1. This is an appeal filed jointly by M/s. Hirachand Kantilal & Co., Hirachand Leelachand Shah and Shri Hemant Hirachand Shah under the Gold (Control) Act.
2. The facts of the case are that M/s. Hirachand Kantilal Saraf was earring on a business as Gold Dealer having valid licence No. 4/67 since 1967. There was no contravention under the Gold Control Act.
There was deterioration in the health of Shri Hirachand Kantilal Saraf, who was the sole proprietor of the concern. Being old, he was not in a position to carry on the business as sole proprietor of the concern.
The appellant's financial year is Diwali to Diwali. The appellant had converted this sole proprietory concern carried out under the name of M/s. Hirachand Kantilal Saraf since 1967 into a partner ship firm under the Indian Partnership Act with effect from the 28th day of October, 1981. The partnership deed was executed on the 25th day of November, 1981 and was effective from the 28th day of October, 1981 and he had admitted his son Shri Hemant Hirachand Shah as a partner. Constitution of the firm was as under.
2. Shri Hemant Hirachand Shah Rs. 00.30 _________ 3. The appellant had sent intimation to the Supdt. of Central Excise, intimating him the conversion of Sole Proprietory Concern into a firm consisting of himself and his son w.e.f. 28.10.81 in the name of M/s.
Hirachand Kantilal and Company, Phaltan on the 30th day of November 1981. On the 16th day of June, 1982, a raid was conducted on the appellant business premises and the entire stock of gold weighing 199.600 ems. of gold was seized under Section 71(1) of the Gold Control Act read with Section 10 (2) of the Gold Control Act.
4. The Additional Collector of Central Excise & Customs, Pune seized gold weighing 199.600 gms. under Section 71(1) of the Gold Control Act giving an option to the appellants to get the confiscated gold released within three months on payment of Rs. 2500/-and a penalty under Section 75 of the Gold Control Act of Rs. 1000'- was also imposed on M/s.
Hirachand Kantilal & Co. of Phaltan.
5. The learned Counsel for the appellants has submitted that the show cause notice was issued to the appellants on the 11th day of August, 1982. The appellants had duly filed a reply to the same. The learned Counsel has submitted that provisions of Section 103 read with Section 27 of the Gold Control Act are not applicable, in this case as there is no transfer or transmission of business. He has submitted that Section 103(2) of the Gold Control Act 1968 runs as under: Where the business of a licensed dealer or refiner is transferred by sale, gift, lease or otherwise, the transferee or lessee, as the case may be, shall not carry on such business or run such refinery either in his own name or in some other name unless he has obtained a licence in accordance with this Act io carry on such business or to run refinery.
He submitted that in the case of appellants it is not a sale or gift or lease or otherwise, the transferee or lessee and as such the appellants cannot be penalised for the same. The appellants are maintaining GS 11 and GS 12 registers which were duly verified by Central Excise authorities on 5.1.82 and 21,4.82, The learned Counsel for the appellants has further submitted that the appellants' cash memos for the months of April, May and June 81 seized by the department and the name printed on the cash Memos was M/s. Hirachand Kantilal & Company and not M/s. Hirachand Kantila Saraf. Every page of the cash memo is duly stamped with the stamp of the Central Excise Department and that the last page was duly signed by the Inspector who verified the registers and books etc. The appellant further submitted that GS-11 and GS 12 registers, cash memos and account books etc. are with the revenue authorities and are under seizure. He further submitted that it is a small technical error and the appellants could not be penalised for the same.
6. The learned D.R. on the other hand has strongly argued that the Order passed by the Additional Collector of Central Excise & Customs is very correct order and the same needs be confirmed and the appeal should be dismissed. The Departmental Representative has also submitted that the appellant had filed the renewal application on the 3rd day of November, 1981 for the appellant's licence for 1982 was renewed on the 19th day of February, 1982 under the name and style of M/s. Hirachand Kantilai Saraf, Phaltan. As regards the GS-11 and GS-12 registers maintained by the appellant which are at the moment in the custody of the department continue to be the same. No change in the firm was mentioned on these. The Learned D.R. has again pleaded for the dismissal of the appeal and submitted that Section 103 read with Section 27 of the Gold Control Act is fully applicable in this case. He has stated that admission of his son as a partner is a sale of the dealership and as such there is violation of the Gold Control Act. The Additional Collectei's order as to confiscation of gold jewellery and imposition of penalty of Rs. 1000/- are in order. In reply the Learred Counsel for the appellant has put emphasis on the word "otherwise" in Section 103(2).
