Hindustan Petroleum Corporation Ltd. vs Union of India

Jayant Patel, J.—Both the appeals are directed against the order dated 7th October, 2015, passed by the learned Single Judge of this Court in dismissing the petitions [2016 (338) E.L.T. A133 (Kar.)], whereby the learned Single Judge for the reasons recorded in the order, has upheld the Constitutional validity of amendment made in Section 35F of the Central Excise Act, 1944 (herein after referred to as the Act) and the validity of the circulars is also upheld.

We have heard Mr. G. Shivadass, the learned Counsel appearing for the appellants and Mr. Jeevan J. Neeralgi, the learned Senior Central Government Standing Counsel for the respondents.

We may record that when the matter was taken up for the first time, the learned Counsel for the appellants had submitted that, one of the appellant concerned in W.A. No. 4856/2015 is ready to deposit the amount of 7.5% and this Court may consider the same for dispensing with the recovery from the concerned Officer. In view of the said declaration, the notice was issued and today we have also heard Mr. Neeralgi, the learned Counsel for the respondents.

The learned Counsel for the appellant submitted that as there is already alternative forum of appeal available and already resorted to against the impugned order for imposition of penalty and interest with the appellant''s company as well as upon the Officers of the appellant''s company, the appeal can be pursued before the Tribunal. The amendment which was the subject matter of the petition before the learned Single Judge was challenged on the ground that it was made compulsory to deposit 7.5% for entertainment of the appeal and further the said amount was treated as retrospective for all the pending appeals. However, one of the appellant, Company in the present matter, is ready to deposit 7.5% of the requisite amount of penalty and since penalty is also imposed on the officer, the same if is dispensed with by this Court in exercise of the power under Article 226 of the Constitution, the appellant may not press the challenge to the validity of the amendment made to Section 35F of the Act at this stage, reserving liberty to challenge the same before Division Bench of this Court, in the event they are unsatisfied with the decision of the Tribunal, after the appeal is decided.

Whereas, Mr. Neeralgi, the learned Counsel appearing for the respondents has submitted that this Court under Article 226 of the Constitution may consider the matter by modulating the relief, if the appellants are desirous to pursue the appeal preferred before the Tribunal. He further submitted that so far as the question of vires and validity of Section 35F is concerned, if the same is kept open, the respondents cannot have any objection.

We may record that the quantum of penalty imposed upon the appellant- Company is of Rs. 6 crores and 7.5% of the said amount would come to Rs. 45 lakhs. Whereas, so far as the Officer of the appellant-Company, namely Appellant No. 2 is concerned, the penalty imposed is of Rs. 50 lakhs and 7.5% thereof may come to Rs. 3.75 lakhs. Considering the facts and circumstances of the case, it appears to us that if the appellant is relegated to pursue the appeal before the appellate authority, and as the penalty is separately imposed on the company as well as its officers, the required 7.5% of the amount can be considered for the purpose of deposit, so far as the penalty imposed upon the company and the requirement for deposit of the amount by the Appellant No. 2, it can await until final disposal of the appeal. We are inclined to take such view because out of the common set of facts and pertaining to the transactions with the company, the penalty has been imposed, the question of actual contribution by the Officer and the lapse, including that of intentional or unintentional by the Officer, would be an aspect to be examined by the appellate authority in the appeal. Further the appeal is already filed by the appellants. Hence, we find that the deposit of Rs. 45 lakhs for consideration of the appeal should meet the ends of justice.

In any case, so far as question pertaining to Constitutional validity of the amendment and its retrospective effect or prospective effect are concerned, since such questions are not examined by us, liberty can be reserved to raise such issues at a later stage, in the event the appellants are unsatisfied with the decision of the Tribunal. We find that we need not address on the said aspects, except giving liberty to the appellants to agitate such questions as and when such controversies arise.

In view of the above observation and discussion, the following order is passed :

The appeal filed by the Appellants No. 1 and 2 shall be examined on merits by the Tribunal, after the deposit of the amount of Rs. 45 lakhs by the appellant-Company and such amount shall be deposited by the Appellant No. 1 - Company, within three weeks from today. The Tribunal shall decide the said appeal as early as possible, preferably within three months from the date of receipt of copy of this order.

The question of Constitutional validity of the amendment under Section 35F of the Act, including its retrospective and/or retroactive effect, shall remain open to be raised before Division Bench of this Court and it shall not get concluded by the disposal of the present appeal. It is observed that, in the event the appellants are unsatisfied with the decision of the Tribunal on merits, the appellants shall be at liberty to reagitate the question of validity of the amendment made in Section 35F of the Act.

The appeals are disposed of in terms of the above said order.

No order as to costs.