# M/s Jay Shree Industries v. Union of India & Anr

- **Citation:** (2021) 8 ILRA 51
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-08-06
- **Case number:** Writ Tax No. 832 of 2020
- **Bench:** Naheed Ara Moonis, Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-jay-shree-industries-v-union-of-india-anr-47246
- **Pages:** 17

## Headnote

A.S.G.I., Sri Ramesh Chandra Shukla

A.
Sabka
Vishwas
(Legacy
Dispute
Resolution) Scheme, 2019 - Sections 125,
129
&
133
-
Words
&
Phrases
-
"redemption fine" - In absence of any
contrary statutory definition of the word
'penalty'
or
other
specific
exclusion
of
'redemption fine' from the consequences of
issuance
of
a
Discharge
Certificate,
undoubtedly, the word 'penalty' appearing in
section 129 of the Scheme includes, within its
ambit, both, a penalty in personam and a
penalty in rem. (Para 31)

Upon the petitioner being eligible under section
125 of the Scheme and upon payment of the
entire amount due under section 124 of the
Scheme and, in absence of any other objection
being raised by the revenue, entitles the
petitioner to receive Discharge Certificate. The
authorities requiring the petitioner to deposit
the 'redemption fine' as a pre-condition to issue
the Discharge Certificate is found to be wholly
contrary to the law. (Para 37 & 38)

Writ Petition Allowed. (E-8)

List of Cases cited:-

## Text

_Characters 0–39,952 of 57,514. This is a partial read: ask again with offset=39952 for what follows._

8 All. M/s Jay Shree Industries Vs. Union of India & Anr.
51
in the order passed as per Rule 86-A of the
Rules. As and when the credit entries arise,
the lien would attach to those credit entries
upto the limit set by the order passed under
Rule 86-A of the Rules. The debit entry
recorded in the electronic credit ledger
would be read accordingly.

26. Therefore should the assessee earn
further credit of 'input tax' the revenue
would be entitled to a lien upto the limit of
Rs.7,06,66,700.00/-. However, the same
shall not be adjusted in favour of the
revenue except in accordance with law, as
discussed above. Any further credit that
may arise over and above that amount
would be allowed to be utilized without
objection by the revenue.

27. Writ petition is dismissed. No
order as to costs.
----------
(2021)08ILR A51
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.08.2021

BEFORE

THE HON'BLE NAHEED ARA MOONIS, J.
THE HON'BLE SAUMITRA DAYAL SINGH, J.

Writ Tax No. 832 of 2020

M/s Jay Shree Industries ...Petitioner
Versus
Union of India & Anr. ...Respondents

Counsel for the Petitioner:
Sri Vijay Kumar, Awadhesh Kumar Mishra

Counsel for the Respondents:
A.S.G.I., Sri Ramesh Chandra Shukla

A.
Sabka
Vishwas
(Legacy
Dispute
Resolution) Scheme, 2019 - Sections 125,
129
&
133
-
Words
&
Phrases
-
"redemption fine" - In absence of any
contrary statutory definition of the word
'penalty'
or
other
specific
exclusion
of
'redemption fine' from the consequences of
issuance
of
a
Discharge
Certificate,
undoubtedly, the word 'penalty' appearing in
section 129 of the Scheme includes, within its
ambit, both, a penalty in personam and a
penalty in rem. (Para 31)

Upon the petitioner being eligible under section
125 of the Scheme and upon payment of the
entire amount due under section 124 of the
Scheme and, in absence of any other objection
being raised by the revenue, entitles the
petitioner to receive Discharge Certificate. The
authorities requiring the petitioner to deposit
the 'redemption fine' as a pre-condition to issue
the Discharge Certificate is found to be wholly
contrary to the law. (Para 37 & 38)

Writ Petition Allowed. (E-8)

List of Cases cited:-

1. Workmen of Cochin Port Trust Vs Board of
Trustees of the Cochin Port Trust & anr. (1978)
3 SCC 119

2. Kunhayammed & ors. Vs St.of Kerala & Anr.
(2000) 6 SCC 359

3. Srish Chandra Sen & ors. Vs Commissioner of
Income Tax, West Bengal AIR 1961 SC 487

4. Sewpujanrai Indrasanarai Ltd. Vs Collector of
Customs & ors. AIR 1958 SC 845

5. Collector of Customs, Madras & ors. Vs D.
Bhoormaall (1974) 2 SCC 544

6. UOI & Anr. Vs Mustafa & Najbai Trading Co.
& ors. (1998) 6 SCC 79

7. R.E.M.S. Abdul Hameed Vs Govindaraju &
ors. (1999) 4 SCC 663

8. Commissioner of Income Tax (Central) Vs
B.N. Bhattacharjee & Anr. (1979) 4 SCC 121

(Delivered by Hon'ble Naheed Ara
Moonis, J. &
Hon'ble Saumitra Dayal Singh, J.)
52 INDIAN LAW REPORTS ALLAHABAD SERIES

1. Heard Shri Vijay Kumar along with
Shri Awadhesh Kumar Mishra, learned
counsel for the petitioner and Shri Ramesh
Chandra Shukla, learned counsel for the
revenue.

