M/S. Dhanpat Oil & General Mills Vs.
Union of India & Ors [1985] INSC 149 (8 July 1985)
PATHAK, R.S. PATHAK, R.S.
VENKATARAMIAH, E.S. (J)
CITATION: 1985 AIR 1255 1985 SCR Supl. (2) 4
1985 SCC (3) 599 1985 SCALE (2)46
ACT:
Produce Cess Act, 1966, Sections
2(a),7,8,9(2),10 and 15(2), scope of - Whether proceedings under the Act can be
taken without appointing a "Collector" and an " Appellate
Authority" by resort to the provisions of section 15 (2) of the Act
Monthly filing of obligatory returns under section 8, whether can be
discontinued on the plea of non- appointment of a "Collector"
Liability to the payment of cess for the products manufactured and a liability
to prosecution for not filing returns and paying the cess during the period
when the Collector and Appellate Authority had not been appointed.
HEADNOTE:
The Produce Cess Act, 1966 is a dual
enactment. It provides for the levy and collection, as a cess, of customs duty
on produce specified in the first schedule to the Act and exported beyond the
limits of India; and (ii) of excise duty of the produce specified in the second
schedule.
Section 8 of the Act requires the occupier of
a mill to furnish to the "Collector" every month a return stating the
total amount of produce, specified in the Second Schedule consumed or brought
under processing or extracted in the mill during the preceding month. The return
has to be furnished before the seventh day of each month together with such
other information as may be prescribed, and every such return is to be made in
such form and to be verified in such manner as may be prescribed. There must be
a "Collector" within the meaning of the Act, that is as defined in
section 2(a) of the Act to whom such monthly returns are to be furnished. On
noncompliance with the provisions of section 8, the "Collector" so
appointed by the Central Government under the Act, is empowered under sub-
section 2 of section 9 to proceed at once and make an assessment in the manner
prescribed by the Produce Cess Rules 1969. Such a "Collector" was
appointed under the Act on July 13, 1970. The Appellate Authority, entitled to
hear appeals from the orders of the collector was appointed on August 21, 1972.
The appellant carries on the business of oil extraction from ground nut,
cotton-seeds, sarson and other oil seed and also deals in vegetable and other
essential oils. On September 29, 1972 the Superintendent, Central Excise,
issued a notice requiring the 5 appellant to produce certain documents and to
appear before the authority for the purpose of an enquiry pertaining to the
cess leviable under the Act. The appellant did not comply with the notice. On December
22, 1972, the Superintendent, Central Excise, issued a further notice requiring
the appellant to show cause against the imposition of a penalty for its failure
to file a return and deposit the cess. The appellant questioned the
jurisdiction of the authority to levy cess. A further notice dated September 3,
1973 was issued by the Assistant Collector, Central Excise requiring the
appellant to appear before him in connection with the aforesaid proceedings.
The appellant, admittedly, did not deposit any cess nor file any return,
contending that there was no jurisdiction in the authorities to levy and
recover the cess on the products manufactured and dealt in by it. The appellant
then filed a writ petition in the High Court of Punjab & Haryana raising
various points, including the question whether sub-section (2) of section 3 and
section 4 of the Act and rule 6 of the Cess Rules were ultra vires and whether
the notices issued by the authorities were valid on the ground that no
machinery had been provided for the levy of the cess during the relevant period
and prayed for relief against the proceedings. The Writ Petition was dismissed
and hence the appeal by special leave.
Dismissing the appeal, the Court, ^
HELD: 1.1. The entire machinery under the Produce
Cess Act, 1966 through which the occupier of a mill must discharge his
statutory obligations remains non-existent unless a "Collector"
within the meaning of the definition in section 2(a) is appointed. So long as
there is no Collector there is no obligation on the occupier of a mill to
furnish monthly returns and there is no existing statutory authority for taking
proceedings for the assessment and collection of the cess. Clearly there can be
no Collector for the purpose of the Act unless he is an officer appointed by
the Central Government to perform the duties of a Collector provided under the
Act and Rules. A subordinate officer is also envisaged within the definition of
section 2(a) but he must be an officer authorised in writing by the Collector
appointed under the Act to perform such duties. Even the earliest step required
of an occupier, that is to say, the furnishing of a statement containing the
particulars specified under section 7 must be made to a Collector, and that is
also not possible in the absence of a duly appointed Collector under the Act.
