1977 (10) TMI 37 - HC - Central Excise

Penalty Imposed after six months illegal - Alternative remedy - Article 226 - Applicability - Doctrine of Merge

Summary

Issues Involved:
1. Jurisdiction of the Collector, Central Excise, to impose a penalty.
2. Validity of the show cause notice issued after the expiration of the statutory period.
3. Applicability of alternative remedies and the doctrine of merger.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Collector, Central Excise, to Impose a Penalty:
The petitioner challenged the jurisdiction of the Collector, Central Excise, Hyderabad, to impose a penalty of Rs. 1,00,000/- under Rule 173-Q of the Central Excise Rules, 1944. The court held that the impugned order was passed without jurisdiction because the show cause notice was issued after the expiration of the statutory period prescribed under Section 40(2) of the Central Excises and Salt Act, 1944. The court emphasized that any proceeding, including the issuance of a show cause notice, must be initiated within six months from the date of the accrual of the cause of action. Since the stock-taking occurred between 3rd December 1969 and 23rd December 1969, the show cause notice issued on 29th June 1972 was beyond the six-month period, rendering the penalty imposition void.

2. Validity of the Show Cause Notice Issued After the Expiration of the Statutory Period:
The court examined the interpretation of Section 40(2) of the Central Excises and Salt Act, 1944, which stipulates that no legal proceeding shall be instituted after the expiration of six months from the accrual of the cause of action. The court concluded that the show cause notice issued on 29th June 1972 was clearly beyond the six-month period contemplated by Section 40(2). The court supported its view by referencing a Division Bench decision in W.P. No. 2516 of 1974, which held that the issuance of a show cause notice beyond the period of six months is illegal. Consequently, the court declared the levy of penalty based on such a notice as void and without jurisdiction.

3. Applicability of Alternative Remedies and the Doctrine of Merger:
The respondent contended that the petitioner should have availed the alternative remedy of revision under Article 226(3) of the Constitution of India. However, the court held that the impugned order was bad in law due to a jurisdictional infirmity, making it void ab initio. The court cited a Full Bench decision in Government of India v. National Tobacco Company Limited, which stated that the availability of an alternative remedy does not bar the maintainability of a writ petition if the impugned order is inherently void. Additionally, the court addressed the doctrine of merger, stating that it does not apply to orders that are void ab initio. The court referred to the Supreme Court's decision in B. Mishra v. Orissa High Court, which held that if the original order is void, the appellate order cannot make it valid. Therefore, the doctrine of merger was not applicable in this case.

Conclusion:
The court quashed the order of the Collector, Central Excise, Hyderabad, dated 5-7-1973, imposing a penalty of Rs. 1,00,000/- on the petitioner. The writ petition was allowed with costs, and the court awarded an advocate's fee of Rs. 250/-.