GOVERNMENT OF INDIA versus CITEDAL FINE PHARMACEUTICALS MADRAS & ORS. ETC. ETC.

Citation: [1989] 3 S.C.R. 465 · Decided: 20-07-1989 · Supreme Court of India · Bench: K.N. SINGH · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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GOVERNMENT OF INDIA 
v. 
CITEDAL FINE PHARMACEUTICALS MADRAS &OR,S. 
ETC. ETC. 
JULY 20, 1989 
[K.N. SINGH AND M.H. KANIA, JJ.] 
Medicinal and Toilet Preparations (Excise Duties) Act 1955: 
Sectinn-3.19/Medicinal and Toilet Preparation.< !Excise Duties) 
Rules, 1956: Rule 12. 
Residuary Powers for recovery of sums due to Government-
Validity of 
Constitution of India, 1950: Article 14 Medicinal and Toilet Pre-
parations (Excise Duties) Rules 1956--Absence of period of limitation 
for recovery of sums due to Government-Rule 12-Whether uncons-
titutional. 
Limitation-Absence of period of limitation-Action should be 
taken within reasonable period-Reasonableness of period-What is. 
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The respondents were manufacturing various medicinal prepara-
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!ions and in that process were using tincture containing alcohol. On the 
enforcement of the Medicinal and Toilet Preparations (Excise Duties) 
Act, 1955 they became liable to pay duty and also to obtain licence but 
they continued their manufacture without doing so. 
The Commercial Tax Officer issued demand notices under Rule 
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12 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 
requiring payment of the duty which the respondents had failed to pay. 
The respondents tiled writ petitions in the High Court challenging 
the aforesaid notices, and the proceedings for recovery of duty. Allow-
ing the writ petitions the Division Bench quashed the notices as well as 
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the proceedings for recovery on the ground that the Act was silent on 
the question of levy of duty on escaped turnover, and hence Rule 12 
which provides for recovery of escaped duty was outside the purview 
and scope of the Act and, therefore, ultra vires. 
In these appeals it was contended that Rule 12 was invalid and 
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465 
A 
B 
c 
466 
SUPREME COURT REPORTS 
[1989) 3 S.C.R. 
unreasonable and violative of Article 14 of the Constitution because it 
does not provide for any period of limitation for the recovery of duty. 
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Allowing the appeals and setting aside the judgment of the High 
Court, this Court, 
HELD: 1. The liability to pay tax is created by the charging 
section 3 and Rule 12 confers, power on the authorised officer to 
recover duty if the same has not been paid on account of any short-levy 
or deficiency or any other reason. Rule 12 is referable to section 19(2)(i) 
of the Act and carries out the purposes of the Act as it seeks to provide 
for recovery of duty as contemplated by section 3(3) of the Act. It is 
designed to confer residuary power for recovery of duty if unpaid on 
account of short-levy or deficiency or for any reason it remains unpaid. 
If recovery of duty or any amount of sum payable to the Government 
under the Act is not covered by any specific Rule, additional supple-
menting provision is made for its recovery by this Rule. This Rule does 
not create any additional charge or liability on the manufacturer for the 
D payment of the duty. The High Court Committed error in holding that 
the Rule is ultra vires the Act. [470C-D, 470A-B) 
2. Rule 12 does not prescribe any period within which recovery of 
any duty as contemplated by the Rule is to be made, but that by itself 
does not render the Rule unreasonable or violative of Article 14 of the 
--4,. 
E Constitution. In the absence of any period of limitation it is settled that 
every authority is to exercise the power within a reasonable period. 
What would be reasonable period, would depend upon the facts of each 
case. Whenever a question regarding the inordinate delay in issuance of 
notice of demand is raised, it would be open to the assessee to contend 
that it is bad on the ground of delay and it will be for fhe relevant officer 
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to consider the question whether in the facts and circumstances of the 
case notice or demand for recovery was made within reasonable period. 
No hard and fast rules can be laid down in this regard as the determina-
tion of the question will depend upon the facts of each case. [470F, G, H, 471A] 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1403 
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to 1406 of 1974. 
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From the Judgment and Order dated 23.12.1971 of the Madras 
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High Court in W.P. Nos. 1053-54, 4679 & 4715of1968. 
Anil Dev Singh, Ms. Indu Malhotra and C.V. Subba Rao for the 
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Appellant. 
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GOVT. 01' INDIA v. C.F. PHARMACEUTICALS [SINGH, J.] 
467 
R.P. Bhat, G.L. Sanghi, M.N. Krishnamani, Vineet Kumar, R. 
Mohan, K.C. Dua and R.A. Perumal for the Respondent

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