2008 (11) TMI 269 - HC - Central Excise

Public interest litigation - Enquiry/investigations - whether the 5th respondent which is a car manufacturing unit has indulged in large scale tax evasion as well as Central Excise duty by under pricing the cars exported to its associate enterprises in the foreign countries and that in spite of such malpractice being brought to the notice of the concerned authorities, no steps have been taken to unearth such corrupt practice? Held that - Inasmuch as the petitioner has failed to establish with necessary supporting materials for ordering any enquiry or investigation to be made as prayed for in this writ petition, we are not in a position to grant the relief as prayed for by the petitioner. Therefore, we dismiss this writ petition and the dismissal of the writ petition shall not preclude the petitioner, if so advised, from working out its remedy before the appropriate police authorities in the manner known to law. In any event if either the petitioner or Mr. Samuel C. Wilson, continues to entertain a strong ground as against the 5th respondent in respect of any corrupt practice in the matter of payment of Excise Duty or Custom Duty or tax liability, it is always open to them to prefer necessary complaint of corruption as against the 5th respondent before the appropriate police authorities and seek for necessary action being taken against the 5th respondent, it is needless to state that if any such attempt is to be made either by the petitioner or Mr. Samuel C. Wilson, such action should satisfy the requirements of law as enunciated under the criminal legal system. It is for the petitioner to workout his remedy in the manner known to law.

Summary

Issues Involved:
1. Allegations of tax evasion and underpricing by the 5th respondent.
2. Inaction by authorities on reported allegations.
3. Validity and basis of the allegations made by Mr. Samuel C. Wilson.
4. Jurisdiction and appropriateness of the public interest litigation.

Detailed Analysis:

1. Allegations of tax evasion and underpricing by the 5th respondent:
The petitioner, a registered Trust, alleged that the 5th respondent, a car manufacturing unit, indulged in large-scale tax evasion and underpricing of cars exported to its associate enterprises abroad. These actions purportedly violated Section 4 of the Central Excise Act, 1944, Section 14 of the Customs Act, 1962, and Sections 6(3)(g) and 7(1)(a) of FEMA. The petitioner claimed this resulted in significant losses in foreign exchange earnings and corporate tax payments.

2. Inaction by authorities on reported allegations:
The petitioner contended that despite the allegations being brought to the attention of the authorities, no steps were taken to investigate or address the malpractice. The Range Officer of Central Excise had initially raised the issue in 2004, but subsequent communications and reports were either dismissed or redirected without proper verification.

3. Validity and basis of the allegations made by Mr. Samuel C. Wilson:
The respondents, including the Commissioner of Central Excise and Service Tax, countered that the allegations were baseless and motivated by Mr. Samuel C. Wilson, who had a personal vendetta. Various audits and investigations, including those by a Special Team and the Director (Costs), found no irregularities or underpricing in the 5th respondent's exports. The reports from these investigations consistently showed that the pricing of exported cars was competitive and in line with industry practices.

4. Jurisdiction and appropriateness of the public interest litigation:
The court highlighted that the petitioner's case was heavily reliant on the allegations made by Mr. Samuel C. Wilson without independent verification. The court noted that numerous authorities, including the Prime Minister's Office and the Ministry of Finance, had examined the allegations and found no merit in them. The court emphasized the need to avoid "roving enquiries" in public interest litigations, especially when previous thorough investigations had found no basis for the allegations.

Conclusion:
The court concluded that the petitioner failed to make a case for the relief sought. The allegations were found to be unsubstantiated, and the litigation was deemed to lack bona fides, appearing to be driven by personal vendetta rather than genuine public interest. The court dismissed the writ petition but allowed the petitioner the option to pursue remedies through appropriate legal channels if they could substantiate their claims with credible evidence. The dismissal was without costs, and all miscellaneous petitions were closed.