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TMI Blog2022 (4) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of limitation by considering the fact that a show cause notice under Section 28(4) could be issued within 5 years from the relevant date which means the date on which the goods were assessed and cleared in case the duty was not paid, short paid or erroneously refunded by reason of collusion or any misstatement or suppression of facts. On having found that the importer had not made any willful misstatement or suppression of facts, the Court therefore held that extended period of limitation of 5 years was not available to any authority to reopen under Section 28(4) as it was difficult to hold that there was any willful misstatement on facts. In case of COMMISSIONER OF CUSTOMS, KANDLA VERSUS M/S. AGARWAL METALS AND ALLOYS [ 2021 (9) TMI 316 - SUPREME COURT] , the identical issue had arisen and the Apex Court in wake of the decision of Three Judges Bench of the Apex Court in M/s. Canon India Pvt. Ltd. had dismissed the appeals as the show cause notice was also issued by the Additional Director General, Directorate of Intelligence who is held to be not the proper officer within the meaning of Section 28(4) read with Section 2(34) of the Customs Act. The arguments advanced of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MS. JUSTICE SONIA GOKANI 1. These are the group of petitions which are being disposed of by a common order for the reason that they all contain identical question of law and the facts are largely similar, however, they may differ. 2. The lead matter is Special Civil Application No. 5562 of 2021 and the facts are drawn from the said matter for the purpose of adjudication. 3. M/s. Aztec Fluids Machinery Pvt. Ltd. - petitioner herein is a Private Limited Company engaged in the business of trading and manufacturing of goods like Inkjet Printers, Laser Printers and parts as well as accessories of such printers. The petitioner no.2 is the Managing Director and also a member of the petitioner. He is a citizen of this Country and is entitled to the constitutional guarantees enshrined under the Constitution of India. 3.1. The respondent no.1 is the Union of India whereas the respondent nos. 2 to 7 are the officers of the Union of India. The respondent nos. 2 and 3 are the officers of Customs having jurisdiction over the imports made by the petitioner under Ahmedabad Customs Commissionerate including Ahmedabad Air Cargo Complex as well Khodiyar ICD. The respondent No.4 is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and the proper officers of Customs in charge of these Customs Stations have finally assessed the import documents like Bills of Entry and Airway Bills filed by the Petitioner for the imported goods under the said classifications. Custom duties leviable on the imported goods in accordance with the rates applicable under the above referred Customs Tariff Headings have also been finally assessed by such Customs Officers and the duties so assessed have been fully paid by the petitioner for the said period. In absence of any kind of dispute on such facts, the petitioner has chosen not to produce any documents in respect of such assessment and collection of such duties. 3.6. It is the case of the petitioner that this petition involves consignments which had been allowed to be cleared for home consumption which have been sold by the petitioner to their customers as the petitioner is engaged in trading business. The sales has been effected by following due procedure and appropriate taxes leviable on such trading business also have been paid. 3.7. Around February, 2020, the office of DRI, Chennai Zonal Unit came across the imports made by the petitioner and thereupon, the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent nos. 2 to 6 as to why the reassessment and recovery should not be made as proposed along with the interest, penalty and confiscation of the goods, etc. It is alleged by the petitioner that the proceedings initiated by the respondent no.7 are wholly illegal and without jurisdiction because the DRI Officer is not the proper officer who can invoke Section 28 of the Customs Act and therefore, the notice issued by the respondent no.7 under Section 28 of the Customs Act is exfacie illegal and without any authority or jurisdiction. 3.10. It has heavily relied upon the decision in case of M/s. Canon India Pvt. Ltd. vs. Commissioner of Customs [2021(3) SCALE 748]. 3.11. It is urged that the entire proceedings of issuance of the show cause notice under Section 28 of the Customs Act is invalid and without authority of law since the DRI Officer is not the proper officer of the Customs and even the action taken is liable to be set aside when the proceedings itself is by DRI officer. It is also further the grievance of the petitioner that all concluded transactions are proposed to be reassessed for which the DRI Officer has initiated proceeding for recovery of duty allegedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Show Cause Notice F.No.DRI/CZU/VIII/26/17/2020 dated 24.02.2021 (Annexure A ); (D) An ex-parte ad-interim relief in terms of para 20(C) above may be kindly be granted; (E) Any other further relief as may be deemed fit in the facts and circumstances of the case may also please be granted. 