2012 (11) TMI 915 - HC - Central Excise

Summons under Section 14 of the Central Excise Act alleged that summon has been issued without there being any reason and in spite of the fact that the authorized officer of the company and who is General Manager (F & A), who has full knowledge of the facts of the case and who is dealing with the subject of taxation matters, appeared before the authority and gave his statements Held that - Statements of the witness has already been recorded by the Enquiry Officer and he is also the person who is the General Manager (F&A) of the company and the reason has been disclosed in the counter-affidavit by the respondents for summoning the petitioner and therefore, for the purpose of deciding of a larger issue to examine the scope and power of the Assessing Officer under section 14 of the Act of 1944 - it is not necessary for the Assessing Officer to record reasons for summoning of witnesses in each and every case At this stage of inquiry, the evidence of the Managing Director may be dispensed with, with permission to the Assessing Officer to take a decision subsequently and if necessary, then to summon the Managing Director himself. It is also made clear that in case, the Assessing Officer proceeds to summon any of the witnesses of the company, he need not to record any reason and may summon any witness.

Summary

Issues Involved:
1. Challenge to the summons issued under Section 14 of the Central Excise Act, 1944.
2. Scope and jurisdiction of the Enquiry Officer under Section 14 of the Central Excise Act, 1944.
3. Reasonableness and necessity of summoning the Managing Director of the company.
4. Legal interpretation of contracts and the applicability of service tax.

Issue-Wise Detailed Analysis:

1. Challenge to the Summons Issued Under Section 14 of the Central Excise Act, 1944:
The petitioner challenged the summons issued to the Managing Director of the company under Section 14 of the Central Excise Act, 1944. The company argued that it had already fully cooperated by providing all relevant documents and the authorized person, the General Manager (F&A), had given statements. The summons to the Managing Director was contested on the grounds that it was issued without any reason, despite the General Manager having full knowledge of the case and having already provided statements.

2. Scope and Jurisdiction of the Enquiry Officer Under Section 14 of the Central Excise Act, 1944:
The court examined the legal issue regarding the scope and jurisdiction of the Enquiry Officer in summoning individuals during an inquiry. It was noted that Section 14(1) and (2) of the Act grants wide powers to the officer to summon any person whose attendance is considered necessary. The court emphasized that the power to summon is broad and includes the authority to call any person to give evidence or produce documents.

3. Reasonableness and Necessity of Summoning the Managing Director of the Company:
The court considered whether the summons to the Managing Director was reasonable and necessary. The respondents argued that the General Manager had given evasive replies, justifying the need to summon the Managing Director. The court highlighted that while the officer has the power to summon any person, this power must be exercised reasonably. The court stated that it is primarily the company's responsibility to decide who is best suited to represent it in such inquiries. However, the Enquiry Officer can summon any person if the statements provided are unreliable or incomplete.

4. Legal Interpretation of Contracts and the Applicability of Service Tax:
The court addressed the issue of whether the plant and equipment supplied under an independent supply contract are subject to service tax. The petitioner argued that this was a matter of legal interpretation based on the contracts, which had already been provided to the authorities. The court noted that the interpretation of contracts should be based on the documents themselves, as per Sections 91 and 92 of the Indian Evidence Act, which exclude oral evidence for written contracts unless there is ambiguity.

Conclusion:
The court concluded that the power to summon under Section 14 of the Central Excise Act, 1944, must be exercised reasonably. It was observed that the Managing Director's evidence could be dispensed with at this stage, with the liberty for the Assessing Officer to summon him later if necessary. The court quashed the summons dated 11.11.2011, allowing the Assessing Officer to proceed in light of the court's observations. The court emphasized the need for reasonableness and application of mind in the exercise of summoning powers, ensuring that the inquiry proceeds smoothly without unnecessary delays.