[10 B-D] 6
1.2 The appellant in this case, cannot be
prosecuted for its omission to furnish monthly returns required under section 8
of the Act during the period upto July 30, 1970 for which there was no
Collector appointed under the Act.
The Appellate Authority was appointed on
August 21, 1972, but the delay in appointing the Appellate Authority can be no
ground for not furnishing the returns after July 30, 1970, when the Collector
was appointed. [11 G-H, 12 A & 13 B]
1.3 The absence of duly appointed Collector
under the Act for a certain period is a good defence against a prosecution for
non-compliance with section 8 of the Act during that period only. However, the
delay in appointing the Collector under the Act does not relieve the appellant
of the liability to excise duty in respect of the period during which the Collector
was not appointed. [13 B-D] The levy is imposed by sub-section 2 of section 3
of the Act and comes into existence immediately on the taxable event attracting
excise duty. The accrual of the obligation to suffer the duty does not depend
on the appointment of a Collector, which is only part of the machinery designed
by the Act for the Assessment and recovery of the duty. The imposition and
accrual of the duty is a thing apart from its assessment and collection. There
is an obligation to file a return under section 8 of the produce and a return
must be filed every month before the 7th day. Noncompliance with the latter
obligation is sufficient to bring the occupier within the mischief of
sub-section 2 of section 9 of the Act. But where such non-compliance is due to
the circumstance that Collector was appointed to whom such returns could be
furnished, sub-section 2 of section 9 cannot come into play.
However, the obligation to file a return
remains and it remains in respect of the entire period during which the
Collector had not been appointed, and once the Collector is appointed the
occupier is obliged to file a return for the entire period from the
commencement of the levy including the period during which there was no
Collector. That is because the liability to excise duty had already accrued
with the earliest excisable event and it subsisted during the entire period
including the period during which there was no Collector. The position is that
when the Collector is appointed the occupier must within a reasonable time
thereafter, file monthly returns of the produce consumed or brought under
processing or extracted in the mill during each preceding month, such monthly
returns being in respect of all the months included in the period uptodate. Or
the occupier may 7 make a composite return specifying the amount of such
produce monthwise or the entire period. The Collector will then take the return
into consideration and take proceedings under section 9 of the Act.[12 C-H 13
A]
2. Recourse to sub-section 2 of section 15 of
the Act on the ground that no steps are instituted by the Government to bring
Sections 2(a),6,7,8,9 and 20 into working life by taking action under them
cannot be resorted to. Sub-section 2 of section 15 is not intended as a
substitute for the other provisions of the Act. It is not an interim provision
intending that recourse may be had to it until action is taken by the
Government to instal the machinery and institute the steps required by the Act
for making its provisions workable. Sub-section 2 of section 15 is intended to
cover that area only which is not included within the area covered by the
remaining provisions of the Act. It is a residual provision and nothing more.
For example, a Collector appointed under the Cess Act can alone be the
assessing authority authorised to receive returns and make assessments. No
officer or authority constituted under the Central Excises and Salt Act can do
so. Nor can the appellate authority appointed under the latter enactment
entertain and hear appeals against assessments made under the Cess Act. The
jurisdiction to do so belongs solely to the appellate authority appointed under
subsection 1 of section 10 of the Act. [11 C-G]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 138 of 1979.
From the Judgment and Order dated 29.11.1978
of the Punjab & Haryana High Court in C.W. No. 35 of 1974.
A.K. Sen, R.L. Batta, V.K. Bahl and H.K. Puri
for the Appellant.
Hardyal Hardy, K. S. Gurumoorthy and Miss A.
Subhashini for the Respondents.