4. This Court (Coram:- Mr. Vikram Nath, the Then Hon ble The Chief Justice as his Lordship then was and Mr. Bhargav D. Karia, J.) admitted this matter and issued notice on 26.03.2021 with the following order: - Heard Shri Paresh M. Dave, learned counsel for the petitioner. Admit. Issue Notice. By means of this petition under Article 226 of the Constitution, the petitioner has prayed for quashing of a show cause notice dated 24.02.2021 issued by the Additional Director General, Directorate of Revenue Intelligence, Chennai Zonal Unit, on the ground that the said officer cannot fall within the definition of a proper officer and as such could not have issued the notice under Sections 28 and 124 of the Customs Act, 1962. Reliance has been placed upon a recent judgment of the Supreme Court dated 09.03.2021 passed in Civil Appeal No.1827 of 2018, M/s.Canon India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. CNG Logistics Pvt. Ltd. on 03.11.2020 revealed that the importer informed that the imported product is classifiable under 84433250 by showing them the catalogue that they have claimed NIL rate of duty exemption under Notification No. 24/2005 SI. No. 2E and the Managing Director petitioner no.2 had informed that his competitors were clearing similar products with NIL rate of duty by claiming Notification No.24/2004 SI. No. 2E as Inkjet Printers and hence, they started filing the documents by claiming the notification exemption and they were asked to clear parts under 84439959 but the customs did not allow the classification and hence, they started classifying the parts under 84439990, which the company also accepted. 5.5. According to the statement of the petitioner no.2 on 15.12.2020, these printers were used for coding and marking of details such as batch no., expiry date, QR code, logo and he along with his Custom House Agent arrived at the HSN based on the classification being adopted by other companies importing these printers, whereas the version of the CHA is that they were filing the BoE classifying the CIJ printers under 84433250 after getting approval from the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Navneet Kumar [ ( 2020) 371 ELT 270] that the Directorate of Revenue Intelligence is only an arm of the Customs department and not alien to the Customs department. It has further explained that the DRI was set up under the Notification dated 04.12.1957 issued by the Ministry of Finance. Various Notifications were issued from time to time under Section 2(34) read with Section 4 of the Customs Act, 1962, according to the respondents, have not been placed before the Apex Court which resulted into the order dated 09.03.2021. They have tabulated the notifications right from 1990 to 2015. 5.11. It is further contended that the Apex Court in case of Commissioner of Customs vs. Sayed Ali [265 ELT 17] vide judgment dated 18.02.2011 held that unless and until the officers are appointed as proper officer under Section 2(34) read with Section 4 5 of the Customs Act 1962, assigning the function of adjudication under Section 28, it is not possible to conclude that the officers are empowered to discharge the function of issuing Show Cause Notice. Thereafter, the Finance Act, 2011 inserted sub-section (11) in Section 28 of the Act and also simultaneously issued Notification No.44/2011- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. An officer of customs has to be designated as proper officer under Section 2(34) of the Act by assigning the function of levy and collection of duty by the Board or the Commissioner of Customs. 5.14. It is also contended by the respondents that in light of the judgment of the Apex Court in case of Sayed Ali (supra) the notifications as tabulated in the said affidavit-in-reply were issued by the Central Government under Sections 4 5 read with Section 2(34) of the Customs Act appointing the DRI officers as proper officers. It is emphasized that the Apex Court in M/s. Canon India Pvt. Ltd. (supra) observed that unless the authorities are notified as proper officers under Section 6 (which applies to officers of other department appointed as customs officers) they are not considered as proper officers . The attention of the Apex Court in the case of Canon India had not been invited to the Notifications referred to in the table in para 12 of the said affidavit and also to the decisions of the Division Benches of various High Courts detailed in para 15 of the affidavit. 5.15. It is urged that the attention of the Apex Court was not invited to the amendment made to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of jurisdiction in accordance with law. Likewise, Delhi High Court in WP(C) No. 6044/2021 also did the same. The Calcutta High Court in WPO No. 592/2021 also firstly directed the adjudication on the jurisdictional issue and pass the final order. High Court of Madras in WP No. 12502/2021 directed the parties to approach the appellate authority whereas the Telangana High Court at Hyderabad in IA No. 01/2021 in WP No. 8460/2021 gave interim stay. 5.21. According to the respondent, the review application is submitted under Section 27 of the Customs Act, therefore, the refund of duty of ₹ 50 Lakhs is a process to be followed. It is further urged that the Court may not consider the demand of the petitioner for refund of duty as there is an alternative remedy available to the petitioner. 