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TMI Blog2010 (4) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to the extent that it sustains the order of the Administrator dated 31st March 1980 ordering confiscation and imposing a fine of ₹ 80 lakhs in lieu of confiscation of the seized gold is hereby set aside. Consequently the amount of ₹ 80 lakhs will now be refunded to the estate of the late Maharaja together with simple interest @ 6% per annum from the date on which the fine in lieu of confiscation was paid by Petitioner No.1 while getting the seized gold released till the date of its refund to the estate by the central government. The said amount shall be deposited in this Court by the central government, together with costs of this petition which are quantified at ₹ 50,000/- within a period of eight weeks. - 2363/1981 & CM APPL 4202-03/91, 12656/06, 1706/10 - - - Dated:- 28-4-2010 - W.P. (C) 2363/1981 CM APPL 4202-03/91, 12656/06, 1706/10 Appellant through: Mr. Manoj Kumar Rathi, proxy counsel for Mr. Kedar Nath Tripathy, Advocate for P-1 2. Mr. Shyam Moorjani, Advocate for P-3 P-4 Mr. D.D. Singh, Advocate for applicant in CM APPL No. 12656/06. Respondent through: Mr. S.K. Dubey with Mr. Javed Akhtar and Mr. Vanshdeep Dalmia, Advocates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Takht-i-Shahi) and from beneath and corner of the Moti Doongri Strong Room, Raj Bagh Palace and Rajmahal Palace. The total quantity of gold seized was 867 kgs 961.200 gms Apart from this, 1728 silver coins weighing 19 kgs 878 gms were also seized. The Collector's order 3. Two separate show cause notices were issued to the Petitioners under the GCA. The first dated 22nd August 1975 was in respect of gold weighing 867.961.200 kgs and silver weighing 19.878.000 kgs. The second show cause notice dated 3rd September 1975 was in respect of gold weighing 27.145.500 kgs and silver weighing 1.172.75 kgs. After replies were filed to the show cause notices, the Collector of Central Excise and Customs passed an order dated 7th February 1977 holding that the Petitioners had contravened Sections 8 and 16 GCA and had therefore rendered themselves liable to penal action under Section 74 GCA. A penalty of Rs. 5 lakhs was imposed on the Petitioner No.1 Col. Sawai Bhawani Singh in his capacity as the karta of the HUF (incidentally Col. Sawai Bhawani Singh is also arrayed as Petitioner No. 2 herein in his individual capacity). The Collector decided not to take any penal action against Smt. Gay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the foundation of palaces. Thirdly, the four pieces of gold in Item E (1) weighing 4.285.000 kgs are part of the photo frame and hence articles covered by the declaration made. Further 10.856.000 kgs coins are of numismatic value and there is no offence in possessing them." The Administrator held that the Petitioner No.1 Col. Sawai Bhawani Singh had no knowledge of the existence of the huge quantity of gold buried in the pit in the strong room. However, as the karta of the HUF, he did not seem to have taken steps to assert his authority or to discharge his responsibility. Impliedly negativing the Appellants" contention that the Government was fully aware of the existence of such gold and was expected to keep a track of the possession of huge quantities of such gold from its own records, it was held that "this is no excuse for the clear cut omission which is there on the part of the karta of the HUF consisting of erstwhile ruling family of Jaipur." Accordingly, the confiscation order was held to be justified. Nevertheless, the fine was reduced from Rs. 1.50 crores to Rs. 1 crore. The personal penalty of Rs. 5 lakhs on Col. Sawai Bhawani Singh, Petitioner No.1 as the karta of the HUF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71 Indo-Pakistan Operations. Petitioner No.1 could not be held responsible for any contravention. The penalty of Rs. 5 lakhs imposed on him was remitted. Fine and penalty paid 6. It requires to be noticed that soon after the Collector passed an order dated 7th November 1977 Petitioner No. 1 Col. Sawai Bhawani Singh exercised the option and paid the fine of Rs. 1.5 crores in lieu of confiscation. He also paid the personal penalty of Rs. 5 lakhs and took delivery of the seized gold. He also informed the Collector on 27th March 1978 of his compliance with the Collector"s directions about the disposal of the gold so released to him on payment of fine in lieu of compensation. In the written submissions subsequently filed by the Petitioners it has been pointed out that even the gold which was so redeemed was sold as per the orders of the Collector and all the proceeds realized went towards payment of taxes and repayment of loans obtained from the bank for paying the redemption fine. Later, after the amount of redemption fine was reduced from Rs. 1.50 crore to Rs. 80 lakhs by the central government and the penalty amount of Rs. 5 lakhs was remitted, those amounts were also attached b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of being heard. This requirement can never be fulfilled in respect of a dead person. Reliance is placed on the decisions in Commissioner of Income-tax Bombay v. Ellis C. Reid AIR 1931 Bombay 333, The Commissioner of Income-tax, Bombay v. James Anderson AIR 1964 SC 1761 and Commissioner of Income-tax, Bombay City -1, Bombay v. Amarchand N. Shroff AIR 1963 SC 1448. 