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2008 DIGILAW 928 (CAL)

Ranjan Kr. Banerjee v. STATE OF WEST BENGAL

2008-09-17

DIPANKAR DATTA

body2008
JUDGMENT:- (1.) Three orders, all dated 11.8.08, passed by the Collector of Excise, Kolkata (North) are the subject-matter of challenge in the present petition. By the first order (at pg. 41 of the petition), the Collector has cancelled the petitioners licence of the private warehouse for the deposit and storage of foreign liquor in exercise of power conferred by Section 42(1) (b) of the Bengal Excise Act (hereafter the Excise Act). Clause (b) (supra) authorizes cancellation of licence if any fee, tax or fee payable by the holder thereof is not duly paid. By the other two orders (at pgs. 42 and 43 of the petition), passed in exercise of power conferred by Section 42(2) of the said Act, two other licenses held by the petitioner were also cancelled. (2.) Mr. Kar, learned Counsel for the petitioner, led by Mr. Ghosh, learned Counsel while inviting the attention of the Court to various orders passed in earlier proceedings between the parties assailed the impugned orders by submitting that the same have been passed in clear violation of principles of natural justice. According to him, the notice to show cause, which preceded the final order of cancellation, did not at all specify the proposed action, viz. cancellation of licence and as such the petitioner was deprived of reasonable opportunity to show cause. Reliance in this connection was placed on the decision in S. L. Kapoor v. Jagmohan, reported in AIR 1981 SC 136 . Moreover, the learned Advocates who represented the petitioner at the hearing were not heard on a flimsy ground and the impugned orders were passed practically without hearing the defence version. It is further contended that whatever default had been committed by the petitioner in paying the taxes had been condoned by reason of the orders of the Division Bench of this Court in C.O.T.T. No. 2 of 2008 dated 12.8.08 and 14.8.08 and the petitioner having paid approximately Rs.1.3 crore out of the due amount of Rs. 1.9 crore and since is in the process of liquidating the balance amount in terms of the time frame fixed by the Taxation Tribunal, these are circumstances deserving kind consideration of this Court for granting interim relief, as prayed for. (3.) Mr. Gupta, learned Senior Counsel representing the Collector raised preliminary objection in respect of maintainability of the writ petition. 1.9 crore and since is in the process of liquidating the balance amount in terms of the time frame fixed by the Taxation Tribunal, these are circumstances deserving kind consideration of this Court for granting interim relief, as prayed for. (3.) Mr. Gupta, learned Senior Counsel representing the Collector raised preliminary objection in respect of maintainability of the writ petition. (4.) He contended that in view of Section 6 of the West Bengal Taxation Tribunal Act, 1987 (hereafter the T.T. Act) read with the decision in L. Chandra Kumar v. Union of India, reported in AIR 1997 SC 1125 , the remedy of the petitioner lies in approaching the Taxation Tribunal at the first instance. Elaborating on this point, he argued that the Taxation Tribunal has been empowered to adjudicate or try disputes or complaints with respect to, inter alia, all matters of enforcement of tax under any specified State Act (the Excise Act being one of such specified State Acts), and matters connected therewith or incidental thereto, and since the order cancelling licence of the petitioner for nonpayment of tax due being a consequent step to enforce of tax liability, hence a writ petition before a Single Bench of this Court would not be maintainable. He relied on the decision in M. A. Rahman v. The State of Andhra Pradesh, reported in 1961 (12) STC 392 wherein it was held that generally speaking cancellation of registration in cases like these is one more method of compelling payment of tax which is due to the State. On the strength thereof, he submitted that the provision for cancellation of licence for failure to pay tax [Section 42(1) (b) of the Excise Act) is designed to enable the State to recover the unpaid taxes and ought to be held to be a coercive process incidental to enforcement of tax under the Excise Act. (5.) Moreover, according to him, a forum of appeal is provided by Section 8 of the said Act. The orders passed by the Collector, impugned herein, are appealable in terms thereof. In view of existence of an efficacious alternative remedy, he urged the Court not to entertain the writ petition and to relegate the petitioners to the appellate forum. (6.) Answering Mr. Guptas contentions, Mr. Kar submitted that availability of an alternative remedy is not an absolute bar to maintain a writ petition. In view of existence of an efficacious alternative remedy, he urged the Court not to entertain the writ petition and to relegate the petitioners to the appellate forum. (6.) Answering Mr. Guptas contentions, Mr. Kar submitted that availability of an alternative remedy is not an absolute bar to maintain a writ petition. In the present case, the petitioner has complained of violation of principles of natural justice and, therefore, in view of the principle of law laid down in Whirlpool Corporation v. Registrar of Trade Marks, reported in 1998 (8) SCC 1 , the writ petition may be heard on