LI Network
Published on: December 27, 2023 at 06:42 IST
In a recent ruling, the Allahabad High Court emphasized that if the initiation of proceedings is legally flawed, all consequent proceedings would be deemed invalid.
Justice Piyush Agrawal made this observation while addressing a case related to recovery without a show-cause notice under the Excise Act.
The case involved the drawing of samples by Excise officials from CL-2/wholesale suppliers, not under the petitioner’s control but managed by a different entity under the Excise Department.
The petitioner’s counsel argued that the process violated Rule 776 of the U.P. Excise Manual, as no representative from the distillery was present during sample collection.
Furthermore, the petitioner contended that, five days after the contested order, the alleged duty and penalty under Section 74-A were withdrawn from the advance duty register, totaling Rs. 1,49,85,677.20. The petitioner’s counsel highlighted a violation of Section 11(2) of the Excise Act, which allows one month for filing a revision. Instead, authorities proceeded with recovery, making the revision practically futile.
The petitioner also raised concerns about the absence of a show-cause notice before the order under Section 74-A, alleging a violation of natural justice principles.
The respondent’s counsel defended the order, asserting that after inspection and sample collection, a shortage beyond the permissible limit justified the action.
However, in response to the court’s inquiry, it was admitted that no notice under Section 74-A(1) was issued, and Rule 776 procedures were not adhered to in both letter and spirit.
Consequently, the court directed the deduction of 25% of the recovered amount for the petitioner’s revision deposit, with the remaining sum placed in a fixed-term, interest-bearing account in a Nationalized Bank.
The Commissioner of Excise Tax, U.P., Lucknow, was ordered to submit a personal affidavit regarding compliance with the court’s directives.
Case Title: M/S Wave Distilleries Breweries Ltd v. State Of U.P. And 2 Others