5.22. The respondent has attempted to further highlight the issue which fall for consideration before the Apex Court at para 4 of the decision. The framing of the issue by the Apex Court in para 6, 9 and 12 also have been heavily relied upon. It is further submitted by the respondents that the Finance Act, 2011 (Act No.08 of 2011) dated 08.04.2011 has introduced the concept Self Assessment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific functions being assigned to officers of DRI to function as proper officers, is a consequence of Sections 4 and 5 and the appointments made thereunder. The law is clear so far as the powers of review are concerned and even at the stage of Section 28, the proper officer does not exercise the powers of review. However, the proper officers exercise independent powers as proper officers subject to provisions and conditions laid in Section 28. Therefore, in that view of the matter also it cannot be said that the show cause notices will have to be issued by the same officer who has done assessment or reassessment of the duties under Section 17. 6.1. It is emphasized that Section 28(11) refers to the proper officer and officers in plural is very significant as it clearly reflects the legislative intent to recover the duty short paid, not paid or erroneously refunded by assigning powers under Section 28 to multiple officers. By not noticing this difference of singular word officer in Section 17(4) and plural word officers in Section 28(11) as apparent from the order dated 09.03.2021, this crucial aspect has been lost sight of and has caused the fatal error therein. Withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by a DRI officer by issuing show cause notices is invalid, without any authority of law and liable to be set aside along with ensuing demands. 7.3. This Court in case of CMR Chiho Industries India Pvt. Ltd. vs. Union of India [SCA 10521/2020, decided on 06.04.2021 ] has also rejected the review application rendered on 10.08.2021, therefore, the Court cannot take any other decision than that. Moreover, the final orders in cases like Commissioner vs. Agarwal Metals Alloys also has been passed after the decision of Canon India. Therefore, in the instant case, the Court needs to hold that the reassessment cannot be undertaken by the DRI. 8. We have also heard extensively learned advocates appearing for both the sides. 9. Learned advocates appearing for the petitioners have relied upon following authorities in support of their arguments: - (i) Judgment of Hon ble Supreme Court in case of M/s. Canon India Pvt. Ltd. vs. Commissioner of Customs [2021 (3) SCALE 748]; (ii) Copy of the status of Review Application filed in Commissioner of Customs vs. Sony India Pvt. Ltd. [Diary No. 9584/2021]; (iii) Judgment of Hon ble Supreme Court in case of Commissioner of Customs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor General (Adj.) and Others [W.P. (C) No. 6044/2021, dated 8.07.2021]; (ix) Order of Bombay High Court in the case of Om Drishian International Ltd. vs. Additional Director, Directorate of Revenue Intelligence and Anr. [W.P. No. 1088/2021, dated 24.09.2021]; (x) Judgment of Madras High Court in the case of M/s. R.K.K.R. Steel vs. The Central Board of Excise and Customs [W.P. Nos. 10276 to 10281/2011, dated 09.07.2021]; (xi) Order of Bombay High Court in case of Coastal Energy Pvt. Ltd. and another vs. Union of India [WP (L) No. 10206/2021, dated 230.09.2021]; (xii) Order of Punjab and Haryana High Court in case of Gautam Spinners vs. Deputy Director, Directorate of Revenue Intelligence [WP 16799/2021, dated 15.11.2021]; (xiii) Judgment of this Court in case of Swari Menthol and Allied Chem. Ltd. vs. Jt. DIR, DRI [(2014) 304 ELT 21]. 11. This Court at the outset needs to consider the decision of the Apex Court rendered in case of M/s. Canon India Pvt. Ltd. 11.1. In case of M/s. Canon India Pvt. Ltd. on 19.08.2014, a show cause notice was issued under Section 28(4) of the Customs Act, 1962 alleging that the Customs Authorities had been induced to clear the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or recovery of duties allegedly not levied or paid when the goods have been cleared for import by a Deputy Commissioner of Customs who decided that the goods are exempted. It is necessary that the answer must flow from the power conferred by the statute i.e. under Section 28(4) of the Act. This Section empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts and confers the power of recovery on the proper officer . The obvious intention is to confer the power to recover such duties not on any proper officer but only on the proper officer . This Court in Consolidated Coffee Ltd. and Another vs. Coffee Board, Bangalore2 has held:- 14. ...Secondly, and more importantly, the user of the definite article the before the word agreement is, in our view, very significant. Parliament has not said an agreement or any 2 (1980) 3 SCC 358 agreement for or in relation to such export and in the context the expression the agreement would refer to that agreement which is implicit in the sale occasioning the export. In Shri Ishar Alloy Steels Ltd. vs. Jayaswals Neco Ltd.3 has held:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under this Act or under the Customs Tariff Act or under any other law for the time being in force; instance, assessed and cleared the goods i.e. the Deputy Commissioner Appraisal Group. Indeed, this must be so because no fiscal statute has been shown to us where the power to re-open assessment or recover duties which have escaped assessment has been conferred on an officer other than the officer of the rank of the officer who initially took the decision to assess the goods. 