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Mascot Enterprises Etc. Vs. Lt. Governor of Delhi and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 171 of 1980
Judge
Reported inAIR1981Delhi92; ILR1980Delhi1225
ActsConstitution of India - Article 226
AppellantMascot Enterprises Etc.
RespondentLt. Governor of Delhi and ors.
Advocates: R.S. Narula,; D.S. Narula and; Krishan Kumar, Advs
Excerpt:
.....of the duty in cash and the remainder was also paid by the petitioner on 16-1-1980. the cancelled bank guarantees were then returned by the respondent to the petitioner.; by a communication dated 21-1-1980, a demand for rs. 1,76,371.39 was made by the respondents no. 3, calling upon the petitioner to pay the said amount within 7 days of the receipt of the communication failing which it was threatened that the same would be recovered as arrears of land revenue. this amount was demanded by the respondents on the ground that there had been a delay in making payment of rs. 9 lakhs and odd under the terms and conditions of the grant of license and, thereforee, the petitioner was liable to pay penal interest. the default alleged was with regard to payment per month of the 50% of the excise..........case that thereafter the petitioner imported liquor into the union territory by paying 50 per cent duty in cash and giving bank guarantee to the extent of 50 per cent of the remaining duty. in another similar petition, being c. w. no. 716 of 1978, m[s. sat pal & co.. etc. v. lt. governor of delhi and others, a learned single judge of this court held that no excise duty was livable on liquor imported into delhi as the same was not manufactured here. this judgment was delivered on january ii, 1979. the effect of the said judgment would have been that excise duty claimed by respondents on all such liquor licenses could no longer be claimed and would naturally have resulted, in great loss of revenue. to neutralise the effect of the said judgment, the president was pleased to promulgate.....
Judgment:

Prakash Narain, J.

(1) This petition arises out of proceedings which had taken place in Civil Writ No. 1403 of 1978. Briefly stated, the circumstances in which the petition comes up for hearing are these.

(2) The petitioner was a bidder for and was awarded a wholesale dealer's license, known as L-1 license for dealing in Indian made foreign liquor for the year 1978-79. It is common case that at the relevant time no Indian made foreign liquor was manufactured within the Union Territory of Delhi. The same used to be imported from distilleries or manufacturers in other States of the country. Inasmuch as there was no manufacture in Delhi a question was raised by the petitioner that no excise duty is payable on the liquor imported into Delhi. This question was raised by filing C.W. No. 1403 of 1978 in this court on 16th December, 1978. Along with the said writ petition an application had been moved for stay of recovery of payment of excise duty. In fact. there were two applications moved and were numbered as C. Ms. 3040 and 3042 of 1978, In the miscellaneous application after notice the following order was passed by H. I.. Anand, J. on January 12, 1979 :

'PENDINGfurther orders the levy collection and realisation of Excise and or countervailing duty impugned by the petitioner is stayed on the condition that the petitioner furnishes within two days bank guarantee to the extent of 50 per cent of the duty that may be realisable from time to time. On the bank guarantee being furnished,' the authorities would issue the requisite permit in favor of the petitioner in accordance with law.'

It is common case that thereafter the petitioner imported liquor into the Union Territory by paying 50 per cent duty in cash and giving bank guarantee to the extent of 50 per cent of the remaining duty. In another similar petition, being C. W. No. 716 of 1978, M[s. Sat Pal & Co.. etc. v. Lt. Governor of Delhi and others, a learned Single Judge of this court held that no excise duty was livable on liquor imported into Delhi as the same was not manufactured here. This judgment was delivered on January Ii, 1979. The effect of the said judgment would have been that excise duty claimed by respondents on all such liquor licenses could no longer be claimed and would naturally have resulted, in great loss of revenue. To neutralise the effect of the said judgment, the President was pleased to promulgate Ordinance No. I of 1979 on January 20, 1979 in which the erstwhile excise levy was acknowledged as countervailing duty not being payable but a special duly was imposed retrospectively which would cover such liquor licenses as the petitioner had. Despite this Ordinance of January 20, 1979 the stay orders passed in C.W. No. 1403 of 1978 were made absolute till disposal of the writ petition on 29-1-79 and no objection was raised on behalf of the respondents with regard to making a provision for payment of interest or any such like amount in the event of the writ petition being dismissed. Ordinance No. 1 of 1979, we are told, was challenged by a petition filed in the Supreme Court under Article 32 of the Constitution as being ultra virus the various provisions of the Constitution. We are informed that the Supreme Court dismissed that writ petition. The result obviously was that the special duty imposed by Ordinance No. 1 of 1979 became a validly imposed duty. In consequence, the petition filed by the petitioner more or less lost all force. Accordingly, C.W. No. 1403 of 1978 was permitted to be withdrawn by this court and was dismissed as such on November 13, 1979. With the dismissal of the said writ petition the special duty became payable in full for every consignment of liquor imported by the petitioner into Delhi. The respondents had already received 50 per cent of the duty for the consignments already imported in cash. For the. remaining they had bank guarantees to the extent of 50 per cent. Instead of enforcing or encashing the bank guarantees, we are told, the respondents asked the petitioner to pay the balance of 50 per cent in cash and receive back cancelled bank guarantees. The petitioner was ready and willing to abide by this request. The respondents thereupon gave a statement of account to the petitioner on November i5, 1979 setting out what was the amount due and payable by the petitioner. This statement of account was not found to be correct by the petitioner. It, accordingly, wrote its letter of November 20, 1979 pointing out the discrepancies. The revised statement of account of moneys due was issued by the respondents on December 13, 1979. Admittedly, the petitioner paid all the amounts so claimed on January 16, 1980. The cancelled bank guarantees were then returned by the respondents to the petitioner. By a communication dated January 21, 1980 a demand of Rs. 1,76,371.39 was made by respondent No. 3 calling upon the petitioner to pay the said amount within 7 days of the receipt of the communication failing which it was hreatened 'the same would be recovered as arrears of and revenue. This amount the respondents demanded by invoking the terms and conditions of the grant of license to the petitioner. It was claimed that there had been a delay in making payment of Rs. 9 lakhs and odd and so, the petitioner was liable to pay penal interest at the rate of 1.5 per cent per mensem of the conditions of the license. The default alleged was with regard to the payment per month of the 50 per cent of the excise duty for which the petitioner had given bank guarantees. The petitioner replied to this demand by letter dated January 25, 1980 and submitted that the demand as made was not tenable for the reasons stated in the said letter. The Collector by his order dated January 30, 1980 observed that the terms and conditions of the grant of the wholesale dealer's license for Indian made foreign liquors for the year 1978-79 accepted by the petitioner, resulted in a binding contract coming into existence. Invoking Clause 14 of the said terms and conditions it was pointed out that interest at the rate of 1.5 per cent per mensem on all amounts due but not paid by the petitioner on due dates was payable calculated from the due date to the date of eventual payment. Referring to clause 13 of the terms and conditions of the license it was observed that the Department could take any penal action mentioned therein in respect of any delay in making payment of monthly Installments or any government dues. It was specified that the default was in making payment by the petitioner of special duty despite the order of stay being vacated by the High Court of Delhi and that the liability to pay interest went back to the date or dates when the payment or payments were due under the terms of the license. The Collector cautioned that the amount of Rs. 1,76,371.39 should be paid within 5 days of the order, failing which action would be taken to recover the same as arrears of land revenue. On this the petitioner filed the present writ petition challenging the levy and the demand.