The Judgment of the Court was delivered by
PATHAK, J. This civil appeal arises out of a writ petition filed in the High
Court of Punjab and Haryana for the quashing of proceedings taken under the Produce
Cess Act, 1966 for the assessment and recovery of the cess.
8 The Indian Cotton Cess Act, 1923, the Indian
Lac Cess Act, 1930, the Indian Coconut Committee Act, 1944 and the Indian
Oil-seeds Committee Act, 1946 ceased to have effect from April 1, 1966 in
consequence of which the relative Committees constituted under those Acts stood
dissolved and there was no legislative sanction for the continuance of the levy
of cess on the produce after March 31, 1966. While the Research Institutes and
Stations and other research projects of those Committees now fell within the
administrative control of the Indian Council of Agricultural Research, and the
work relating to development, marketing and other functions was to be looked
after directly by the Ministry of Food and Agriculture, Department of
Agriculture, assisted by Development Councils constituted by the Government,
and suitable grants were envisaged to the Indian Council of Agricultural
Research for the maintenance of Research Institutes and for carrying on the
research activities, the Government felt need for larger investments on such
projects in order to undertake an effective programme of research and
development. Accordingly, it decided to continue the cess on the produce even
after the abolition of the Commodity Committees. For the achievement of that
objective Parliament enacted the Produce Cess Act, 1966 (shortly referred to as
"the Act"). The Produce Cess Rules, 1969 were published on March 28,
1969.
The Act is a dual enactment. It provides for
the levy and collection, as a cess, of customs duty on produce specified in the
First Schedule to the Act exported beyond the limits of India. And it provides
for the levy and collection, as cess, of excise duty on the produce specified
in the Second Schedule. We are concerned in this case with the levy and
collection of excise duty.
The appellant carries on the business of oil
extraction from groundnut, cotton-seeds, sarson and other oil seeds and also
deals in vegetable and other essential oils. On September 29, 1972, the
Superintendent, Central Excise, issued a notice requiring the appellant to
produce certain documents and to appear before the authority for the purpose of
an enquiry pertaining to the cess leviable under the Act.
The appellant did not comply with the notice.
On December 22, 1972, the Superintendent, Central Excise, issued a further
notice requiring the appellant to show cause against the imposition of a
penalty for its failure to file a return and to deposit the cess. The appellant
questioned the jurisdiction of the authority to levy cess.
9 A further notice dated September 3, 1973
was issued by the Assistant Collector, Central Excise requiring the appellant
to appear before him in connection with the aforesaid proceedings. Admittedly,
the appellant did not deposit any cess nor filed any return, contending that
there was no jurisdiction in the authorities to levy and recover the cess on
the products manufactured and dealt in by it.
The appellant filed a writ petition in the
High Court of Punjab and Haryana. Various points were raised before the High
Court, including the question whether sub-s.(2) of s.3 and s.4 of the Act and
rule 6 of the Cess Rules were ultra vires and whether the notices issued by the
authorities were valid on the ground that no machinery had been provided for
the levy of the cess during the relevant period. All the contentions were
rejected by the High Court, and the writ petition was dismissed.
In the appeal before us the limited point
raised is that the appellant is not liable to payment of cess for the period
during which the Collector and appellate authority had not been appointed, and
no penal proceeding can be taken against the appellant for not furnishing
returns and depositing the cess pertaining to such period. It is pointed out
that while s.9 of the Act confers power on the Collector to make assessment and
recovery of the excise duty such Collector was appointed only on July 13, 1970.
It is also pointed out that while s10. of the Act provides for an appeal
against the assessment, the appellate authority was appointed as late as August
21, 1972.
