2024(05)LCX0362

M.S.S. FOODS PROCESSORS

Versus

UNION OF INDIA

WRIT PETITION No. 12381 of 2024 decided on 20-05-2024

IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE

BEFORE

HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
HON'BLE SHRI JUSTICE GAJENDRA SINGH

ON THE 20^th OF MAY, 2024

WRIT PETITION No. 12381 of 2024

BETWEEN:-

M/S M.S.S. FOOD PROCESSORS THROUGH ITS
AUTHORIZED SIGNATORY SHRI SHYAMSUNDAR
SHARMA S/O SHRI MAHAVIR PRASAD SHARMA, AGED
ABOUT 39 YEARS, OCCUPATION: SERVICE PLOT NO.
102, 104, 109, 111, SECTOR E, SANWER ROAD,
INDUSTRIAL AREA, INDORE (MADHYA PRADESH)      .....PETITIONER

(SHRI ABHINAV MALHOTRA - ADVOCATE FOR THE PETITIONER)

AND

1. UNION OF INDIA CENTRAL BOARD OF INDIRECT
TAXES AND CUSTOMS DEPARTMENT OF
REVENUE MINISTRY OF FINANCE, NORTH
BLOCK, CENTRAL SECRETARIAT, NEW DELHI
(DELHI) (DELHI)

2. THE ASSISTANT COMMISSIONER CGST AND
CENTRAL EXCISE, DIVISION II INDORE C.G.O.
COMPLEX, NEAR WHITE CHURCH, A.B. ROAD,
INDORE (MADHYA PRADESH)                         .....RESPONDENTS

(SHRI PRASANNA PRASAD - ADVOCATE FOR THE RESPONDENT NO.2)

This petition coming on for admission this day, Justice Sushrut Arvind Dharmadhikari passed the following:

ORDER

The present petition under Article 226 of the Constitution of India has been filed against the order dated 29.03.2024 passed by respondent no.2 in Case No. V(21)15-1/2012-13/Adj-II/573 whereby the respondent has issued an order of recovery and also levied penalty.

2. Brief facts in nutshell are that Petitioner M/s M.S.S. Food Processors is a partnership firm engaged in the business of manufacture of Pan Masala, Mouth Freshner and Sweet Supari falling under Chapter 21 and 24 respectively of the First Schedule to the Central Excise Tarrif Act, 1985. Office of the Commissioner - Customs, Excise and Service Tax, Indore issued a show cause notice against the petitioner and its partners on 09.11.2012 wherein the petitioner was asked to show cause as to why action should not be initiated against the petitioner and its partners under the provisions of Central Excise Act, 1944[referred to as 'the Act of 1944' hereinafter] and rules made there under for recovery of short payment of Central Excise Duty of an amount of Rs. 7,14,282/- and levy of penalty for contravention of the provisions of Excise Act. While issuing the show cause notice, about 32 documents were relied upon by the Commissioner on the basis of which the process for recovery and levy of penalty was initiated by the Commissioner against the petitioner and its partner. However, none of the said documents were provided to the petitioner and only 06 documents out of 32 documents were provided and assurance was given that rest of documents will also be supplied . On the basis of that assurance, petitioner kept on waiting for the said remaining documents to be supplied enabling him to tender its reply. The respondent no.2 without affording proper opportunity of hearing to the petitioner passed final order dated 16.11.2022 confirming the demand of Rs. 7,14,282/- and levied penalty also. Petitioner thereafter preferred an appeal against the order of recovery before the Commissioner(Appeals) vide appeal no. 234-CE/IND/APPL/2022-2023 which stood allowed and the matter was remanded back to the respondent no.2 for fresh adjudication after complying with the principles of natural justice. Petitioner accordingly again requested the respondent no. 2 to provide all the relied documents (RUDs) to tender detailed response. Respondent no. 2 failed to provide the same. Thereafter, respondent no. 2 again passed another order of recovery dated 29.03.2024 confirming the recovery of Rs. 7,14,282/- without supplying the requisite documents relied upon and without providing opportunity of hearing in terms of the order passed in Appeal dated 06.12.2023. Hence, the preset petition has been filed.

3 . Learned counsel for the petitioner submitted that the action of respondent no.2 in passing the final order of recovery alongwith levy of penalty is illegal and arbitrary in as much as after issuing show cause notice against the petitioner on the basis of various documents, respondent no.2 ought to have supplied the same to the petitioner enabling him to tender his reply. Due to nonavailability of documents/material relied upon by the respondent no.2, the petitioner was not in a position to raise his defense against the show cause notice, which further lead to passing of final order of recovery as well as levy of penalty. Even otherwise, as per the provisions of Excise Act as well as the rules made thereunder, the circular issued by the respondent from time to time, respondent were bound to provide the relied documents to the petitioner. The final order of recovery and levy of penalty upon the petitioner has been passed in gross violation of the principles of natural justice as petitioner has not been afforded proper opportunity of hearing and in the absence of filing of reply, the order of recovery has been passed. Moreso, the respondent no.2 in utter disobedience of the order passed by the Commissioner(Appeals) has not chosen to provide the documents before adjudicating the show cause notice afresh and passing another final order of recovery alongwith levy of penalty. Hence, both the final orders passed by the respondent no.2 are violative of the constitutional right of the petitioner under Article 19(1)(g) and 21 of the Constitution of India. Under such circumstances, the order the final order of recovery dated 29.03.2024 deserves to be quashed and set aside.

