9911796707
TMI Blog2017 (7) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/17/SMB - Dated:- 9-6-2017 - Mr. Ramesh Nair, Member(Judicial) Shri. Ajay Kumar, Addl. Commissioner(A.R.) for the Appellants Shri. Darshan Ranavat, C.A. for the Respondent ORDER This appeal is filed by the Revenue against order passed by the Commissioner(Appeals). The fact of the case is that appellant is engaged in the manufacture of 'Electric Generating Sets parts thereof and 'electric control panel' falling under chapter 85 of Central Excise Tariff Act, 1985, They have purchased the said property in the for of As is Where is basis and what is basis' from the Debt Recovery Tribunal by duly making payment of ₹ 10,75,00,000/- for which DRT Mumbai issued sale certificate No.MDRT-1/R.P.57-02/2007 dated 9-8-2007. Then they applied online for Central Excise Registration from LTU, Mumbai on 19-2-2013. They sought to the post verification report from Khololi division, Raigad Commissionerate, before issuance of registration certificate to the respondent. Dy Commissioner Central Excise, Khopoli vide letter dated 18-3-2013 informed LTU, Mumbai that there were govt. dues pending recovery amounting to ₹ 30,45,434/-( 9,80,742/- alongwith int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty and related dues shall have the first charge. In the present case the land was already purchased by the respondent therefore at this stage. The issue of first charge does not arrive. In support of his submission he placed reliance of the following judgments: (a) Lamifab Industries Vs. Union of India [2015(326) ELT 674 (Guj)] (b) Gopal Agarwal Vs. Commr. Cus C Ex. Hyderabad[2015(324)ELT 62(A.P.)] (c) IDBI Ltd Vs. Dy. Commr.[2012(283)ELT 188(A.P.)] 4. I have carefully considered the submissions made by both sides and perused the record. 5. This Tribunal on the identical issue has passed the detailed order in case M/s. Rajaram Steel Industries Pvt Ltd Vs. Commissioner of Central Excise, customs, Nagpur[Final Order No.A/2535/15/SMB dated 29/5/2015 which is reproduced below: 6. Ld. Commissioner in the impugned order has confirmed the recovery of arrears from the appellant in view of proviso to Section 11 of Central Excise Act, which is reproduced below: SECTION 11, Recovery of sums due to Government. [(1)] In respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of the rules ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson, to pay to the credit of the Central Government either forthwith upon the money becoming due or being held, or at or within the time specified in the notice, not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount; (ii) every person to whom a notice is issued under this subsection shall be bound to comply with such notice, and in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary; (iii) in a case where the person to whom a notice under this sub-section has been issued, fails to make the payment in pursuance thereof to the Central Government, he shall be deemed to be a person from whom duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or the Rules made thereunder have become due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am in agreement with the submission of the Ld. Counsel that in view of the Krishna Lifestyle Technologies Ltd(supra ) case the recovery from the successor can only be made when the business or trade is transferred either in whole or in part from the predecessor to the successor. Hon'ble Bombay High Court in the said judgment has held as under: 14. In order to answer the controversy, the Judgment in Shreyas Papers Pvt. Ltd. (supra) needs to be considered. In case, there were two issues before the Supreme Court. (1) 117-cat would be the meaning of the expression transfer of ownership of business under Section 15 of the KST Act and (2) Enforceability of the Charge. The assets were sold by State Financial Corporation in exercise of its powers under Section 25 of the State Corporation Act, 1951. The issue for consideration was whether the purchaser of assets of a concern, sold by a State Financial Corporation would be liable for arrears of sale tax of the concerned assets which has been transferred. Section 15 of the KST Act and the expression transfer of ownership of business were considered. Section 15 of the KST Act reads as under : 15(1) When the ownership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be transfer of the whole of the ownership of business. It is sufficient if there is transfer or disposal of part of the business or any change in the ownership. The consequences must be that the person who purchases must succeed in such business or trade from the reason who was carrying on the business or trade. Would the ratio in Shreyas Papers Pvt. Ltd. (supra) conclude the issues as to the expression transfer or disposal of business in whole or in part ? Shreyas Papers Pvt. Ltd. (supra), has laid down the law in so far as Section 11 is concerned. However, the ratio would apply, namely that there must be transfer or disposal of the business in whole or in part. The transfer must be of the business or trade and not merely the assets. This follows, considering the subsequent language which uses the expression in consequence of which he succeeded in such business or trade by any other person . In other words, it is only when the person wholly or partially succeeds to the business or trade pursuant to the transfer and when the Legislature has permitted, the State to recover from the assets including plant and machinery, As such there must be a transfer of the whole or part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... split up and thereafter another person carries on part of the business he does not succeed his predecessor in carrying on the business. Considering the language of our statute, in our opinion, that really would not apply. In Industrial Development Investments Co. Ltd. v. Commissioner of Excess Profits Tax [(1957) 31 ITR 688 (Bom.)], this Court was considering as to what would constitute a succession to a business. The Court speaking through Chagla, C.J. observed that whether there is a succession to a business, two factors have got to be considered. One obviously is the identity of the two businesses. If the two businesses are not identical, no question of succession can arise and even if the two businesses are identical, another factor has also got to be taken into consideration and that is the factor of the continuity of the two businesses. In other words, the successor business must be the continuation of the original business. If the original business has come to an end or has been discontinued, then the subsequent business even though it may be identical with the first business, cannot be looked upon as its successor, because a successor should not only do the same b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dicta and are not authoritative. The Court also quoted with approval, P. J. Fitzgerald, 12th edition as to the concept of sub silentio which reads thus :- A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio. From the above discussions, we are of the opinion that though assets were sold, sale of assets by itself would not be transfer of business in whole or in part. There must be material on record to show that the business has been transferred to the Petitioner and consequent thereto