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2021 DIGILAW 2261 (RAJ)

State of Rajasthan v. Rajasthan Tax Board, Ajmer

2021-12-02

DINESH MEHTA

body2021
JUDGMENT : Dinesh Mehta, J. 1. The writ petition in hands brings to the judicial scrutiny, an order dated 10.12.2019 passed by the Rajasthan Tax Board, Ajmer in appeal No. 1022/2018. 2. The facts giving rise to the extant petition are that respondent No. 2 supplied/sent 20,000 Bulk Litres Grain Rectified Spirit F.O.R. Rajasthan basis to the Rajasthan State Ganganagar Sugar Mills Ltd. at its Bikaner unit vide Transport permit no. JPR561017 dated 04.03.2016; transport permit no. PA16000511 dated 07.03.2016 and invoice No. 1540 dated 07.03.2016. 3. Before the tanker could reach its consignee at Bikaner Unit, it met with an accident on Kapurthala Sultanpur Road, near village Padian in Punjab and the Tanker turned turtle. As a consequence of the accident, major part of the spirit loaded therein spilled over. 4. The District Excise Officer wrote a letter dated 27.10.2017 to the petitioner No. 2 and asked it to recover a sum of Rs. 25,42,504/- from the bills of respondent No. 2 (as evident from letter dated 13.06.2018 - Annexure-5) 5. When the respondent No. 2 learnt that officers of the Excise Department were in the process of recovery of the duty as per the provisions of Rule 5 of the Stock Taking and Wastage of Liquor (At Distilleries and Warehouse) Rules, 1959 (hereinafter referred to as 'the Rules of 1959), it submitted a request letter dated 28.07.2016 to the Excise Commissioner and prayed that since the quantity of 13075.100 Bulk litres high strength rectified spirit has been lost due to an accident, the excise duty on such quantity be waived off/written off. 6. In furtherance of the request so made, the District Excise Officer, Bikaner sent a report, categorically confirming the factum of the accident and stating that the 13075.100 bulk litres of spirit in question has been lost on account of such accident, while also forwarding the request of the respondent No. 2 to waive off/write off the demand of excise duty that was proposed to be raised in terms of Rule 5 of the Rules of 1959. 7. A notice dated 01.05.2018 seems to have been issued by the District Excise Officer to the respondent No. 2 to appear on 07.05.2018 before the Excise Commissioner. 8. 7. A notice dated 01.05.2018 seems to have been issued by the District Excise Officer to the respondent No. 2 to appear on 07.05.2018 before the Excise Commissioner. 8. On the said date, representatives of the respondent - Company appeared before the Excise Commissioner and filed a reply/request, inter alia, beseeching that no duty be recovered from it, as the loss of spirit (13075.100 bulk litres) was on account of act of God, and there was no negligence on the part of respondent Company (consignor). 9. The Excise Commissioner turned down the request of respondent No. 2 vide communication dated 16.05.2018. 10. The respondent No. 2 preferred an appeal against such order/communication before the Rajasthan Tax Board, Ajmer. A Division Bench of the Board vide its order dated 10.12.2019 allowed the appeal after considering the material available on record. The Board held that the loss of spirit in question was indeed on account of act of God/due to an accident involving no negligence on the part of the appellant and that the reason for the loss/wastage was a cause beyond his control and therefore, no excise duty can be charged. 11. While allowing the appeal of the respondent No. 2, the Tax Board gave a direction to refund the amount of excise duty collected with respect to purported loss of 13075.100 bulk litres spirit in the transit. 12. The State is before this Court, invoking its jurisdiction under Article 226/227 of the Constitution of India, calling the above order of the Tax Board in question. 13. Mr. Girish Sankhla, learned counsel for the petitioners invited Court's attention towards the provisions contained in Rule 5(5) of the Rules of 1959 and contended that the respondent No. 2 Company was under a statutory obligation to pay the excise duty on the wastage, regardless of the fact that the same was a result of vehicular accident. 14. While not disputing the factum of the accident, learned counsel for the petitioner argued that the mandate of Rules of 1959 has to be observed and that the respondent No. 2, being consignor, is vicariously liable for the negligence of the driver who had clearly stated that the vehicle met with an accident because his eyes got dazzled due to reflection/fluctuation of light. 15. 15. It is also argued that the Board has committed an error of law in observing that in other similar cases, the Excise Commissioner himself had waived off such duty. He argued that every case is required to be examined on its own facts. And in the present case, since the Excise Commissioner has recorded a finding that the Consignor (respondent No. 2) was liable to make good the loss caused to the State revenue, the Tax Board was not legally justified in passing the impugned order. 