12. It is pointed out that the late Maharaja died on 24th June 1970 and during his lifetime, no action was initiated under the GCA. The show cause notices against the Petitioners were issued only on 22nd August 1975 and 3rd September 1975 respectively. There was no legal basis to proceed against the legal heirs of a dead person for any liability arising under the GCA for an omission on the part of such dead person. Further, the legal heirs had satisfactorily explained their position which had been accepted by the authorities under the GCA as well as the Central Government. It had been held that they could not be answerable for the omission of the late Maharaja to make a declaration of the gold held by him. In the circumstances, there was no justification in determining the "notional" share of the late Maharaja a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... punishable in law and the holder of the gold liable to penalty. He submitted that the petitioners had already been given every possible relief under the orders in appeal and later in revision. The value of the gold seized was much higher than the redemption fine. The order in revision was a fair and reasonable one which did not call for interference. Can proceedings under the GCA be maintained against a dead person? 15. The conspectus of the orders passed by the authorities under the GCA, the Administrator in appeal and the Central Government in revision show that the area of dispute has narrowed down considerably. The impugned order dated 31st March 1981 reveals that the Central Government had accepted most of the contentions advanced on behalf of the Petitioners. In effect, none of the individual legal heirs was found liable under the GCA for any failure to make a declaration of the gold held by all of them collectively through the karta of the HUF i.e. Petitioner No.1. 16. Significantly, the Administrator was satisfied that "the source of the gold seized is fully explained and they are fully covered by the gold mentioned in the covenant." The reference was to the Cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CA states that no person shall (i) own or have in his possession, custody or control or (ii) acquire or agree to acquire the ownership, possession, custody or control of; or (iii) buy, accept or otherwise receive or agree to buy or otherwise receive; any primary gold. Section 8 (2) contains a similar provision concerning ornaments which required to be included in a declaration and have not been so included. Section 8 (3) deals with articles of gold. Under Section 16 of the GCA mandates that every person who owns, or is in possession, custody or control of any article or ornament at the commencement of the GCA shall make within thirty days from such commencement or from such acquisition, as the case may be a declaration in the prescribed form as to the "quantity, description and other prescribed particulars of any article, or ornament, or both, owned, possessed, held or controlled by him". The two provisos to Section 16 envisage situations where such a declaration need not be made by such person. 20. The tenor of the above provisions of the GCA indicate clearly that the liability under the GCA is of a person who is alive and not one who is dead. The above position gets further str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within a particular time. The failure to do so entails a punishment with imprisonment of a period up to two years in terms of Section 86 GCA. Therefore, the failure to make a declaration has penal and punitive consequences. This is the background against which the provisions in Chapter XIV GCA which spell out the mandatory procedure that has to be followed before any confiscation can take place or any penalty imposed have to be viewed. Section 78 provides for a statutory adjudication by the Gold Control Officer and Section 79 talks of "giving an opportunity to the owner of the gold etc." Section 79 of the GCA reads as under: "79. Giving of an opportunity to the owner of gold etc. - No order of adjudication of confiscation or penalty shall be made unless the owner of the gold, conveyance, or animal or other person concerned is given a notice in writing - (i) informing him of the grounds on which it is proposed to confiscate such gold, conveyance or animal or to impose a penalty; and (ii) giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the confiscation or imposition of penalty m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act 1922 does not authorise levy of