2018 (7) TMI 328 - HC - Central Excise

Attachment of Bank Property - penalty u/r 209A of the Central Excise Rules 1944 - petitioner retired from the firm but penalty was levied on the petitioner as a partner of M/s. Mukesh Dye Works - Held that - Once that order is set aside and in which it included a personal penalty of ₹ 2 lakhs, we do not see how the Department can pursue that demand by attaching the bank account of the petitioner. More so, the petitioner s retirement from the firm with effect from 27th April 1990 is undisputed. Therefore, the request to the petitioner to pay a sum which is of ₹ 2 lakhs, but as a penalty under the order in original which was set aside does not arise at all. All that the petitioner is liable to pay is the balance sum stated before us by Mr. Dharmadhikari - petition disposed off.

Issues:
1. Request to raise attachment on bank account due to penalty levied on petitioner as a partner.
2. Liability of petitioner for penalty as a retired partner of the firm.
3. Recovery of past dues and balance amount from petitioner.
4. Disputed penalty amount and attachment of bank account.
5. Directions for payment and consequences of non-compliance.

Analysis:
1. The petitioner sought relief from the High Court to lift the attachment on his bank account imposed by the revenue department due to a penalty of ?2,00,000 levied on him as a partner of a firm. The petitioner clarified that he had retired from the partnership firm, and no show cause notice or order of adjudication was issued to him in his capacity as a partner.

2. The court considered the liability of the petitioner for the penalty, emphasizing that the firm had challenged the order of adjudication in appeal, which was subsequently set aside by the Tribunal. As a result, the demand for tax did not survive, leading to the conclusion that the penalty imposed on the petitioner also did not stand. The court highlighted that even if a partnership firm has no independent existence from its partners, the liability of the partner ceases upon retirement or resignation.

3. Regarding the recovery of past dues, it was noted that a significant amount had already been adjusted by the revenue department from the petitioner's bank accounts. The court directed the petitioner to pay the balance amount within six months to have the attachment lifted. The court also mentioned the recovery of outstanding dues from the firm's assets and the petitioner's liability to pay the remaining sum.

4. The court scrutinized the disputed penalty amount and the attachment of the bank account in detail. It was observed that the petitioner's retirement from the firm was undisputed, and the demand for the penalty, which was set aside in the original order, was deemed invalid. The court clarified that the petitioner was only liable to pay the balance amount as indicated by his representative.

5. In conclusion, the court disposed of the writ petition by instructing the petitioner to pay the remaining sum within three months and report compliance to the Commissioner. Upon compliance, the attachment on the bank account would be lifted, allowing the petitioner to operate it. However, failure to pay could result in the attachment and sale of the petitioner's movable and immovable properties to enforce the demand, as per the court's directions.

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