16. Mr. Choudhary, appearing for respondent No. 2, at the very outset submitted that Rule 5 of the Rules of 1959 enjoins upon the Excise Commissioner and the Excise Officer to afford a reasonable opportunity of hearing to the consignor, but in the present case, the order of levying duty came to be passed by the Excise Commissioner on 16.05.2018, whereas the amount of Rs. 25,42,504/- was got deposited from the respondent No. 2 on 04.05.2018. He submitted that the District Excise Officer had written a letter on 27.10.2017 requiring the Ganganagar Sugar Mill to recover and deposit the said sum and thus the respondent was coerced to deposit the huge amount. 17. While highlighting that no notice was issued by the petitioner-State, he argued that the observance of principles of natural justice, in the facts of the present case is a mere eyewash. 18. Having argued that the impugned order deserves to be quashed for violation of principles of natural justice, learned counsel submitted that the order passed by the Excise Commissioner cannot be sustained even on merit. 19. He wondered that when the Excise Commissioner himself has written/waived off the demand in identical cases in which transportation losses were due to accidents, how could the case of the respondent be meted with different treatment? 20. It was also argued by Mr. Choudhary that proviso to Rule 5 of Rules of 1959 clearly stipulates that if the consignor is able to prove that the wastage was caused due to an accident involving no negligence on his part, or due to any other factor beyond his control, no duty can be charged. 21. In rejoinder, Mr. Sankhla learned counsel relied upon Division Bench judgment dated 03.02.1995 reported in 1996 1 WLC 385 Udaipur Distillery Co. Ltd. Vs. State of Rajasthan & Ors. 21. In rejoinder, Mr. Sankhla learned counsel relied upon Division Bench judgment dated 03.02.1995 reported in 1996 1 WLC 385 Udaipur Distillery Co. Ltd. Vs. State of Rajasthan & Ors. and an interim order dated 09.04.2021 passed by a Coordinate Bench of this Court in SBCWP No. 5918/2021, (The State of Rajasthan Vs. Rajasthan Tax Board, Ajmer & Ors.). 22. Before dilating upon the rival submissions, it would be profitable to first reproduce Rule 5(5) of the Rules of 1959: "(5) If the report of the Excise Officer by whom the consignment of spirit has been gauged and proved at its destination, shows that wastage has occurred above the maximum limit allowable, the consigner shall be liable to pay duty on so much of the deficiency as is in excess of the allowance at such rate not exceeding the current duty payable at the time, as may be ordered or as may be specified in the bond conveying the consignment. The order for charging duty on the deficiency in excess of the permissible allowable shall be passed by the district Excise Officer of the District of destination when the percentage of spirit in the consignment of spirit is upon three per cent in the aggregate and by the Excise Commissioner where the percentage of wastage in the consignment of spirit is more than three per cent, in the aggregate: Provided that before passing such order the District Excise Officer concerned or the Excise Commissioner, as the case may be, shall afford a reasonable opportunity to the owner of the consignment of spirit transported under bond to be heard and in case it is found that the wastage was due to an accident involving no negligence on his part or due to any other reasonable cause beyond his control no duty shall be charged." 23. A careful reading of sub rule (5) of rule 5 reveals that the same uses expression 'wastage'. The dictionary meaning of 'wastage' reads thus: "wastage (of something) the fact of losing or destroying something, especially because it has been used or dealt with carelessly - Oxford Advanced Learner's Dictionary Definition of wastage: loss, decrease, or destruction of something (as by use, decay, erosion, or leakage) especially: wasteful or avoidable loss of something valuable - Merriam Webster" 24. The dictionary meaning of 'wastage' reads thus: "wastage (of something) the fact of losing or destroying something, especially because it has been used or dealt with carelessly - Oxford Advanced Learner's Dictionary Definition of wastage: loss, decrease, or destruction of something (as by use, decay, erosion, or leakage) especially: wasteful or avoidable loss of something valuable - Merriam Webster" 24. The term wastage in the context of Rules of 1959 means and suggests that the loss should be on account of natural reasons or process loss. 25. Concededly, in the instant case, the loss of the spirit was a consequence of an accident, which may or may not be an act of God, but was definitely attributable to the driver of the tanker who was transporting the spirit, but in no case be relatable to the consignor. 26. In the opinion of this Court, the loss of the spirit which undeniably was a result of an accident, cannot be said to be wastage by any stretch of imagination. 