2. Present petition has been filed to
quash the order dated 17.11.2020 issued by
the
Designated
Committee,
SVLDR
Scheme, 2019/Commissioner Central Tax,
Central
Goods
&
Services
Commissionerate,
Ghaziabad.
By
that
order, the said authority has refused to
issue the Discharge Certificate in electronic
form, in terms of the Sabka Vishwas
(Legacy Dispute Resolution) Scheme, 2019
(hereinafter referred to as the 'Scheme') for
reason of outstanding demand of Rs. 30
lakh
against
the
petitioner,
towards
redemption fine, for the same transaction
and tax period for which the Discharge
Certificate has been sought, upon payment
of fee computed in terms of section 124 of
the Scheme.

3. Briefly, the petitioner is a
partnership concern against which an
Order-in Original No. 2/A/Ayukt/M-/97
dated 14.08.1997 had been passed creating
duty demand of Rs. 1,05,99,382/- together
with penalty Rs. 60 lac under the Central
Excise Act, 1944. Also, by that order,
redemption fine Rs. 30 lac had been
determined against the petitioner, in lieu of
confiscation of goods under that Act.

4. Upon introduction of the Scheme
through the Finance (No.2) Act, 2019, the
petitioner applied for issue of the Discharge
Certificate under section 127 of the
Scheme, with respect to the aforesaid
Order-in-Original dated 14.08.1997. It was
required to deposit Rs. 63,59,629.20.
Undisputedly, the petitioner deposited that
amount on 30.06.2020. It did not discharge
the liability of redemption fine Rs. 30 lac
imposed vide the aforesaid Order-inOriginal dated 14.08.1997. The Designated
Committee did not issue the Discharge
Certificate in absence of deposit of
redemption fine Rs. 30 lacs. At that stage,
the petitioner filed Writ Tax No. 483 of
2020 wherein, vide order dated 21.10.2020,
the petitioner was granted liberty to file a
representation relying on the order dated
27.02.2020 passed by the Gujarat High
Court in R/Special Civil Application No.
21744 of 2019. The petitioner made
compliance of that order. Subsequently,
that writ petition came to be dismissed vide
order dated 19.11.2020, in view of the
order dated 17.11.2020 passed by the
Designated Authority. Hence, this writ
petition.

5. Learned counsel for the petitioner
has submitted: ''redemption fine' is a
''penalty' and, therefore, by virtue of the
clear language of section 129 of the
Scheme, no amount of ''redemption fine'
may be demanded. The petitioner is eligible
to the benefit of the Scheme and in view of
the further fact that the petitioner has made
the requisite deposit in terms of section 124
of the Scheme, it is entitled to its issue. In
addition, he has placed heavy reliance on
the final decision of the Gujarat High Court
dated
27.02.2020
in
R/Special
Civil
Application No. 21744 of 2019. He has
further submitted that the Special Leave
Petition filed against the aforesaid decision
of the Gujarat High Court being Special
Leave to Appeal (C) No. 449 of 2021 has
been dismissed by the Supreme Court vide
order dated 03.03.2021 on the following
terms:

"1. We are not inclined to
entertain the Special Leave Petition under
Article 136 of the Constitution.
8 All. M/s Jay Shree Industries Vs. Union of India & Anr.
53

2. The Special Leave Petition is
accordingly dismissed."

Relying on that order, it has been
submitted, the decision of the Gujarat High
Court has become binding on the revenue.
Next, reliance has been placed on the
communication dated 03.06.2013 issued by
the Chairperson, Central Board of Excise
and
Customs
(CBEC)
to
contend,
''redemption fine' is ''penalty'. Last, learned
counsel for the petitioner has placed heavy
reliance
on
the
circulars
and
other
communications issued by the departmental
authorities (described as flyers and press
notes in the decision of the Gujarat High
Court), to submit that the departmental
authorities have consistently read the
provisions of the Scheme to include
redemption fine as a penalty and therefore,
the separate demand of ''redemption fine'
does not survive upon payment of the entire
amount computed under section 124 of the
Scheme.

