Siemens Ltd. Vs. State of Maharashtra & Ors  Insc 886 (1 December
Sinha & Markandey Katju
out of SLP (C) No. 15691 of 2005) S.B. Sinha, J.
the High Court in exercise of its jurisdiction under Article 226 of the
Constitution of India would interfere with a demand directing payment of cess
is in question in this appeal which arises out of a judgment and order dated
8.07.2005 passed by a Division Bench of the High Court of Judicature at Bombay
in Writ Petition No. 4338 of 2005.
appellant is a multi location company. It has a factory and godown at Kalwe. It
pays cess for the goods supplied from the said factory in terms of the
provisions of the Bombay Provincial Municipal Corporation Act, 1949. It also
owns a factory at Aurangabad. Its office is at Kharghar.
said factory at Aurangabad and the office at Kharghar are
outside the jurisdiction of the city limits of Navi Mumbai and, thus, outside
the territorial jurisdiction of the Bombay Municipal Corporation. Supplies are
made to dealers directly from the appellant's factory situated at Aurangabad and office at Kharghar. However,
the establishment of the appellant at Kalwe was directed to pay taxes, although
according to it, no jurisdictional fact exists therefor.
demand was made terming the same as a show cause notice. It appears that in
course of routine investigation, some vendors had made certain complaints as
regards the transactions of goods from the appellant's factory at Kalwa. The
appellant made its representation on receipt of the said purported demand. Oral
and written submissions were also made on 2.05.2005 and 10.06.2005 stating that
the appellant had neither been receiving any goods within the local limits of
Respondent No. 2 nor was it an importer in respect of the goods directly sold
from its Aurangabad factory or from its sub-vendors' manufacturing premises
and, therefore, they were not liable to pay any cess thereupon.
reason of a purported show cause notice, the appellant was directed to make
payment of cess with interest immediately in respect of the purported supplies
made to Navi Mumbai parties right from 1.06.1996. It was, however, stated:
are also requested to attend at above address at 11.00 a.m. on 4.7.05 hearing. I am enclosing herewith the photocopies
of the bills raised by Aurangabad Daman divisions to the Navi Mumbai
Vendees." A writ petition was filed by the appellant herein questioning
the said purported notice. By reason of the impugned order, the High Court refused
to exercise its jurisdiction under Article 226 of the Constitution of India
is to a show cause notice issued by the Corporation demanding certain payment
of cess on the value of goods imported from Aurangabad and Daman. Petitioners may file their reply
to the show cause notice and produce the relevant documents within two weeks.
In case the order is adverse to the petitioner no recovery shall be made for a
period of four weeks from the date of service of the order on the petitioner."
Before this Court a counter affidavit has been filed wherein although inter alia
it was contended that the said show cause notice cannot be termed as an order
determining the rights and obligations of the parties, it has clearly been
say that the show cause notice dated 22.6.2005 at Annexure P-2 to the Special
Leave Petition indicates that the Respondent No. 2 Corporation has been
deprived of lawful recovery of Cess on the said goods imported within the
jurisdiction of the Respondent Corporation. I say that such evasion of Cess is
in huge amounts and it is perfectly within the rights of the respondent
Corporation to call upon all the parties involved in the transactions to arrive
at the exact finding of fact. I say that for arriving at the finding of fact
with regard to the said imports there are many facts which need to be taken
into account. I say that such factual aspects include : which is the party
which has imported the goods within the jurisdictional limits of the respondent
Corporation what is the nature of contract between the seller and the said
importer of goods, is there any mechanism used by the parties to avoid payment
of Cess on the said import of goods, what is the extent of Cess that is evaded
as a result of such mechanism and who ultimately can be held responsible both
for the purposes of recovery as also for the purpose of penalty" It was
say that it is well known that under the Bombay Provincial Municipal
Corporation (Cess on Entry of Goods) Rules 1996 goods purchased from registered
dealers are not subject to Cess. I say that in this view of the fact the entire
nature of the transactions, to which the petitioner also was party, need to be
examined and scrutinized from the perspective of recovery of cess and
identification of liability. I say that if the petitioner has directly or
indirectly supplied the goods the petitioner itself must come forward to
cooperate with the respondent Corporation to enable it to discharge its duties
prescribed under the B.P.M.C. (Cess on Entry of Goods) Rules, 1996 read with
B.P.M.C. Act 1949" The question as to whether jurisdictional fact existed
for issuance of the said notice order passed by the respondent was in question
in the said writ petition.
ordinarily a writ court may not exercise its discretionary jurisdiction in
entertaining a writ petition questioning a notice to show cause unless the same
inter alia appears to have been without jurisdiction as has been held by this
Court in some decisions including State of Uttar Pradesh v. Brahm Datt Sharma and Anr. AIR 1987 SC 943, Special
Director and Another v. Mohd. Ghulam Ghouse and Another, (2004) 3 SCC 440 and
Union of India and Another v. Kunisetty Satyanarayana, 2006 (12) SCALE 262],
but the question herein has to be considered from a different angle, viz, when
a notice is issued with pre-meditation, a writ petition would be maintainable.
In such an event, even if the courts directs the statutory authority to hear
the matter afresh, ordinarily such hearing would not yield any fruitful purpose
[See K.I. Shephard and Others v. Union of India and Others (1987) 4 SCC 431 :
AIR 1988 SC 686]. It is evident in the instant case that the respondent has
clearly made up its mind. It explicitly said so both in the counter affidavit
as also in its purported show cause.
said principle has been followed by this Court in V.C. Banaras Hindu University and Ors. v. Shrikant [2006 (6) SCALE 66], stating:
Vice Chancellor appears to have made up his mind to impose the punishment of
dismissal on the Respondent herein. A post decisional hearing given by the High
Court was illusory in this case.
K.I. Shephard & Ors. etc. etc. v. Union
of India & Ors. [AIR 1988 SC 686], this Court held :
is common experience that once a decision has been taken, there is tendency to
uphold it and a representation may not really yield any fruitful purpose."
[See also Shri Shekhar Ghosh v. Union of India & Anr. 2006 (11) SCALE 363
and Rajesh Kumar & Ors. v. D.C.I.T. & Ors. 2006 (11) SCALE 409] A bare
perusal of the order impugned before the High Court as also the statements made
before us in the counter affidavit filed by the respondents, we are satisfied
that the statutory authority has already applied its mind and has formed an
opinion as regards the liability or otherwise of the appellant. If in passing
the order the respondent has already determined the liability of the appellant
and the only question which remains for its consideration is quantification
thereof, the same does not remain in the realm of a show cause notice. The writ
petition, in our opinion, was maintainable.
the reasons aforementioned, the impugned judgment cannot be sustained which is
set aside accordingly. The appeal is allowed and the matter is remitted to the
High Court for its consideration afresh on its own merits. No costs.