The case before us falls into two parts. Is
the appellant liable to prosecution for not filing returns and paying the cess
during the period when the Collector and appellate authority had not been
appointed? And is the appellant not liable to cess at all for the products
manufactured during such period ? It seems to us that the appellant is right in
the contention that so long as the Collector is not appointed for the purposes
of the Act no fault can be found with the appellant in not furnishing returns
during such period. s.8 of the Act requires the occupier of a mill to furnish
to the "Collector" every month a return stating the total amount of
produce, specified in the Second Schedule, consumed or brought under processing
or extracted in the mill during the preceding month. The return has to be
furnished before the seventh day of each month together with such other
information as may be prescribed, and every such return is 10 to be made in
such form and to be verified in such manner as may be prescribed. There must be
a Collector within the meaning of the Act to whom such monthly returns are to
be furnished. The expression "Collector" has been defined by clause
(a) of s.2 of the Act to mean "the officer appointed by the Central
Government to perform in any specified area the duties of a Collector under the
provisions of this Act and the rules made thereunder, and includes any officer
subordinate to that officer when he may, by order in writing, authorise to
perform his duties under those provisions." Clearly there can be no
Collector for the purpose of the Act unless he is an officer appointed by the
Central Government to perform the duties of a Collector provided under the Act
and Rules. A subordinate officer is also envisaged within the definition, but
he must be an officer authorised in writing by the Collector appointed under
the Act to perform such duties. It would be true to say that unless there is a Collector"
within the contemplation of the Act, there can be no obligation on any occupier
of a mill to furnish monthly returns. Even the earliest step required of an
occupier, that is to say, the furnishing of a statement containing the
particulars specified under s. 7 must be made to a Collector, and that is also
not possible in the absence of a duly appointed Collector under the Act. The
entire machinery under the Act through which the occupier of a mill must
discharge his statutory obligations remains non-existent unless such
"Collectors is appointed. So long as there is no Collector there is no
obligation on the occupier of a mill to furnish monthly returns and there is no
existing statutory authority for taking proceedings for the assessment and collection
of the cess.
Reliance was placed before the High Court by
the respondent on sub-s.(2) of s.15 of the Act. Sub-s.(2) of s.
15 declares that the provisions of the Central Excises
and Salt
Act, 1944 and the rules made thereunder, including those relating to
refunds and exemptions from duty, shall, so far as may be, apply in relation to
the levy and collection of duties of excise on any produce specified in the
Second Schedule as they apply in relation to the levy and collection of duty
payable to the Central Government under that Act. The High Court took the view
that the absence of a Collector appointed under the Act was of no significance
and proceedings could be taken under the provisions of sub-s.(2) of s. 15 of
the Act. We are unable to agree. In our opinion, in order to ascertain the
scope of sub-s.(2) of s. 15 is necessary to read the Act as a whole.
We have pointed out earlier that the
expression "Collector" has been specifically defined by the Act
itself, and the definition requires that the officer must 11 be one
specifically appointed by the Central Government to perform the duties of a
Collector detailed under the Act and Rules. There are other provisions which
have been particularly enacted in the Act. They specify the persons who are
liable to pay duty, their obligations, the powers and procedures in relation to
assessment of the duty, the constitution of an appellate authority and its
powers, and the powers of the Central Government to revise the appellate
orders. Included also are specific provisions in respect of the recovery of
sums due under the Act to the Government, and there are other incidental provisions.
There is also an express provision by s.20 empowering the Central Government to
make rules to carry out the purposes of the Act, and particularly sub-s.(2) of
s.20 envisages that such rules should provide for the form of the monthly
return and the manner in which such return should be verified, the information
which every occupier is required to furnish in the monthly returns and the
manner in which assessment of excise duty shall be made where no return is
furnished or the return furnished is believed by the Collector to be incorrect
or defective. It is inconceivable to our mind that recourse should be
permissible to sub-s.(2) of s.15 of the Act on the ground that no steps were
instituted by the Government to bring the aforesaid provisions into working
life by taking action under them. Sub-s.(2) of s.15, we think, is not intended
as a substitute for the other provisions of the Act. It is not an interim
provision intending that recourse may be had to it until action is taken by the
Government to instal the machinery and institute the steps required by the Act
for making its provisions workable. In our opinion, sub-s.(2) of s.15 is
intended to cover that area only which is not included within the area covered
by the remaining provisions of the Act. It is a residual provision and nothing
more. For example, a Collector appointed under the Cess Act can alone be the
assessing authority authorised to receive returns and make assessments. No
officer or authority constituted under the Central Excise and Salt Act can do
so. Nor can the appellate authority appointed under the later enactment
entertain and hear appeals against assessments made under the Cess Act. The
jurisdiction to do so belongs solely to the appellate authority appointed under
sub-s.(1) of s.10 of the Cess Act.