6. Opposing the writ petition, learned
counsel for the revenue submits that the
Scheme is part of a fiscal statute. He has
therefore
invoked the rule of strict
interpretation and submitted, the Scheme
does not, in any way, include ''redemption
fine' within the ambit of consequences of
the Discharge Certificate under section 129
of the Scheme. Therefore, unless the
petitioner were to pay the entire amount of
''redemption fine' - Rs. 30 lacs, the
Discharge Certificate cannot be issued.
Referring to the communication dated
20.12.2019, he would submit that the
position in this regard has been clarified by
the Central Board of Indirect Taxes and
Customs (CBIC in short), to exclude
''redemption fine' from ''penalty' and
therefore, from the scope of the Scheme.
He has further submitted that the petitioner
had given an undertaking before the
Designated
Committee
to
pay
the
redemption
fine
once
the
Discharge
Certificate is issued to it. Therefore,
invoking estoppel against the petitioner, it
has been submitted, the petitioner cannot
go against its own undertaking and that the
challenge now raised, is merely an
afterthought.

7. Having heard learned counsel for
the parties and having perused the record,
first, we find that the object of the
Scheme is only one, being to end legacy
disputes. For that object and purpose, the
"amount in arrears" has been defined
under section 121 (c) of the Scheme. It
includes duty amount that is recoverable
as
arrears
under
an
indirect
tax
enactment, on account of - either no
appeal having been filed or on account of
an order in appeal having attained finality
or on account of a declarant having filed
his
return
under
the
indirect
tax
enactment on or before the cut-off date,
30.06.2019,
wherein
he
may
have
admitted the duty liability but not
discharged the same. The phrase 'amount
of duty' has been defined under section
121 (d) of the Scheme to mean the
amount of central excise duty, the service
tax and the cess payable under the
indirect tax enactment.

8. Section 121 (u) of the Scheme
provides that words and expressions used
in this Scheme, but not defined, would
carry the same meaning as may be assigned
to them in the indirect tax enactment. In
case of conflict between two or more such
meanings in any indirect tax enactment, the
meaning that is more congruent with the
provisions of the Scheme shall be adopted.
For ready reference, the provision of
section 121 (u) of the Scheme is quoted
below:
54 INDIAN LAW REPORTS ALLAHABAD SERIES

"(u)
all
other
words
and
expressions used in this Scheme, but not
defined, shall have the same meaning as
assigned to them in the indirect tax
enactment and in case of any conflict
between two or more such meanings in any
indirect tax enactment, the meaning which
is more congruent with the provisions of
this Scheme shall be adopted".

The
words
''penalty'
and
''redemption fine' have not been defined,
either under the Central Excise Act, 1944
or the Scheme or the Rules framed
thereunder.

9. Computation of the relief granted
under the Scheme is provided under section
124 of the Scheme. It reads as under:

"124.
(1)
Subject
to
the
conditions specified in sub-section (2), the
relief available to a declarant under this
Scheme shall be calculated as follows:--

(a) where the tax dues are
relatable to a show cause notice or one or
more appeals arising out of such notice
which is pending as on the 30th day of
June, 2019, and if the amount of duty is,--
(i) rupees fifty lakhs or less, then, seventy
per cent, of the tax dues;

(ii) more than rupees fifty lakhs,
then, fifty per cent, of the tax dues;

(b) where the tax dues are
relatable to a show cause notice for late fee
or penalty only, and the amount of duty in
the said notice has been paid or is nil, then,
the entire amount of late fee or penalty;

(c) where the tax dues are
relatable to an amount in arrears and,--

(i) the amount of duty is, rupees
fifty lakhs or less, then, sixty per cent, of
the tax dues;

(ii) the amount of duty is more
than rupees fifty lakhs, then, forty per cent
of the tax dues;

(iii) in a return under the indirect
tax enactment, wherein the declarant has
indicated an amount of duty as payable but
not paid it and the duty amount indicated
is,--

(A) rupees fifty lakhs or less,
then, sixty per cent, of the tax dues;

(B) amount indicated is more
than rupees fifty lakhs, then, forty per cent,
of the tax dues;

(d) where the tax dues are linked
to an enquiry, investigation or audit
against the declarant and the amount
quantified on or before the 30th day of
June, 2019 is--

(i) rupees fifty lakhs or less, then,
seventy per cent, of the tax dues;

(ii) more than rupees fifty lakhs,
then, fifty per cent, of the tax dues;

(e) where the tax dues are payable
on account of a voluntary disclosure by the
declarant, then, no relief shall be available
with respect to tax dues.

(2) The relief calculated under subsection (1) shall be subject to the condition
that any amount paid as predeposit at any
stage of appellate proceedings under the
indirect tax enactment or as deposit during
enquiry, investigation or audit, shall be
deducted
when
issuing
the
statement
indicating the amount payable by the
declarant:

Provided that if the amount of
predeposit or deposit already paid by the
declarant exceeds the amount payable by the
declarant, as indicated in the statement
issued by the Designated Committee, the
declarant shall not be entitled to any refund."

Undisputedly, the entire amount
determined in terms of section 124 of the
Scheme, Rs. 63,59,629.20 has been paid by
the petitioner, within time.

