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Issues:
1. Whether the notice demanding duty is barred by limitation under section 40(2) of the Central Excises and Salt Act. Analysis: The case involved a writ petition questioning the legality of a notice demanding duty and imposing a penalty on the petitioner. The petitioner, engaged in a tobacco business, had his premises inspected by the Preventive and Intelligence Inspector, leading to the issuance of a show cause notice by the Superintendent of Central Excise. The petitioner contended that the notice issued was beyond the limitation period prescribed in section 40(2) of the Act. The petitioner relied on a Supreme Court judgment emphasizing the time limit of six months for taking action against any alleged evasion of duty under the Act. The court noted that the show cause notice was issued well beyond the six-month period, rendering the demand for duty and penalty illegal based on the statutory limitation. The Standing Counsel for the Central Government attempted to distinguish the case by arguing that the levy of excise duty in response to evasion does not constitute "legal proceedings." Referring to a different Supreme Court judgment, the counsel contended that the term "legal proceedings" is limited to court proceedings and does not encompass actions by a department like levying excise duty. However, the court rejected this argument, emphasizing the applicability of the Supreme Court judgment that interpreted section 40(2) of the Act to restrict any suits, prosecutions, or legal proceedings related to tax evasion to a six-month period. The court also highlighted an amendment to section 40(2) introduced after the Supreme Court judgment to avoid its implications. As the alleged evasion and notice issuance occurred before the amendment, the court aligned with its previous decision and allowed the writ petition, quashing the impugned order and imposing costs on the respondent. In conclusion, the court ruled in favor of the petitioner, emphasizing the strict adherence to the statutory limitation period under section 40(2) of the Central Excises and Salt Act. The judgment highlighted the significance of timelines in initiating actions related to tax evasion and underscored the need for compliance with statutory provisions to ensure the legality of demands and penalties imposed by authorities.
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