as also in one writ petition the constitutional validity of Section 11D of the Central Excises and Salt Act, 1944, hereinafter referred to as 'the Act'. Several writ petitions relate to the various show cause notices issued for different periods and in other respects, the grounds of challenge are similar and identical. For a proper understanding of the grievance of the petitioner and an appreciation of the points urged on either side, it would be useful to refer to the facts pertaining to W.P. Nos. 11017 and 11018 of 1992.

Finding of the Court:

The petitioners, in the affidavit filed in support of the writ petitions, contend that the provisions of Section 11D of the Act are ultra vires and in excess of the legislative competence of Parliament under Entry 84 of List I of the VII Schedule to the Constitution since, according to the petitioners, the provision in the Act provides for the deposit of amounts which are collected as 'representing' excise duty, though, in fact, it may not be payable as such duty. The further grounds of challenge in the affidavit are that the show-cause notices are totally illegal and arbitrary inasmuch as the petitioners have not charged or collected any amount as excise duty or representing to be the excise duty in respect of UT Products from their customers, and the said move of the respondent is opposed to the price list submitted by the petitioners. The show-cause-cum-demand notices under challenge are also said to be pre-mature in that no such assumption could be made by the authorities before the issue of the final approval of the classification list which were said to be pending as on 13-7-1992 when the first of the notices came to be issued. The further plea on behalf of the petitioners is that Sections 11A and 11D of the Act are mutually exclusive having different schemes and purpose and also situations to be dealt with by them and they cannot be simultaneously invoked as have been done by the respondents by issuing the impugned notices and therefore, there is no scope to proceed against the petitioners under Section 11D read with Section 11A of the Act. On merits, the petitioners contend that the petitioners have not factually collected any excise duty on the U.T. Products from their customers representing any portion of the price to be towards excise duty, that at any rate, the provision of Section 11D does not provide for any issue of notice or taking of action or adjudication of any claim and that Section 11A has no application whatsoever to the case on hand.

Issues: 1. Whether Section 11D of the Central Excises and Salt Act, 1944, hereinafter referred to as 'the Act', is ultra vires and unconstitutional? 2. Whether the show-cause notices issued are totally illegal and arbitrary? 3. Whether the show-cause-cum-demand notices under challenge are also said to be pre-mature in that no such assumption could be made by the authorities before the issue of the final approval of the classification list which were said to be pending as on 13-7-1992 when the first of the notices came to be issued? 4. Whether Sections 11A and 11D of the Act are mutually exclusive having different schemes and purpose and also situations to be dealt with by them and they cannot be simultaneously invoked as have been done by the respondents by issuing the impugned notices and therefore, there is no scope to proceed against the petitioners under Section 11D read with Section 11A of the Act?

Ratio Decidendi: The Apex Court held that the impugned proceedings issued in the nature of demand-cum-show cause notices are totally without jurisdiction and, therefore, liable to be and are hereby quashed. By doing so, we are not to be understood to have wiped of the liability created under Section 11D or exonerated the petitioners from liability to pay to the credit of the Central Government any amount by the petitioners, if they have really been found to have collected from the buyer of any goods as representing duty of excise when there was no liability at all in respect of such goods under the Act. On the other hand, we categorically declare that the statutory liability and obligation cast upon the petitioners if they have really been found to have collected any amount from the buyer of any goods in any manner as representing the duty of excise to pay the amount so collected to the credit of the Central Government preserved, protected and kept in tact and is not in any manner interfered with or undermined by this order.

Final Decision: The writ petitions are allowed to the above limited extent with the liberties as indicated. No costs.