10. The petitioner's eligibility to apply
under the Scheme as provided under
8 All. M/s Jay Shree Industries Vs. Union of India & Anr.
55
section 125 of the Scheme is also
undisputed by the revenue. That provision
of law includes within the ambit of the
Scheme, all persons, excluding those
falling under clauses (a) to (h) of subsection (1) of that section. Persons who
have been held ineligible are, amongst
others, those who may have been convicted
of any offence punishable under any
indirect tax enactment or; who may have
been subjected to inquiry or investigation
or audit though the amount of duty
involved in such inquiry, investigation or
audit may not have been quantified or; a
person who may have made a voluntary
disclosure or; a person who may have made
a declaration under the Scheme with
respect to excisable goods set forth in the
Fourth Schedule of the Central Excise Act.
Admittedly, the petitioner before us, is not
such a person.

11.
 The
consequences
of
the
Discharge Certificate being issued are
provided under section 129 of the Scheme.
For ready reference, the provisions of
section 129 are quoted herein below:

"129.
(1)
Every
Discharge
Certificate issued under section 126 with
respect to the amount payable under this
Scheme shall be conclusive as to the matter
and time period stated therein, and--

(a) the declarant shall not be
liable to pay any further duty, interest, or
penalty with respect to the matter and time
period covered in the declaration;

(b) the declarant shall not be
liable to be prosecuted under the indirect
tax enactment with respect to the matter
and time period covered in the declaration;

(c) no matter and time period
covered by such declaration shall be
reopened in any other proceeding under
the indirect tax enactment.

(2)
Notwithstanding
anything
contained in sub-section (1),--

(a) no person being a party in
appeal, application, revision or reference
shall contend that the central excise officer
has acquiesced in the decision on the
disputed issue by issuing the Discharge
Certificate under this scheme;

(b) the issue of the Discharge
Certificate with respect to a matter for a
time period shall not preclude the issue of a
show cause notice,--

(i) for the same matter for a
subsequent time period; or

(ii) for a different matter for the
same time period;

(c) in a case of voluntary
disclosure where any material particular
furnished in the declaration is subsequently
found to be false, within a period of one
year of issue of the Discharge Certificate, it
shall be presumed as if the declaration was
never made and proceedings under the
applicable indirect tax enactment shall be
instituted."

12. Thus, upon the Discharge
Certificate being issued under section 129
of the Scheme, the same would be
conclusive as to the matter (resolution of
the dispute) and the time period stated in
that Certificate. Further, by virtue of
clauses (a) (b) and (c) of sub-section (1) of
section 129 of the Scheme, such a declarant
would not be liable to pay any further
amount, either towards duty or interest or
penalty with respect to the subject matter in
question and the time period covered under
the declaration. Second, such a person shall
not be prosecuted under the indirect tax
enactment with respect to the subject
matter and the time period covered under
his declaration made. Third, no proceeding
would
be
reopened,
and
no
other
proceeding would be initiated against such
56 INDIAN LAW REPORTS ALLAHABAD SERIES
a person for that subject matter and tax
period. We are called upon to decide
whether ''redemption fine' is covered under
the word ''penalty; used in section 129 (1)
(a) of the Act.

13. Sub-section (2) of section 129
provides exception to sub-section (1) of the
Scheme. Thus, it has been provided: the
person in whose favour a Discharge
Certificate may have been issued, may not
successfully contend that, by virtue of that
certificate having been issued, the central
excise authority had acquiesced (to the
defence
of
the
declarant).
Thus,
a
Discharge Certificate cannot be read as
evidence against the revenue in another
proceeding. Second, the issue of Discharge
Certificate may not prevent the authorities
from issuing another notice on the same
matter for another time period and it may
also not prevent such authority from
issuing a notice on another matter for the
same time period. Further, by virtue of
clause (c) of sub-section (2), it has been
provided that the effect of a Discharge
Certificate obtained on false declaration
may stand wiped out if falsity in the
declaration is discovered within a period of
one year. Clearly, none of those statutory
exclusions are attracted to the facts of the
case and none has been pressed into service
by the revenue.

14. Under section 133 of the Scheme,
the Central Board of Indirect Taxes and
Customs (CBIC) has been authorised to
issue orders, instructions and directions to
the other authorities, for the proper
administration
of
the
Scheme.
The
directions so issued have been made
mandatory to be observed and followed by
the authorities under the Scheme. For ready
reference, the provisions of section 133 are
quoted below:

"133. (1) The Central Board of
Indirect Taxes and Customs may, from time
to time, issue such orders, instructions and
directions to the authorities, as it may deem
fit, for the proper administration of this
Scheme, and such authorities, and all other
persons employed in the execution of this
Scheme shall observe and follow such
orders, instructions and directions:

Provided that no such orders,
instructions or directions shall be issued so
as to require any designated authority to
dispose of a particular case in a particular
manner.