4. On the other hand, learned counsel for the respondent opposed the petition with great vehemence on various grounds which are enumerated below:

(i) The first and foremost contention of learned counsel for the respondent is that petitioner is trying to canvass a situation where the petitioner is not served with all documents relied upon, which is incorrect. It is pertinent to mention here that in the communication made by the petitioner to the department, the petitioner has never submitted that he has not been served with the documents relied upon by the respondent while issuing show cause notice and rather, the petitioner has used the word ' the documents are not available with the petitioner' as the petitioner on its own showing submitted that petitioner has misplaced the documents and its not the case where the relied documents have not been supplied to the petitioner..

(ii) Secondly, para 2 of the order in original No. 14/AC/CGST & CEX/DIV-II/IND/2023-24 dated 29.03.2024 clearly mentions that any person deeming himself aggrieved by this order may appeal against the same to the Commissioner(Appeals) of CGST & Central Excise. Hence, in the backdrop of various judicial pronouncements, petitioner ought to have availed the remedy of filing appeal for redressal of grievances.

(iii) So far as the contention of learned counsel for the petitioner as regards opportunity of hearing being not afforded is concerned, it would be imperative to mention here that the order of adjudication was passed after affording property opportunity of hearing to the petitioner as is evident from the order itself as personal hearings have been fixed.

(iv) The petitioner has suppressed the material fact regarding supply of documents and thus, there is no violation of Article 14 or 19(1)(g) or 21 of the Constitution of India.

5. In support of his contentions, learned counsel for the respondent has relied upon various judgments which are as follows:

Alternative Remedy:

Hindustan Coca Cola Bevereges Pvt. Ltd. Vs. Union of India reported in (2014) 15 SCC 44

Hameed Kanju Vs. Najim reported in (2017) 8 SCC 611.

Ansal Housing and Construction Ltd. Vs. State of U.P. reported in (2016) 13 SCC 305.

Institute of Hotel Management and another Vs. UOI & Another reported in (2017) 11 SCC 72.

Maintainability:

G. Bassi Reddy Vs. International Corps Research Institute reported in (2003) 4 SCC 225.

6. The adjudicating authority has duly complied with the provisions of law and correct principles of law were adopted while passing the final order of recovery. Under such circumstances, petitioner is not entitled to claim reliefs as sought for and the petition is liable to be dismissed with heavy cost.

7. Heard, learned counsel for the parties and perused the record.

8. Before dwelling upon the merits of the case, the preliminary issue as regards maintainability of the writ petition raised by the respondent needs to be answered.

9. The said issue is answered in favour of the petitioner, in as much as the alternate suggested by the learned counsel for respondent does not appear to be efficacious in the fitness of things. It hardly needs to be stated that the rule of alternate remedy is not a Thumb Rule to non-suit every litigant approaching the writ Court. It all depends upon the facts and circumstances of each case and the requirement of doing justice to the party aggrieved.

10. This Court finds support in its view by the judgment passed in the case of Godrej Sara Lee Ltd. Vs. Excise & Taxation Officer reported in 2023 SCC Online Sc 95 wherein it has been observed that availability of alternative remedy does not operate as an absolute bar to the 'maintainability' of a writ petition and that the rule, which requires a party to pursue such remedy provided by a statute, is a rule of policy, convenience and discretion evolved by the judiciary rather than a rule of law. Therefore, in all the cases, the entities answering Article 12 of the Constitution of India cannot press into service the doctrine of alternative remedy as the China Wall against the invocation of writ jurisdiction.