We hold that the appellant cannot be
prosecuted for its omission to furnish monthly returns required under s.8 of
the Act during the period upto July 30, 1970 for which there was no Collector
appointed under the Act. The appellate authority was appointed on August 21,
1972 but the delay in appointing the 12 appellate authority can be no ground
for not furnishing the returns after July 30, 1970, when the Collector was
appointed. We find it unnecessary to go into the further question whether the
appellant can be excused from furnishing monthly returns upto March 28, 1969,
that is to say, until the Produce Cess Rules, which prescribed the form of the
return and the mode of the verification, were published. That is unnecessary
because in any event the Collector was not appointed until July 30, 1970 and
for that reason no returns could be filed upto that date.
The absence of a duly appointed Collector
under the Act for a certain period is a good defence against a prosecution for
non-compliance with s.8 of the Act during that period.
It does not however, relieve the occupier of
a mill from the burden of the levy. The levy is imposed by sub-s.(2) of s.3 of
the Act and comes into existence immediately on the taxable event attracting
excise duty. The accrual of the obligation to suffer the duty does not depend
on the appointment of a Collector. The appointment of a Collector is only a
part of the machinery designed by the Act for the assessment and recovery of
the duty. The imposition and accrual of the duty is a thing apart from its
assessment and collection. Now s.8 requires the occupier to furnish a return
every month stating the total amount of produce consumed or brought under
processing or extracted in the mill during the preceding month. There is an
obligation to file the return every month. Non-compliance with the latter
obligation is sufficient to bring the occupier within the mischief of sub-s.(2)
of s.9 of the Act. It empowers the Collector to proceed at once and make an
assessment in the manner prescribed by the Rules. But where such non-
compliance is due to the circumstances that no Collector was appointed to whom
such returns could be furnished, sub-s.(2) of s.9 cannot come into play.
However, the obligation to file a return remains and it remains in respect of
the entire period during which the Collector had not been appointed, and once
the Collector is appointed the occupier is obliged to file a return for the
entire period from the commencement of the levy including the period during
which there was no Collector. That is because the liability to excise duty had
already accrued with the earliest excisable event and it subsisted during the
entire period including the period during which there was no Collector. The
position is that when the Collector is appointed the occupier must within a
reasonable time thereafter, file monthly returns of the produce consumed or
brought under processing or extracts in the mill during each preceding month,
such monthly returns being in respect of all the months included in the period
uptodate. Or 13 the occupier may make a composite return specifying the amount
of such produce monthwise for the entire period. The Collector will then take
the return into consideration and take proceedings under s.9 of the Act.
We hold that the delay in appointing the
Collector under the Act does not relieve the appellant of the liability to
excise duty in respect of the period during which the Collector was not
appointed.
This disposes of the further argument of the
appellant that as the appellate authority was appointed on August 21, 1972 only there was no liability to pay the duty in respect of the period until such
appointment. If the delay in appointing the Collector does not furnish good
ground for excusing the occupier from such liability, the delayed appointment
of the appellate authority also constitutes no defence.
The only relief therefore to which the
appellant can be entitled in the present appeal would be an order restraining
the respondents from asking any penal action against the appellant for not
furnishing monthly returns during the period in which no Collector had been
appointed under the Act. It seems, however, that counsel for the respondents
stated in the High Court during the hearing of the writ petition that no penal
action would be taken against the appellant for not furnishing monthly returns
within the period mentioned in sub-s.(2) of s.8 of the Act. We take it that the
concession remains binding on the respondents, and it is not necessary for us to
pass any express order in that regard.
In the result, the appeal is dismissed, but
without any order as to costs.
S.R. Appeal dismissed.
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