(2) Without prejudice to the
generality of the foregoing power, the
Central Board of Indirect Taxes and
Customs may, if it considers necessary or
expedient so to do, for the purpose of
proper and efficient administration of the
Scheme and collection of revenue, issue,
from time to time, general or special orders
in respect of any class of cases, setting
forth directions or instructions as to the
guidelines, principles or procedures to be
followed by the authorities in the work
relating to administration of the Scheme
and collection of revenue and any such
order may, if the said Board is of opinion
that it is necessary in the public interest so
to do, be published in the prescribed
manner."

Considering
the
submissions
advanced by learned counsel for the
petitioner, we have also to examine,
whether the communications relied upon by
him have binding force on the revenue
authorities.

15. The Gujarat High Court, upon a
detailed consideration of the Scheme,
reached a conclusion that ''redemption fine'
was
included
in
the
term
''penalty'
appearing under section 129 (1) (a) of the
Scheme. To reach that conclusion, that
8 All. M/s Jay Shree Industries Vs. Union of India & Anr.
57
Court has looked at the intent and object of
the Scheme and reasoned that a person
against whom ''redemption fine' may have
been imposed is not excluded from making
a declaration under section 125(1) of the
Scheme. Then, relying on the Frequently
Asked Questions (FAQs), press notes and
flyers
issued
for
the
smooth
implementation of the Scheme, it has been
further reasoned, for the purpose of section
129 of the Scheme, there is no other fine
contemplated, other than the ''redemption
fine'. Third, it has been reasoned that the
Board's communication dated 20.12.2019 is
contrary to the intent and object of the
Scheme. Here, it may be relevant to quote
the text of the communication dated
20.12.2019:

"F.No.267/78/2019/CS-8

Government of India

Ministry of Finance

Department of Revenue

Central Board of Indirect Taxes
and Customs

Dated, the 20th December, 2019

To,

The
Principal
Commissioner,

CGST Ahmedabad (South)
Commissionerate

Subject: SabkaVishwas (Legacy
Dispute Resolution) Scheme, 2019-reg

Sir,

I am directed to refer to your
letter
F.No.CGSt-Ahd(S)/
Legal/SCA29/19-20 dated 19.12.2019 on the above
mentioned subject.

2. The matter has been examined.
'Find' and 'Redemption Fine' denote
different things. Section 9 of the Central
Excise Act, 1944 provides for the offences
and penalties under the Act. The penalties
for the offences under the Act may extend
to seven years of imprisonment and fine.
Needless to say that once the person is
granted immunity from prosecution, he also
gets waiver from such 'fine'. However,
redemption fine is levied in lieu of
confiscation Section 34 of the Act, whereby
the party can 'redeem' the confiscated
goods. Under the scheme, no immunity
(Section 129) or relief (Section 124) has
been granted for redemption fine.

3. A 'case' under the scheme
means 'a show cause notice, or one or more
appeals arising out of such notice which is
pending as on 30.06.2019' [explanation to
rule 3, SVLDRS Rules, 2019]. In the instant
case, the SCNs also involve imposition of
redemption fine. There are two scenarios
that can emerge:

(a)
The
SCN
involving
redemption fine has been adjudicated. In
this case, redemption fine has been
imposed and quantified.

(b)
The
SCN
involving
redemption fine is yet to be adjudicated. In
other words, the redemption fine has not
been imposed or quantified.

The
Discharge
Certificate
[Section 129] which is issued at the end of
the proceeding under the Scheme is a full
and final closure of the matter and time
period stated therein. Therefore, the
Discharge Certificate in such cases can
only
be
issued
after
settlement
of
redemption fine. In scenario (a) above, it
would be mean payment of redemption fine.
In scenario (b) above, it would mean
adjudication of show cause notice for
imposition of redemption fine and payment
thereof.

4. The Hon'ble High Court may
be apprised of the above position along
with the relevant facts of the case.

Yours sincerely,

Sd/-
58 INDIAN LAW REPORTS ALLAHABAD SERIES

(Navraj Goyal) OSD(CX)"

16. Then, it has been reasoned that the
goods in question (in that case) being not
available for confiscation, the ''redemption
fine' imposed could only be a ''penalty'.
Last,
the
rule
of
interpretation
-
contemporanea expositio was invoked to
conclude that the revenue authorities
themselves read section 129 of the Scheme
to include ''redemption fine' within the
ambit of ''penalty'.