(3) Learned counsel for the petitioner contends that there was no default regarding payment of the 50 per cent duty and delay cannot be synonymous to default. Re further contends that special duty as envisaged by Ordinance No. 1 of 1979 cannot be regarded as government dues within the meaning of either the terms of the license or the Excise Act or the Rules framed there under. It is also submitted that no interest can be charged on tax as interest on tax or duty in a concept unknown, unless statutorily so provided.

(4) In opposition to the petition it has been first contended that what is sought to be challenged is a contractual liability and, thereforee, no petition under Article 226 of the Constitution is maintainable. It is then contended that. admittedly, 50 per cent of the special duty was not paid on the due dates and inasmuch as the writ petition was dismissed, the default regarding delayed payment attracted clause 14 of the terms and conditions of the contract. It is asserted that the demand as made is valid and tenable both on contract and in law.

(5) As we have noticed earlier, 50 per cent of the excise duty, now known as special duty, was not paid in cash by virtue of this court's order made in C.W. No. 1403 of 1980. Bank guarantees, as ordered by the court were given. thereforee, the first question which comes up for consideration is whether non-payment in cash of the 50 per cent duty regarding which bank guarantees was given amounts to default or delay in payment, in our opinion, during the period that the stay order was operative, there was no default or delay. The effect of the stay orders granted by this court is so as to freeze the situation. No party can as a matter of public policy be allowed to take advantage of or foist any liability on any party because of actions of court. If this was not so, it would be destructive of our entire judicial system. Indeed, it would be subversive of the vciy concept of rule of law. The non-payment of 50 per cent duty in cash was by virtue of the protection granted by the court. That protection would become meaningless if ultimately the party in whose favor the order had been made is penalised for having dared to seek the protection' of court. It is surprising that this elementary principle of the rule of law has not been appreciated and a plea has been taken that once the stay orders are vacated, parties are relegated to the original position. Here we may mention that the petition was withdrawn not because originally there was nothing worthwhile urged in the petition or an arguable case was not made out. The petition was withdrawn on account of Ordinance No. 1 of 1979 having been promulgated and its validity having been upheld by the Supreme Court. It may be worthwhile to note that even after the promulgation of the Ordinance this court confirmed the stay orders as originally passed without any objection from the respondents. It had not been mooted by the respondents either at the 'time the stay orders were passed or the same were confirmed that some provision should be made for payment of interest in case the petition is ultimately dismissed. Claiming of interest now not only amounts to nullifying the court's order but to add to it a condition which was never raised. thereforee, no interest under Clause 14 could be claimed merely by virtue of C. W. No. 1403 of 1978 being dismissed as withdrawn on November 13, 1979. The question of delay in payment could only arise subsequent to November 13. 1979. Admittedly, the respondents had bank guarantees with them. They could immediately encash the same. As it is, the respondents wanted payment in cash rather than encashing the bank guarantees. For this purpose they submitted an incorrect statement of account on November 15, 1979. The correct claim was put up by the Collector on December 13, 1979. In these circumstances the petitioner can by no stretch of imagination be regarded as being in default.

(6) In the view that we have taken, it is not necessary to dilate upon the other contentions of the petitioner. We must, however, notice the preliminary objection raised by the learned counsel for the respondents that the petition is not maintainable as the demand merely seeks to enforce one of the terms of the contract. In our view the objection is without any substance. The point in issue in the present petition was not whether a term of the contract is sought to be enforced but as to what is the effect of court's order on the term of the contract. We have already dilated on the effect of the court's order. The preliminary objection is. thereforee, overruled.

(7) In this view of the matter, we make the rule absolute, quash the demand dated January 21. 1980 as well as the Collector's order dated January 13, 1980 and issue a writ restraining the respondents from enforcing or Realizing the same.

(8) Before we leave the case. we might mention that there were several prayers made in the writ petition but in view of the changed circumstances the petitioner has only sought adjudication with regard to the first prayer.Parties are left to bear their own costs.


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