GOKAK PATEL VOLKART LIMITED versus COLLECTOR OF CENTRAL EXCISE, BELGAUM

Citation: [1987] 2 S.C.R. 309 · Decided: 17-02-1987 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Appeal(s) allowed
cites 1 · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

..... 
GOKAK PATEL VOLKART LIMITED 
A 
. v. 
COLLECTOR OF CENTRAL EXCISE, BELGAUM 
FEBRUARY 17, 1987 
[R.S. PATHAK C.J.I. AND RANGANATH MISRA, J.] 
B 
Central Excises and Salt Act, 1944 section llA and Explanation 
thereto, scope of-Limitation of six months' period-No order of the 
court staying the service of notice-Whether a show cause notice issued 
beyond the /imitation, period specified under section llA is valid. 
A show cause notice dated 29.1.1976 issued by the respondent to 
the appellant calHng upon him to explain as to why excise duty treating 
his product as "fabric" and not as "yarn" may not be levied, was 
challenged in the High Court of Karnataka In Writ Petition No. 2632/ 
1976. PendiDK ftnal disposal of the writ petition, an Interim order stay-
ing the collection or excise daty as a "fabric" for the period 1.4.1975 to 
18.8. 75 alone was pasaed wltll a speclftc direction that the appellant 
should continue to pay excise daty as ''yarn''. Finally the .writ petition 
was dismissed on 16.2.1981. 
On 20th May, 1982, another notice No. 913 to show cause was 
issued to the appellut slmullaneol!sly seelti111 to raise a demand for the 
period from 20.6.1976 to 28.2.1981 apart Crom for the period between 
1.4.1975 to 18.8.1975 challenged In the earlier writ petition. The 
Karnataka High Court havinl! rejected the plea of bar of limitation 
under section HA or the Central Excises and Salt Act, 1944 raised in 
the writ petition challenging the said second show cause notice and 
demand, the appellant has come In appeal by way of special leave. 
c 
D 
E 
F 
t 
Allowing the appeal, the Court, 
HELD: 1.1 Section 3 of the Act which contains the cjtarging pro-
vision clearly shows that levy and collection are two distinct and sepa-
rate steps. l312Hl 
G 
1.2 The provision of section I IA( I) and (2) of the Central Excises 
and Salt Act, 1944 make it clear that the statutory scheme is that in the 
situations covered by the sub-section( I), a notic~ of show cause has to be 
issued and sub-section(2) requires that the cause shown by way of rep-
resentation has to be considered by the prescribed authority and then 
H 
309 
A 
310 
SUPREME COURT REPORTS 
(1987] 2 S.C.R. 
only the amount has to be determined. The scheme is in consonance 
with the rules of natural jl\lstice. An opportunity to be heard is intended 
to he afforded to the person who is likely to he prejudiced when the 
order is made, before making the order thereof. Notice is thus a condi-
tion precedent to a demand under sub-section(2). In the instant case, 
compliance with this statutory requirement has not been made, and, there-
8 
fore, the demand Is in contravention of the statutory provision. [313E-Gl 
2. Explanation to seetion I IA of the Central Excises and Salt Act, 
1944, which incorporates a well known principle of law, in clear terms 
refers to 'stay of service of notice'. The High Court order did not at all 
refer to service of notice. The High Court having directed stay of collec· 
C 
lion of duty as 'fabric' has not issued any interim direction in the matter 
of issue of notice of levy of the duty. Therefore, the benefit of Explana-
tion to section llA of the AClt is not available to the Respondent. [313C·Dl 
Sirajul Haq Khan & Ors. v. The Sunni Central Board of Waqf, 
U.P. & Ors., [ 1959] SCR 1287; and N.B. Sanjane Assistant Collector of 
D Central Excise, Bombay & Ors. v. Elphinstone Spinning & Weaving 
Mills Co. Ltd., [1971] 3SCU506, 514referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 161 
Of 1986. 
E 
From the Judgment and Order dated 17.9.85 of the Customs 
F 
Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal 
No. ED(SB) (T) 463/84-D. 
, 
Soli J. Sorabjee, Ravinder Narain, Harish Salve, S. Ganesh and 
P.K. Ram for the Appellant. 
B. Datta, Additional Solicitor General, Mrs. Indra Sawhney and 
Ms. S. Rela!J for the Respondent. 
The Judgment of the Court was delivered by 
.... 
+ 
G 
RANG ANA TH MISRA, J. The fate of this appeal under sec-
tion 35(L) of the Central Excises and Salt Act, 1944, depends upon the 
}.. 
meaning and scope of the Explanation appearing in section I IA of the 
Act. 
The High Court of Karnataka by its order dated 4.6.1976 in Writ 
H Petition No. 2632 of 1976 gave the following direction: 
"4f 
~ 
I 
-' r 
~ 
-
-4· 
i 
G.P.V. LTD. v. COLL. OF C. EXCISE (MISRA, J.] 
311 
"Pending disposal of the aforesaid writ Petition, it is or-
A 
dered by this Court that collection of excise duty as a fabri
Excerpt shown. Read the full judgment & AI analysis in Lexace.