17. While we are obliged to consider
the persuasive value of the decision of the
Gujarat High Court, we are equally
dismissive of the further submission
advanced by learned counsel for the
petitioner that the same has become the law
declared by the Supreme Court, by virtue
of dismissal of Special Leave to Appeal
filed against that decision of the Gujarat
High Court. In Workmen of Cochin Port
Trust v. Board of Trustees of the Cochin
Port Trust & Anr., (1978) 3 SCC 119, in
the context of an order dismissing a Special
Leave Petition in limine, it was clearly
explained:

"10. In the instant case the award
of the Tribunal, no doubt, was challenged
in the special leave petition filed in this
Court, on almost all grounds which were in
the subsequent writ proceeding agitated in
the High Court. There is no question,
therefore, of applying the principles of
constructive res judicata in this case. What
is, however, to be seen is whether from the
order dismissing the special leave petition
in limine it can be inferred that all the
matters agitated in the said petition were
either explicitly or implicitly decided
against
the
respondent.
Indisputably
nothing was expressly decided. The effect
of a non-speaking order of dismissal
without anything more indicating the
grounds or reasons of its dismissal must, by
necessary implication, be taken to have
decided that it was not a fit case where
special leave should be granted. It may be
due to several reasons. It may be one or
more. It may also be that the merits of the
award were taken into consideration and
this Court felt that it did not require any
interference. But since the order is not a
speaking order, one finds it difficult to
accept the argument put forward on behalf
of the appellants that it must be deemed to
have necessarily decided implicitly all the
questions in relation to the merits of the
award. A writ proceeding is a different
proceeding..."

Again, in Kunhayammed & Ors.
v. State of Kerala & Anr., (2000) 6 SCC
359, it was conclusively laid down by the
Supreme Court:

"40. A petition seeking grant of
special leave to appeal may be rejected for
several reasons. For example, it may be
rejected (i) as barred by time, or (ii) being
a defective presentation, (iii) the petitioner
having no locus standi to file the petition,
(iv)
the
conduct
of
the
petitioner
disentitling him to any indulgence by the
court, (iv) the question raised by the
petitioner for consideration by this Court
being not fit for consideration or deserving
being dealt with by the Apex Court of the
country and so on. The expression often
employed by this Court while disposing of
such petitions are -- "heard and dismissed",
"dismissed", "dismissed as barred by time"
and so on. May be that at the admission
stage itself the opposite party appears on
caveat or on notice and offers contest to the
maintainability of the petition. The Court
may apply its mind to the merit worthiness
of the petitioner's prayer seeking leave to
8 All. M/s Jay Shree Industries Vs. Union of India & Anr.
59
file an appeal and having formed an
opinion may say "dismissed on merits".
Such an order may be passed even ex parte,
that is, in the absence of the opposite party.
In any case, the dismissal would remain a
dismissal by a non-speaking order where
no reasons have been assigned and no law
has been declared by the Supreme Court.
The dismissal is not of the appeal but of the
special leave petition. Even if the merits
have been gone into, they are the merits of
the special leave petition only. In our
opinion neither doctrine of merger nor
Article 141 of the Constitution is attracted
to such an order. Grounds entitling
exercise of review jurisdiction conferred by
Order 47 Rule 1 CPC or any other
statutory provision or allowing review of
an order passed in exercise of writ or
supervisory jurisdiction of the High Court
(where also the principles underlying or
emerging from Order 47 Rule 1 CPC act as
guidelines) are not necessarily the same on
which this Court exercises discretion to
grant or not to grant special leave to
appeal while disposing of a petition for the
purpose. Mere rejection of a special leave
petition does not take away the jurisdiction
of the court, tribunal or forum whose order
forms the subject-matter of petition for
special leave to review its own order if
grounds for exercise of review jurisdiction
are shown to exist. Where the order
rejecting an SLP is a speaking order, that
is, where reasons have been assigned by
this Court for rejecting the petition for
special leave and are stated in the order
still the order remains the one rejecting
prayer for the grant of leave to appeal. The
petitioner has been turned away at the
threshold without having been allowed to
enter in the appellate jurisdiction of this
Court. Here also the doctrine of merger
would not apply. But the law stated or
declared by this Court in its order shall
attract applicability of Article 141 of the
Constitution. The reasons assigned by this
Court
in
its
order
expressing
its
adjudication (expressly or by necessary
implication) on point of fact or law shall
take away the jurisdiction of any other
court, tribunal or authority to express any
opinion in conflict with or in departure
from the view taken by this Court because
permitting to do so would be subversive of
judicial discipline and an affront to the
order of this Court. However this would be
so not by reference to the doctrine of
merger".

18. Thus, the order dated 03.03.2021
dismissing the Special Leave to Appeal
neither laid down the law of the land nor
did the order of the Gujarat High Court
merge in that order of the Supreme Court.
Therefore, the Gujarat High Court decision
has only persuasive value. That we are
bound to consider.