13. Where the statute confers the same power to perform an act on different officers, as in this case, the two officers, especially when they belong to different departments, cannot exercise their powers in the same case. Where one officer has exercised his powers of assessment, the power to order reassessment must also be exercised by the same officer or his successor and not by another officer of another department though he is designated to be an officer of the same rank. In our view, this would result into an anarchical and unruly operation of a statute which is not contemplated by any canon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioners of Customs. At the relevant time, the Central Government was the appropriate authority to issue such a notification. This notification shows that all Additional Directors General, mentioned in Column (2), are appointed as Commissioners of Customs. 18. The next step is to see whether an Additional Director General of the DRI who has been appointed as an officer of Customs, under the notification dated 7.3.2002, has been entrusted with the functions under Section 28 as a proper officer under the Customs Act. In support of the contention that he has been so entrusted with the functions of a proper officer under Section 28 of the Customs Act, Shri Sanjay Jain, learned Additional Solicitor General relied on a Notification No.40/2012 dated 2.5.2012 issued by the Central Board of Excise and Customs. The notification confers various functions referred to in Column (3) of the notification under the Customs Act on officers referred to in Column (2). The relevant part of the notification reads as follows:- [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii)] Government of India Ministry of Finance (Department of Revenue) Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Customs or Commissioner of Customs]. 20. Section 6 is the only Section which provides for entrustment of functions of Customs officer on other officers of the Central or the State Government or local authority, it reads as follows:- 6. Entrustment of functions of Board and customs officers on certain other officers The Central Government may, by notification in the Official Gazette, entrust either conditionally or unconditionally to any officer of the Central or the State Government or a local authority any functions of the Board or any officer of customs under this Act. 21. If it was intended that officers of the Directorate of Revenue Intelligence who are officers of Central Government should be entrusted with functions of the Customs officers, it was imperative that the Central Government should have done so in exercise of its power under Section 6 of the Act. The reason why such a power is conferred on the Central Government is obvious and that is because the Central Government is the authority which appoints both the officers of the Directorate of Revenue Intelligence which is set up under the Notification dated 04.12.1957 issued by the Ministry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est which has not been levied or charged or which has been so short-levied or part paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty has not been levied or has been short-levied or the interest has not been charged or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words one year and six months , the words five years were substituted. 18. It is plain from the provision that the proper officer being subjectively satisfied on the basis of the material that may be with him that customs duty has not been levied or short levied or erroneously refunded on an import made by any individual for his personal use or by the Government or by any educational, research or charitable institution or hospital, within one year and in all other cases within six months from the relevant date, may cause service of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs was not available to any authority to reopen under Section 28(4) as it was difficult to hold that there was any willful misstatement on facts. 12. In case of Commissioner of Customs, Kandla vs. M/s. Agarwal Metals and Alloys [Civil Appeal No. 3411/2020, decided on 31.08.2021], the identical issue had arisen and the Apex Court in wake of the decision of Three Judges Bench of the Apex Court in M/s. Canon India Pvt. Ltd. (supra) had dismissed the appeals as the show cause notice was also issued by the Additional Director General, Directorate of Intelligence who is held to be not the proper officer within the meaning of Section 28(4) read with Section 2(34) of the Customs Act. Delay condoned. The appeals are dismissed in terms of the signed order. Pending applications, if any, stand disposed of. 13. This Court in case of CMR Chiho Industries India Pvt. Ltd.