7. I have gone through the facts of the case and have also considered the arguments on both the sides. There is no dispute as to the fact that the Appellant who was the Sole Proprietor of the Concern since 1967 was carrying on the business under the name and style of M/s, Hirachand Kantilal Saraf and he had a licence bearing No. 4/67. Due to Appellant's old age he was experiencing great difficulty in the carrying on of the business as a Saraf and he had inducted his son as a Partner with 30% share and he had kept major 70% of the share with him.
He had inducted his son as a Partner for the purpose of carrying on of his business on account of his decreasing working capacity due to old age. There would have been a possibility that he would have lost his business had he not inducted his son as a Partner. The Revenue has resorted to provisions of Section 103(2) read with Section 27 of the Gold Control Act, 1968. A simple reading of the relevant Sub-section 2 of Section 103 shows that the bar as to carrying on of business us gold dealer or refiner is only where business is transferred or leased out.
The provisions of Section 103(2) are attracted where when the business of a licensed dealer is transferred or otherwise, the transferee or lessee, as the case may be, shall not carry on such business or run such refinery either in his own name or in some other name unless he has obtained a licence in accordance with this Act to carry on such business or to run refinery. The appellant Shri Hirachand Leelachand Shah had a gold Dealer Licence with him is Sole Proprietor of the Concern M/s. Hirachand Kantilnl Suraf and has neither transferred his licence nor has he leased out, the same. The Dictionary meaning of the word "Transferee" from the Shorter Oxford English Dictionary on Historical Principles, Vol. II reprinted in 1980 at page 2346 is as under: "Trans-feree-I. One to whom a transfer is made, 2. One who is transferred or removed." 8. The appellant on the other hand had always been careful and law conscious as to the handling of his affairs. The appellant had duly intimated the change to the Revenue on the 30th day of November, 1981 to the effect that his son Shri Hemchand Hirachand Shah has been inducted as a partner with effect from 28th October 1981. A Partnership deed was also executed. He had got printed cash memos of the Sole Proprielory Concern changed to that of the Firm under the name and style of M/s. Hirachand Kantilal & Co. All these cash memos are duly stamped by the Excise authorities and are duly signed by the Inspector.
This shows that the Revenue had accepted the fact of the change in Constitution. The mere fact that the same registers are maintained is not sufficient enough to hold that there is contravention of any provisions under the Gold Control Act. It will be too technical to hold that induction of his son as partner in the firm tantamounts to transfer of business. The intention of the Central Government is very clear, if one goes through the Gold Control (Licensing of Dealers Rules, 1969 Sub-rule (dd) of Rule 2. Relevant extract from Rule 2 of the Gold Control (Licensing of Dealers) Rules, 19t 9 runs as under: "Rule 2 Matters :o which regard shall be had before issuing a licence; On receipt of an application, for the issue of licence to commence or carry on business as a dealer, the Administrator shall have regard to the following: (dd) Whether the applicant is a person who does not hold a valid licence to carry on business as a licensed dealer in his name or is a person who is not a partner of a firm which holds such licence; A simple reading of this shows the intention of the Central Government is that where an individual holds a licence in his own name or in the ame of the Firm where he is a partner, no fresh licence should be issued. Keeping in view the totality of the facts, circumstances and legal position of the case, I hold that the Revenue was not justified in holding that the appellant was carrying on the business without a valid Gold Dealer licence. I hereby direct that the imposition of fine of Rs. 2500/- under Section 71(1) of the Gold Control Act was not justified. I also hold that the penalty imposed under Section 75 of the Gold Control Act, 1968 was also not justified. I therefore quash the penalty orders imposing a penalty of Rs 2500/- under Section 71(1) and Section 75ofRs. 1000/- of the Gold Control Act, 1968. I hereby direct the Revenue to refund the penalties if already paid by the appellant.
In the result the appeal is accepted.