19. With all respect, we face our own
difficulty and reservations in accepting (in
toto), the reasoning contained in the
decision of the Gujarat High Court. Merely
because the petitioner was eligible to apply
for
Discharge
Certificate
under
the
Scheme, it would not therefore make it
entitled to issue of a Discharge Certificate.
That eligibility arises under section 125 of
the Scheme whereas the consequences of
issue of the Discharge Certificate arise
under
section
129
of
the
Scheme.
Therefore, a person who may be eligible
and who may apply under and comply with
the terms of the Scheme, may be issued the
Discharge Certificate, yet, the benefit of the
same may remain confined to the extent
provided under section 129 of the Scheme
only. In short, in our view, in scope and
ambit sections 125 and 129 of the Scheme
are different and largely independent of
60 INDIAN LAW REPORTS ALLAHABAD SERIES
each other. Merely because the person may
be entitled to apply for issue of a Discharge
Certificate it would not determine the
consequences of its issue. He may continue
to remain liable to pay ''redemption fine' if
that liability is not found to have been
expressly dissolved under the Scheme.

20. Insofar as it has been reasoned by
the Gujarat High Court that other than
''redemption
fine',
no
other
fine
is
contemplated, we would like to look at the
controversy in a little different complexionwhether the ''redemption fine' would per se
fall within the meaning of the word
'penalty' used in section 129 of the Scheme.
The ambit of that question is limited to that
extent as there is no dispute and, perhaps
there can be no argument that ''redemption
fine' is either a 'duty' or 'interest' (which are
the other consequences contemplated under
section 129 (1) of the Scheme). This aspect,
we propose to examine a little later.

21. The reasoning of the Gujarat High
Court that ''redemption fine' would remain
a ''penalty' because the goods had already
been disposed of (in that case), has not
been pressed in the present case. Neither,
the facts on that aspect are clear nor we are
required to examine that matter in detail
since we propose to examine the very
nature of ''redemption fine'.

22. As to applicability of the rule of
Contemporanea Expositio, again, with all
respect, we find ourselves unable to
persuade ourselves to the view taken by the
Gujarat High Court. First, other than the
communication dated 20.12.2019, none of
the communications has been issued by the
Central Board of Indirect Taxes and
Customs,
but
by
other/subordinate
authorities. By virtue of section 133 of the
Scheme (quoted above), the Central Board
of Indirect Taxes alone is competent to
issue mandatory orders, instructions, and
directions to the authorities under the
Scheme
for
the
purpose
of
proper
administration of its Scheme. Therefore, we
are not inclined to look at the other
communications (flyers and press notes)
relied upon by learned counsel for the
petitioner. Second, those communications
do not contain expression of any opinion
that ''redemption fine' is ''penalty' under
section 129 (1) of the Scheme. Third, the
communication dated 20.12.2019 clearly
does not support the submission advanced
by learned counsel for the petitioner. It
speaks of ''redemption fine' being different
from ''penalty'. Therefore, we are unable to
accept the submission advanced by learned
counsel for the petitioner on that count.

23. The rule of Contemporanea
Expositio may apply only to cases where,
in the first place, the revenue authorities
have looked at the law in a particular way
and that view taken in favour of the
assessee has sustained over a period. Here,
neither condition is satisfied. The view
taken by the Central Board of Indirect
Taxes and Customs is not in favour of the
petitioner and, in any case, the Scheme is a
recent enactment over which there is no
consistent view taken by the departmental
authorities.

24. Coming to the main issue,
whether ''redemption fine' falls within the
meaning of the word 'penalty' used in
section 129 of the Scheme, we find neither
word has been defined under the Scheme or
the Rules framed thereunder or the
principal Act, namely the Central Excise
Act, 1944. Indisputably, the ''redemption
fine' imposed on the petitioner was payable
in
lieu
of
''confiscation'.
As
to
''confiscation',
historically,
under
the
8 All. M/s Jay Shree Industries Vs. Union of India & Anr.
61
Roman Law, it was an act or desire of taking
into hands of the Emperor and, to transfer it
to the imperial treasury, the goods or the
commodity forfeited. That principle appears
to be existing in favour of the State, under the
Central Excise Act, 1944 read with the
Customs Act, 1962. Here, it may be noted
that the powers of ''confiscation', though
existing under the Customs Act, 1962, have
been made applicable to the Central Excise
Act, 1944 by virtue of notifications issued
under section 12 of the Central Excise Act.
Section 9 of that Act provides for penalties
punishable with imprisonment, for specified
offences. Section 11 AC of that Act provides
for monetary penalties for short levy or nonlevy of Central Excise duty, in certain cases.
Again, section 15 B of that Act provides for
levy of monetary penalty for failure to furnish
information on return (under section 15A).
These penalties are imposable on the ''person'
offending the law. On the other hand, by
virtue of section 110 and other provisions of
the Customs Act, 1962 read with notification
no. 68/63 dated 04.05.1963 (as amended),
goods found to have been cleared in
contravention of the Central Excise Act, 1944
may be confiscated.