(supra), was considering the question as to whether the search carried out by the officials of the DRI at the warehouse/factory premises of M/s. CMR Chiho Industries India Pvt. Ltd., Mehsana, where it was permissible in wake of the decision of the Apex Court in case of M/s. Canon India. It was alleged by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rector, DRI Zonal Unit has given 'no objection' to the provisional release to the seized goods on 11.08.2020 since, the importer-petitioner requested for release of the seized goods vide letter dated 05.08.2020. It is quite obvious that at the time of import of the goods, the petitioner had declared the description of the product as Discarded in non-serviceable motor scrap under Customs Tariff Heading 7204 49 00 under other ferrous waste and because of that 2.5% of rate of concessional duty had been made available under Notification 50/2017:CUS dated 30.06.2017. What is not being disputed is that the certificate of analysis and Form9 as also other relevant materials had been placed before the Custom Authority which examined the same and cleared the goods of import. It was later on that the DRI with a reasonable belief that there was an undue benefit of the concessional rate of duty taken which resulted into the short payment of custom duty, placed the goods under detention and they were subjected to confiscation. It is quite obvious that the officer, who had permitted the import of the goods is not the one who had formed a reasonable belief of the petitioner having tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that not only the principles of natural justice shall have to be adhered to. It is obvious that there has to be a show cause notice before confiscation of the goods within six months after once the seizure of the goods takes place under Section 110 (1) of the Act. 32.4. Section 124 of the Act provides for issuance of show cause notice before the confiscation of the goods and states that no order of confiscation or imposing of any penalty on any person shall be made under this chapter unless the owner of the goods or such person (a) is given a notice in writing with the prior approval of the officer of Customs not below the rank of an Assistant Commissioner of Customs informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty; (b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and (c) is given a reasonable opportunity of being heard in the matter, Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may at the request of the person co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the imported products were labeled as Discarded and non-serviceable semi-broken motor scrap and they simply cannot be termed as melting scrap of Iron or Steel (other than stainless steel) falling under Customs Heading 72044900. They have admitted that they are importing the motor scrap consisting Iron Scrap 85%, Copper Scrap 10% and Aluminum Scrap 5% in approximate. They are alleged of intentionally not declaring their products properly in the bills of Entry at the time of import under Section 46 of the Act in terms of Section 17 of the Customs Act. Section 17 provides that an importer entering any imported goods under Section 46 or an exporter entering any export goods under Section 50 of the Act shall save as otherwise provided in Section 85, self assess the duty, if any, leviable on such goods. 35. Admittedly, the description in the Bill of Entry Discarded and non-serviceable semi-broken motor scrap even on inspection of the goods were found exactly as entered into the Bill of Entry i.e. discarded and non-serviceable broken motor scrap. The only reason after having allowed the import for not allowing the benefit of reduced rate of duty is because the Copper scrap an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d warrant indulgence. And, hence, his reasonable belief would also have no bearing when otherwise the authority concerned had allowed the import on the basis of the material which had been already made available by the petitioner. Thus, on the count of the DRI officer not being a proper officer under the law as the action on the part of the officer of DRI is not to be sustained. Again, assuming that he would have powers to reassess the very fact that entire material was with the assessing officer, it was for him to assess otherwise. Besides, vide notification issued by the Central Board of Excise Customs, that is, notification no. 40/2012 customs (NT) dated 2.5.2012 and more particularly, item no.6 whereby, the Intelligence Officer in the Director General of Revenue Intelligence and Directorate General of Central Excise Intelligence, have been assigned the powers of various sections including the powers under subsection (1) and (2) of section 110 of the Act, which notification has been considered by the Apex Court with reference to assigning the powers of section 28 of the Act and has been held to be invalid. The learned counsel for the Union, could not dispute the said proposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular classification. On subsequently having noticed that the Copper and Aluminum elements would not permit the exemption under the Notification at the rate of 2.5% by itself would not make the import of the goods as clandestinely having been done, the least that could have been done was to term the same as mala fide when otherwise the relevant material had been already placed with the department. 