tax on receipts by the legal representatives of a deceased person in the years of assessment succeeding the year of account being the previous year in which such person died. It was explained that Section 24 B was enacted to bring to tax after the death of a deceased, income received during his life time. To fill up the lacuna which was pointed out by the Bombay High Court in Commissioner of Income-tax v. Ellis C. Reid Section 24 B had been inserted. However, it did not extend the tax liability of the Estate of the deceased person "beyond the previous or the account year in which that person dies." 26. Thereafter, in The Commissioner of Income-tax, Bombay v. James Anderson AIR 1964 SC 1761 it was held that for the purpose of Section 24 B of the Income-tax Act, the legal personality of the deceased person came to an end at the end of the account year "in which such person died and that no tax could be levied on the dividends deemed to have been received by him or his legal representative after the end of that year." 27. The above legal position as regards a fiscal statute should a fortiori apply to the confiscation and penalty provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced against the person concerned." 29. This Court is of the view that the provisions of the Customs Act concerning confiscation and penalties do not bear comparison with the corresponding provisions of the GCA. This is because of the language of the relevant provisions. Section 71 read with Section 79 GCA requires the confiscation orders to be passed only after "the owner of the gold, conveyance, or animal or other person concerned is given a notice in writing". While it is true that the confiscation under Section 71 of GCA is of gold, that order confiscating the gold cannot be passed without the owner of the gold being given under Section 79 an opportunity of being heard. The distinction is that under the Customs Act once the goods are shown to be smuggled for the purposes of Section 111, the goods can be straightway confiscated. Under the GCA there is no such automatic confiscation without complying with Section 79 GCA. In any event, in the instant case there is a clear finding that the gold seized has not been smuggled since its source was fully explained. This Court is therefore unable to hold that a parallel can be drawn with the provisions of the Customs Act for interpreti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " share of the late Maharaja of the value of the gold. However, there is no explanation why the redemption fine should also be fixed at Rs. 80 lakhs. 34. In the first place, it must be observed that this question does not arise for determination in view of this Court having held that the late Maharaja cannot after his death be made liable under the GCA particularly since no proceedings thereunder were instituted against him during his lifetime. Secondly, there was no provision in the GCA permitting the imposition of any penalty on a dead person for failure to comply with a provision of the GCA. If one were to proceed on the assumption that the liability was of the legal heirs in terms of Section 16 (3) GCA, then again as far as the present case is concerned no such liability survives. The order of the Collector in the present case holds that the contravention was of Sections 8 and 16 GCA but does not hold Petitioner Nos. 3 and 4 liable to penal action under Section 74 GCA. 35. It must be recalled here that the central government has proceeded on the footing that upon the death of the late Maharaja, the entire property devolved on his legal heirs comprising Petitioner Nos. 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that, as pointed out in the written submissions of the Petitioners, the gold seized which was released on payment by Petitioner No. 1 of Rs. 1.5 crores (the amount of fine in lieu of confiscation as originally determined) and the penalty of Rs. 5 lakhs, has been sold and those proceeds have been used to pay the taxes and the loans borrowed to pay the fine. So, the seized gold which was redeemed does not exist. The moneys realized have been spent. It is stated that even the penalty and the fine to the extent it stood reduced from Rs. 1.5 crores to Rs. 80 lakhs was attached to meet other legal liabilities. It is unclear in relation to the sum of Rs. 80 lakhs which is now liable to be returned to the estate of the late Maharaja how much will be left after adjusting any other legal liability or dues that may be outstanding. Meanwhile, thanks to the long drawn litigation spanning over three decades, a whole generation has passed by. There are other disputes between the legal heirs as regards their rightful shares in the estate of the late Maharaja. Hopefully, with this the curtain will be drawn on the forgettable episode of the searches that took place between 11th February and 13th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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