4. Before answering the questions, we feel the urge to say a few words on the exercise of writ powers conferred by Article 226 of the Constitution having come across certain orders passed by the high courts holding writ petitions as “not maintainable” merely because the alternative remedy provided by the relevant statutes has not been pursued by the parties desirous of invocation of the writ jurisdiction. The power to issue prerogative writs under Article 226 is plenary in nature. Any limitation on the exercise of such power must be traceable in the Constitution itself. Profitable reference in this regard may be made to Article 329 and ordainments of other similarly worded articles in the Constitution. Article 226 does not, in terms, impose any limitation or restraint on the exercise of power to issue writs. While it is true that exercise of writ powers despite availability of a remedy under the very statute which has been invoked and has given rise to the action impugned in the writ petition ought not to be made in a routine manner, yet, the mere fact that the petitioner before the high court, in a given case, has not pursued the alternative remedy available to him/it cannot mechanically be construed as a ground for its dismissal. It is axiomatic that the high courts (bearing in mind the facts of each particular case) have a discretion whether to entertain a writ petition or not. One of the self-imposed restrictions on the exercise of power under Article 226 that has evolved through judicial precedents is that the high courts should normally not entertain a writ petition, where an ef ective and ef icacious alternative remedy is available. At the same time, it must be remembered that mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the high court under Article 226 has not pursued, would not oust the jurisdiction of the high court and render a writ petition “not maintainable”. In a long line of decisions, this Court has made it clear that availability of an alternative remedy does not operate as an absolute bar to the “maintainability” of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and discretion rather than a rule of law. Though elementary, it needs to be restated that “entertainability” and “maintainability” of a writ petition are distinct concepts. The fine but real distinction between the two ought not to be lost sight of. The objection as to “maintainability” goes to the root of the matter and if such objection were found to be of substance, the courts would be rendered incapable of even receiving the lis for adjudication. On the other hand, the question of “entertainability” is entirely within the realm of discretion of the high courts, writ remedy being discretionary. A writ petition despite being maintainable may not be entertained by a high court for very many reasons or relief could even be refused to the petitioner, despite setting up a sound legal point, if grant of the claimed relief would not further public interest. Hence, dismissal of a writ petition by a high court on the ground that the petitioner has not availed the alternative remedy without, however, examining whether an exceptional case has been made out for such entertainment would not be proper.

5. A little after the dawn of the Constitution, a Constitution Bench of this Court in its decision reported in 1958 SCR 595 (State of Uttar Pradesh vs. Mohd. Nooh) had the occasion to observe as follows:

“10. In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally ef ective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute, (Halsbury’s Laws of England, 3rd Edn., Vol. 11, p. 130 and the cases cited there). The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. ***”

6. At the end of the last century, this Court in paragraph 15 of the its decision reported in (1998) 8 SCC 1 (Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and Others) carved out the exceptions on the existence whereof a Writ Court would be justified in entertaining a writ petition despite the party approaching it not having availed the alternative remedy provided by the statute. The same read as under:

(i) where the writ petition seeks enforcement of any of the fundamental rights;

(ii) where there is violation of principles of natural justice;

(iii) where the order or the proceedings are wholly without jurisdiction; or

(iv) where the vires of an Act is challenged.

7. Not too long ago, this Court in its decision reported in 2021 SCC OnLine SC 884 (Assistant Commissioner of State Tax vs. M/s. Commercial Steel Limited) has reiterated the same principles in paragraph 11.

8. That apart, we may also usefully refer to the decisions of this Court reported in (1977) 2 SCC 724 (State of Uttar Pradesh & ors. vs. Indian Hume Pipe Co. Ltd.) and (2000) 10 SCC 482 (Union of India vs. State of Haryana). What appears on a plain reading of the former decision is that whether a certain item falls within an entry in a sales tax statute, raises a pure question of law and if investigation into facts is unnecessary, the high court could entertain a writ petition in its discretion even though the alternative remedy was not availed of; and, unless exercise of discretion is shown to be unreasonable or perverse, this Court would not interfere. In the latter decision, this Court found the issue raised by the appellant to be pristinely legal requiring determination by the high court without putting the appellant through the mill of statutory appeals in the hierarchy. What follows from the said decisions is that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available.

11. Adverting to the merits of the case, undisputedly, the petitioner has not been supplied with the documents, on the basis of which show cause notice was issued and despite repeated communications from the petitioner, the said documents were not provided due to which the petitioner would not be in a position to give reply to the show cause notice which culminated into passing of final order and judgment of recovery. On appeal, the respondent no. 2 was directed to adjudicate the case of petitioner afresh and after supplying requisite documents only, pass appropriate orders. However, even on remand, the respondent no.2 without adhering to the directions of Commissioner (appeals) i.e. without providing requisite documents and in the absence of affording opportunity of hearing has again proceeded to pass a final order of recovery alongwith levying of penalty thereby again violating the principles of natural justice. Under such circumstances, the final order of recovery dated 29.03.2024 is not allowed to stand .

12. Accordingly, the final order and judgment dated 29.03.2024 passed in V(21)15-1/2012-13/Adj-II/573(Annexure P-1) passed by the respondent no. 2 recovering an amount of Rs. 7,14,282/- levying penalty of Rs. 21,42,846/- is hereby set aside and the matter is remanded back to the respondent no.2 for fresh adjudication. Further , respondent no.2 is directed to provide all the documents to the petitioner as relied upon while issuing the show cause notice and thereafter dwelling upon the reply and after giving due and proper opportunity of hearing, respondent no.2 may proceed to pass order on merits of the matter.

13. With the aforesaid directions, petition stands allowed. No order as to cost.

(S. A. DHARMADHIKARI)
JUDGE

(GAJENDRA SINGH)
JUDGE