38.1. As mentioned hereinabove, the communication dated 03.08.2020 in post clearance audit of Bill of Entry was on the basis of various documents including the certificate of analysis, when it was realized by the department that the product consists of the Copper scrap also to the extent of around 10%. The DRI has firstly detained the goods, which later on had been seized. Assuming that the stage of adjudication of show cause notice is yet to come, this Court has no intent to go into the issue of classification at all as it would be for the proper officer to workout the same on following the due procedure and on requisite scrutiny however, noticing that the order of detention and seizure by the DRI itself is unsustainable, we allow the petition by quashing and setting aside the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputed to Bharati's case [AIR 1973 SC 1461]. 17. The Full Bench of this Court in case of Sarjubhaiya Mathurbhai Kahar vs. Commissioner of Police, Vadodara [1984 (1) GLR 538] had come heavily when despite the decision of the High Court in a subsequent case, the party proceeded to deal with the question before it as if the decision would not be applicable and the justification drown was that relevant provision was not brought to the notice of the Supreme Court. 18. The Apex Court in a decision of B.M.Lakhani vs. Malkapur Municipality [AIR 1970 SC 1002] held that the decision was binding on the High Court and the High Court could not ignore it because it thought that the relevant provisions were not brought to the notice of the Court. The Court has emphatically held that a new ground of challenge even on the basis of approach made in the later decision of the Supreme Court may not be available before the Court to the petitioner in a matter before it. Apt would be to refer to the said decision:- 3. Two questions fall to be determined in this appeal (I) whether a suit for refund of tax paid to the Municipality is maintainable; and (2) if the suit is maintainable, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy of tax under an inapplicable entry. 6.Again it was implicit in the judgment of the Full Bench that the suit was maintainable. If the suit was not maintainable the question whether to the claim made under Section 48 of the Act had application could not arise. Section 48 lays down the conditions subject to which the suit may be filed. Whether Section 48 of the C.P. Berar Municipalities Act is not applicable, because the tax contravened Section 142-A of the Government of India Act, 1935, or Article 276 of the Constitution, could only fall to be determined if a suit for refund lay. The High Court was, in our judgment, in error in setting aside the decree passed by the District Court on the ground that a suit for refund of tax was not maintainable. 7. On the second question the argument of the Municipality has also not much substance. The Municipality was constituted in 1905 under Section 41(1)(a)(b) of the Berar Municipal Act, 1888, a tax called the Bale and Boja tax was levied by the Municipality with effect from October 1, 1912, on cotton ginned and pressed in Ginning and. Pressing Factories at the rate of 8 pies per bale of 10 maunds, and 10 pies per bale of 14 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut by the proviso to Sub-section (2) of Section 142-A levy by the Provinces or Municipal bodies of tax on profession, trade, calling or employment, at rates exceeding the rates prescribed by the Government of India Act were to remain in operation until provision to the contrary was made by the Parliament. To give effect to the limitation imposed by Section 142-A the Parliament enacted the Professions Tax Limitation Act XX of 1941. The relevant provisions of Act 20 of 1941 are as follows: Section 2 - Notwithstanding the provisions of any law for the time being in force, any taxes payable in respect of any one person to a Province., or to any one municipality, district board, local board? or other local authority in any Province, by way of tax on professions, trades, callings or employments, shall from and after the commencement of this Act cease to be levied to the extent in which such taxes exceed fifty rupees per annum. Section 3- The provisions of Section 2 shall not apply to any tax specified in the Schedule. The Schedule is as follows: THE SCHEDULE Taxes to which Section 2 does not apply. 1.The tax on professions, trades and callings, imposed throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year. This Court has however held in Municipal Committee, Akot v. Manilal Manekji Pvt Ltd. 1967-2 SCR 100 : ; on interpretation of Sections 2 and 3 and Item 4 of the Schedule to the Professions Tax Limitation Act 20 of 1941 that the rate fixed by the earlier notification was also not saved from the operation of Section 2. This Court was of the view that by virtue of Item 4 of the Schedule only the tax on persons, exercising professions imposed under Clause (b) of Sub-section (1) of Section 66 of the Central Provinces Municipalities Act, 1922, was saved from the operation of Section. 2 of Act 20 of 1941 and not the tax under Section 66 of the Central Provinces Berar Municipalities Act, 1922, and the tax levied by the respondent Municipality was levied under the latter Act. That decision is binding upon us. It must therefore be held that the rate of tax prescribed by the notification of 1912 alone could be enforced, subject to the limit prescribed by Article 276(2) of the Constitution. The Municipality was therefore incompetent to levy a tax at a rate exceeding Rs, 250/- for the whole year. 12. The appeal is allowed and the decree passed by the Trial Court is restor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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