the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sale. As per the High Court, these statutory liabilities would include excise dues. We find that the High Court has missed the true intent and purport of this clause. The expressions in the Sale Deed as well as in the Agreement for purchase of plant and machinery talks of statutory liabilities arising out of the land or statutory liabilities arising out of the said properties (i.e. the machinery). Thus, it is only that statutory liability which arises out of the land and building or out of plant and machinery which is to be discharged by the purchaser. Excise dues are not the statutory liabilities which arise out of the land and building or the plant and machinery. Statutory liabilities arising out of the land and building could be in the form of the property tax or other types of cess relating to property etc Likewise, statutory liability arising out of the plant and machinery could be the sales tax etc. payable on the said machinery. As far as dues of the Central Excise are concerned, they were not related to the said plant and machinery or the land and building and thus did not arise out of those properties. Dues of the Excise Department became payable on the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the right under Article 226 of the Constitution, did not fetter such right by any limitation whatsoever. In those circumstances, there cannot be a contention that the writ petition is not maintainable because it is belated. If the action complained of is non est from the day one, the same can be challenged even after 100 years. The question is, whether the action complained of in the writ petition is non est or not?. The Central Excise Act provides the mechanism of recovery of excise duties. It permits recovery of such duties from the merchandise of the assessee in his control. It does not permit even recovery from those merchandise, which have gone to the buyers of the assessee. Upon failure to recover the same, the Act permits the dues to be recovered as land revenue. The words 'land revenue' connote revenue, which is lawfully recoverable from the person, who is liable to pay the same for his properties. The fact remains that the property in question is not of the assessee, but of the appellant/ writ petitioner. Therefore, by taking measures available for recovery of land revenue, dues due and owing by the assessee cannot be recovered from the properties of the appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a secured creditor. Moreover, what has been sold to the petitioners is the immovable property of the defaulter company and not the business or trade, in whole or in part. The petitioner, therefore, has not succeeded the defaulter in the business or trade. In the circumstances, the proviso to Section 11 of the Act would not be attracted in the present case. Insofar as the first and second contingencies referred to hereinabove are concerned, admittedly the same do not exist in the present case, Insofar as the third contingency is concerned, it is an admitted position that no action has been taken in terms thereof inasmuch as the officer empowered has not prepared any certificate specifying the amount due from the defaulter, etc., as required under the said clause. Thus, prima facie, the provisions of Section 11 are not attracted in the present case Manibhadra Fine Trade Services Vs, Chief Commissioner of Central ELT 514(Guj)]. 8, Under the circumstances, we have no hesitation in holding that the charge of the Central Excise Department cannot survive and must be ordered to be deleted. We may note that proviso to Section 11 permits the Department to recover its dues in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In these circumstances, we are of the view that the first respondent was a purchaser for value without notice of the sales tax arrears of the defaulting company or the consequent charge on the property. This would, therefore, attract the principle laid down by this Court in Ahmedabad Municipal Corporation, which is also embodied in the proviso to Section 100 of the TP Act. Thus, the property in the hands of the first respondent was free of the charge and it is not open to the appellants to enforce the liabilities of the defaulting company in this manner against the first respondent. 6. The third judgment on the point is the case of UTI Bank Ltd. v Deputy Commissioner of Central Excise reported as 2007 (208) E.L.T. 3 (Mad.) = AIR 200 7 Madras 118 wherein the Full Bench of the Madras High Court speaking through Hon'ble Mr. Justice P. Sathashivam (as his Lordship then was) held as follows : All the decisions relied on by Mr. V. T. Gopalan, clearly show that the Government is entitled to claim its dues/ taxes/ duties in preference to other ordinary debts. In all those cases, there is no provision as found in SAFRFAESI Act or a specific provision claiming to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its priority of recovering excise dues or the other such like dues under the Excise Act cannot be upheld either on the applicability of doctrine of priority of Crown debts or that any such priority has been so created under any of the provisions of the Excise Act or Rules or the Customs Act. 8. In the circumstances, the inescapable conclusion is that the Excise Department cannot enforce the payment of their dues against the property purchased by the petitioner though they would have the liberty to seek redress against the original debtors. 9. In view of what has been stated herein above, the present writ petition is allowed and the impugned letters are quashed. In view of the above judgments, it was consistently held that wherever the property was sold under auction by secured creditors such as banks. financial institution, recovery of government dues cannot be made from buyer of the property. In this settled legal position, Revenue was in error to confirm demand amount on the appellant. I have also gone through the sale certificate of the bank, assignment deed between bank and Zia Iron Stores and assignment deed between Zia Iron Stores and the present ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of proviso to Section 11 which under the present set of the facts does not apply. On going through the under taking given by the appellant while obtaining registration regarding the payment of arrears, I find that the appellant has given such under taking without prejudice to the legal rights of the appellant therefore in my considered view though the under taking is given by the appellant, the same is not sufficient for enforcing the recovery of arrears as the appellant is not legally liable for payment of arrears of M/s. Sumit Rerolling Mills Pvt. Ltd. 6.1 In view of my above discussions, binding judgments of Hon'ble Supreme Court, High courts and this Tribunal, I am of the considered view that the appellant is not liable for payment of dues which is pending against M/s. Sumit Rerolling Mills Pvt. Ltd. therefore impugned order is set aside and appeal is allowed with consequential relief, if any, in accordance with law. From the above decision it can be observed that the same was passed after considering various land mark judgments of the High court and Supreme court wherein conclusively held that in case of purchase of property alone under auction from Bank/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