27. That apart, proviso to sub rule (5) clearly postulates that if it is found that the wastage was due to an accident involving no negligence on the part of the consignor, no duty shall be charged. 28. If the proviso is read carefully, the burden heavily lay upon the Excise Commissioner to establish that the loss of spirit in question was caused on account of negligence of the Consignor. 29. The impugned communication, even if treated to be an order does not have any whisper about the negligence of the Consignor. 30. In the light of the admitted facts, order of the Excise Commissioner is absolutely untenable, who was overawed by the fact that because of the accident 13075.100 bulk litres spirit has gone waste. He cannot but afford to be oblivious of the fact that the issue before him was not of the cost of spirit, the issue was with respect to excise duty thereupon. 31. Curiously enough, the Commissioner has also noted that no FIR has been lodged and only a report in the Roznamcha has been lodged which cannot be treated to be an FIR. 32. In the opinion of this Court, such a reasoning given by the Commissioner is liable to be repelled. 31. Curiously enough, the Commissioner has also noted that no FIR has been lodged and only a report in the Roznamcha has been lodged which cannot be treated to be an FIR. 32. In the opinion of this Court, such a reasoning given by the Commissioner is liable to be repelled. Lodging of an FIR or lodging a report hardly makes any difference, particularly when there is no gainsaying the factum of accident and loss of the spirit on account of such accident. 33. The state has not placed any order on record much less a notice levying the duty of Rs. 25,42,504/-. In absence of any notice or even formal order of adjudicating/determining liability, recovery of huge amount of Rs. 25,42,504/- is fundamentally void and without authority of law. 34. Neither can the order dated 16.05.2018 be treated to be an order nor can the notice dated 01.05.2018 be treated as a notice envisaged under Rule 5(5) of the Rules of 1959. 35. The purported notice and proceedings held on 16.05.2018 cannot be treated as post decisional hearing inasmuch as the same only rejects request of the respondent No. 2 to write off/waive off the levy of duty. 36. A demand does not become legally enforceable, sans an order passed within the framework of statutory provisions. Hence, it cannot be recovered in the manner done. 37. Such an approach of the state is required to be deprecated, as the same hits at the very root of fair governance and amounts to violation of principles of natural justice. 38. So far as the judgment relied upon by Mr. Sankhla in the case of Udaipur Distillery (supra) is concerned, the same is absolutely alien to the facts of the present case; because the case of Udaipur Distillery did not involve any accident and the wastage in said case was on account of technical reason. More so, it was specifically held by the Division Bench in para No. 6 of the judgment that Rule 5 of the Rules of 1959 is not applicable. Whereas in the present case, the state has come with the specific case that duty is leviable under Rule 5(5) of the Rules of 1959. 39. In the present factual matrix, it cannot be said that there was negligence on the part of the Consignor-respondent No. 2. Whereas in the present case, the state has come with the specific case that duty is leviable under Rule 5(5) of the Rules of 1959. 39. In the present factual matrix, it cannot be said that there was negligence on the part of the Consignor-respondent No. 2. Maybe there was some negligence, but the same was on the part of the driver, for which the consignor cannot be made scapegoat. 40. Adverting to the interim order dated 09.04.2021 passed by coordinate Bench of this Court, suffice it to say that since the present case is being finally decided, the interim order cannot be a precedent. 41. Viewed from any angle, this Court finds that the order impugned passed by the Excise Commissioner on 16.05.2018 so also the recovery made is illegal. 42. The Tax Board has rightly set aside the order passed by the Excise Commissioner. The order under consideration passed by the learned members of the Board deserves affirmation; which, I hereby do. 43. Mr. Choudhary, learned counsel for the respondent at this juncture informed that in spite of order passed by the Tax Board on 10.12.2019, the amount in question has not been refunded to the consignor. 44. Though this case warrants imposition of cost apart from direction for payment of interest to respondent No. 2 right from the date of deposition of the amount; however, to balance the equity, a direction is issued to the petitioner-State to pay the amount of Rs. 25,42,504/- by 31.01.2022, alongwith simple interest calculated at the rate of 8% per annum from the date of the order of the Tax Board i.e. 10.12.2019, until its payment. 45. In case the amount is not refunded by 31.01.2022, it shall carry interest at the rate of 12% per annum instead of 8%. 46. The writ petition is allowed as indicated above. 47. Stay application stands disposed of accordingly.