merits. (7.) Regarding the other ground on which maintainability has been questioned, he urged that provisions contained in Section 6 of the T.T. Act have no application on facts and in the circumstances of the present case. According to him, Section 42(1)(b) of the Excise Act is not a provision which is conceived in aid of recovery of tax but any order passed under Section 42 thereof is a penal order necessitated by reason of fulfillment of any of the clauses from (a) to (g). The decision in M.A. Rahman (supra) was sought to be distinguished by inviting the attention of the Court to the fact that the object of the enactment impugned before the Supreme Court had really weighed in the mind of the Court in making the observations relied on by Mr. Gupta and that the object of the Excise Act is completely different. Therefore, he contended that the writ petition is maintainable and the petitioner is entitled to interim relief, as claimed. (8.) Having heard learned Counsel for the parties, this Court is of the considered view that in the event the first ground on which maintainability of the writ petition has been questioned is answered in favour of the Collector, the Court would not be required to decide any other issue having regard to the law laid down in L. Chandra Kumar (supra). Accordingly, it would be proper to decide that issue first. Accordingly, it would be proper to decide that issue first. (9.) Section 6 of the T.T. Act, insofar as the same is relevant for deciding the issue of maintainability of the present petition, is quoted below:-" 6.(1) Save as otherwise expressly provided in this Act, the Tribunal shall exercise, in respect of a State Act, with effect from the date on which such State Act is specified in the Schedule referred to in Section 5, all the jurisdiction, powers and authority exercisable immediately before the day by all Courts including the High Court but excluding the Supreme Court of India for adjudication or trial of disputes or complaints or offences with respect to all matters of levy, assessment, collection and enforcement of any tax under any specified State Act and matters connected therewith or incidental thereto: Provided that........................................................................." (10) The intendment of the aforesaid statutory provision is that the Taxation Tribunal would have jurisdiction in relation to matters of adjudication or trial of any dispute, complaint or offence, inter alia, with respect to enforcement of tax under the Excise Act, and of matters connected therewith or incidental thereto. (11.) In M. A. Rahman (supra), constitutional validity of sub-sections (1) and (6) of Section 4 of the Madras Sales of Motor Spirit Taxation Act, 1939 was questioned. While upholding constitutional validity of the impugned provisions, the Supreme Court had the occasion to rule that provision in Section 4(6) for cancellation of registration for failure to pay the tax is an additional coercive process which is expected to be immediately effective and would enable the State to realise its revenues, which is necessary for carrying on the administration in the interest of the general public. (12.) In terms of Clause (b) of Section 42(1) of the Excise Act, the power that has been conferred on the licensing authority may be exercised in the event of a failure to pay tax. Clause (b) serves as warning bell to the licensees not to keep tax payable unpaid and is nothing but a device to compel payment of tax that is due and payable. As has been held in M. A. Rahman (supra), the provision of cancellation is an additional coercive process to achieve the goal of realising taxes. The distinction sought to be drawn by Mr. Kar is not of relevance. As has been held in M. A. Rahman (supra), the provision of cancellation is an additional coercive process to achieve the goal of realising taxes. The distinction sought to be drawn by Mr. Kar is not of relevance. In the event of non-payment of tax by a licensee, ideally, a notice ought to issue asking him to pay the same within a stipulated time failing which the defaulting licensee may be asked to show-cause why action under Section 42(1)(b) shall not be initiated. Apart from other processes that might be available to the Government to recover unpaid taxes, the threat of any licence issued under the Excise Act itself being liable to be cancelled as a consequence of non-payment of tax, which the Government can lawfully claim from the licensee, is an additional coercive process intended to facilitate recovery of unpaid tax and the consequence is inescapable that the Collectors power to cancel a licence is incidental to the primary purpose of enforcement of the Governments right to demand tax from the licensee, which he is liable to pay. (13.) In view thereof, the Court holds that the preliminary objection raised by Mr. Gupta has substance. The writ petition, at this stage, cannot be entertained by this Court. It stands dismissed without any order as to costs. Dismissal of the writ petition shall not preclude the petitioner to approach the appropriate forum for relief. Since none of the points on merit has been decided, it shall be open to the petitioner to urge all such points as are available to him in law before the appropriate forum. Urgent Photostat certified copy of this order, if applied for, shall be furnished to the applicant at an early date.