25. We find that a three-judge bench
of the Supreme Court in Srish Chandra
Sen & Ors. Vs. Commissioner of Incometax, West Bengal, AIR 1961 SC 487, had
the occasion to consider the meaning of the
word 'redemption' in the context of the
Income Tax Act, 1922. In that background,
it was observed as under:

"18. We next consider the effect
of redemption. Learned counsel for the
appellant contends that redemption in this
connection means that by a single payment,
the liability for periodical payments is
saved but the assessment on the land remains
uncancelled. He has cited Wharton's Law
Lexicon to show the meaning of the word
"redemption", which is "commutation or the
substitution of one lump payment for a
succession of annual ones: e.g. See the Land
Tax and the Title Redemption Acts and many
other statutes". Redemption is the act of
redeeming which in its ordinary meaning is
equal to bringing off a charge or obligation
by payment. To what extent this redemption
freed the land or its holder from the
obligation depends not so much upon what
the obligation was before redemption as what
remained of that obligation after it. Here, the
payment itself was meant to be "an immediate
payment of one sum equal in value to the
revenue redeemed" (vide the Resolution of
Government dated October 17, 1861). By the
down payment, the entire land revenue to be
recovered from that land was redeemed. The
payment was equal to the capitalised value of
the land revenue. When such a payment took
place, it cannot be said that the assessment
for land revenue remained. The land was
freed from that assessment as completely as if
there was no assessment. Thenceforward, the
land would be classed as revenue-free, in fact
and in law. In The Land-Law of Bengal
(Tagore Law Lectures, 1895) p. 81 S.C.
Mitra described these revenue-free lands as
follows:

"There
is
another
class
of
revenue-free lands which comes within
these rules laid down in the Registration
and Tenancy Acts, namely, lands of which
Government has, in consideration of the
payment of a capitalised sum, granted
proprietary title free in perpetuity from any
demand of land-revenue.""

26. Section 34 of the Central Excise
Act, 1944 creates a fine in lieu of
''confiscation'. It reads:

"34. Option to pay fine in lieu of
confiscation.-Wherever
confiscation
is
62 INDIAN LAW REPORTS ALLAHABAD SERIES
adjudged under this Act or the rules made
thereunder, the officer adjudging it shall
give the owner of the goods an option to
pay in lieu of confiscation such fine as the
officer thinks".

The above provision is similar in
scope and ambit to section 125 of the
Customs Act, 1962 which reads:

"125. Option to pay fine in lieu
of
confiscation.--(1)
Whenever
confiscation of any goods is authorised by
this Act, the officer adjudging it may, in the
case of any goods, the importation or
exportation whereof is prohibited under
this Act or under any other law for the time
being in force, and shall, in the case of any
other goods, give to the owner of the goods
or, where such owner is not known, the
person from whose possession or custody
such goods have been seized, an option to
pay in lieu of confiscation such fine as the
said officer thinks fit:

......

......

......

(2) Where any fine in lieu of
confiscation of goods is imposed under
sub-section (1), the owner of such goods or
the person referred to in sub-section (1)
shall, in addition, be liable to any duty and
charges payable in respect of such goods".

Plainly, same, or similar concept
of ''confiscation' exists both under the
Customs Act, 1962 and the Central Excise
Act, 1944. It allows the revenue authorities
to seize and confiscate any goods found
offending those legislations. Under both
enactments, such confiscation is in addition
to the other penalties prescribed against the
person offending the laws in the transaction
that
may
give
rise
to
an
act
of
''confiscation'.
Again,
under
both
legislations, there is a right given to the
offender to reclaim the title in the
confiscated goods, subject to payment of an
amount in addition to the other penalties
that may have been imposed. That amount
is known as the ''redemption fine', under
both laws.

27. Thus, upon ''confiscation', the title
in the goods vests in the State. Yet, by
virtue of section 34 of the Central Excise
Act, 1944, an opportunity is given to the
offender to reclaim that title in those goods
through payment of ''redemption fine', in
addition to all other dues of tax/duty,
interests and liabilities of other penalties.

28. Considering the nature of
''confiscation' under the Foreign Exchange
Act, a five judge Constitution Bench of the
Supreme
Court
in
Sewpujanrai
Indrasanarai Ltd. v. Collector of Customs
& Ors., AIR 1958 SC 845, at that early
stage, had made a distinction between the
penalty imposed on a citizen for violating
the law and, a penalty imposed on the
offending goods, both penalties arising
from one transaction. The first was
categorized as a penalty in personam,
visiting
the
offender/person
whereas
confiscation was held to be a penalty in
rem, visiting the goods.