# M/s Mahalakshmi Industries v. State of U.P. & Ors

- **Citation:** (2021) 2 ILRA 306
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-01-20
- **Case number:** Writ C No. 22342 of 2020
- **Bench:** Pankaj Naqvi, Piyush Agrawal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-mahalakshmi-industries-v-state-of-u-p-ors-46738
- **Pages:** 7

## Headnote

A. Central Excise Act (1 of 1944) - Excise
dues - Liability of auction purchaser of
unit to pay excise dues of the erstwhile
owner - Held - dues of central excise are
not a charge on the plant & machinery or
land & building - dues of central excise
become payable on the manufacturing of
excisable items - these statutory dues are
in respect of those products and not the
plant & machinery which were used for
manufacturing
-
same
cannot
be
recovered from the auction purchaser.
(Para 9)

Bank invited bids for auction of Industrial Plot
- petitioner a successful bidder deposited the
earnest & the remaining amount - Bank
issued sale certificate & the deed clearly
stated that the industrial plot free from all
encumbrances - petitioner applied for
transfer of the plot - however CGST requested
UPSID
not
to
transfer
plot
as
some
outstanding dues were pending against the
erstwhile owner which were liable to be
recovered from the plot - Held - Court
directed the UPSIDC to execute the transfer
deed of the industrial plot in favour of the
petitioner (Para 3,5,11)
2 All. M/s Mahalakshmi Industries Vs. State of U.P. & Ors.
307
B. Constitution of India , Art.265 - Tax -
Taxes not to be imposed save by authority
of law - a tax can only be levied by
statutory provision - whenever there is
compulsory exaction of money, whether
as a tax or a fee, there should be a specific
statutory provision for the same - no
amount can be withheld without any
authority of law - a charge cannot be
imposed without legislative sanction -
Held - UPSIDC directed to refund the
amount deposited by the petitioner under
protest within a month. (Para 14)

Writ Petition allowed. (E-4)

List of Cases cited: -

## Text

306 INDIAN LAW REPORTS ALLAHABAD SERIES

29. We are, therefore, of the
opinion that in this background the
impugned
notices
postulating
the
execution of tripartite deeds flows not
only from the clauses of the lease deed
executed between the NOIDA and
AWHO but also from the supervisory
authority which is placed on NOIDA by
virtue of the provisions of Section 7 of
the 1976 Act. The observation of the
High Court that the structures built on
funds provided by the sub-lessees is to
our mind of no consequence. Even
assuming that such was the position, this
was an arrangement inter-se AWHO and
its members and would not detract from
the obligations placed on AWHO and the
sub- lessees to execute tripartite deeds.

18. A perusal of the aforesaid
judgment would indicate that the Apex
Court held that conditions contained in the
original deed will be binding on the sublessee.

19. We are, thus, of the considered
view that even though transfer charge may
not be having a statutory flavour in its
traditional sense as urged by learned
counsel for the petitioner but once NOIDA
an instrumentality of State in exercise of its
supervisory power under Section 7 of the
Act, stipulates a condition of payment of
transfer charges to be paid to NOIDA,
lessor on every subsequent transactions and
makes the said stipulation binding on
subsequent sub-lessees, it becomes a
contractual liability for all sub-lessees to
comply with the same.

No other plea is urged.

The writ petition lacks merit and is
dismissed.
----------
(2021)02ILR A306
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 20.01.2021

BEFORE

THE HON'BLE PANKAJ NAQVI, J.
THE HON'BLE PIYUSH AGRAWAL, J.

Writ C No. 22342 of 2020

M/s Mahalakshmi Industries ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Kaushalendra Nath Singh

Counsel for the Respondents:
C.S.C., Sri Ashish Agrawal, Sri Sunil Kumar
Misra, Sri Ashok Singh

A. Central Excise Act (1 of 1944) - Excise
dues - Liability of auction purchaser of
unit to pay excise dues of the erstwhile
owner - Held - dues of central excise are
not a charge on the plant & machinery or
land & building - dues of central excise
become payable on the manufacturing of
excisable items - these statutory dues are
in respect of those products and not the
plant & machinery which were used for
manufacturing
-
same
cannot
be
recovered from the auction purchaser.
(Para 9)

Bank invited bids for auction of Industrial Plot
- petitioner a successful bidder deposited the
earnest & the remaining amount - Bank
issued sale certificate & the deed clearly
stated that the industrial plot free from all
encumbrances - petitioner applied for
transfer of the plot - however CGST requested
UPSID
not
to
transfer
plot
as
some
outstanding dues were pending against the
erstwhile owner which were liable to be
recovered from the plot - Held - Court
directed the UPSIDC to execute the transfer
deed of the industrial plot in favour of the
petitioner (Para 3,5,11)
2 All. M/s Mahalakshmi Industries Vs. State of U.P. & Ors.
307
B. Constitution of India , Art.265 - Tax -
Taxes not to be imposed save by authority
of law - a tax can only be levied by
statutory provision - whenever there is
compulsory exaction of money, whether
as a tax or a fee, there should be a specific
statutory provision for the same - no
amount can be withheld without any
authority of law - a charge cannot be
imposed without legislative sanction -
Held - UPSIDC directed to refund the
amount deposited by the petitioner under
protest within a month. (Para 14)

Writ Petition allowed. (E-4)

List of Cases cited: -

1. Rana Girders Limited Vs U.O.I. & ors. AIR
(2013) 10 SCC 746)

2. Firm Gulam Husain Hazi Yakub & Sons Vs St.
of Raj. 1963 (2) SCR 255

3. Cooperative Sugars (Chittur) Ltd. Vs St. of
T.N. [1993 (Supp.) 4 SCC 42

4. District Mining Officer Vs T.I.S.C.O. (2001) 7
SCC 358

5.
Ahmedabad
Urban
Dev.
Auth.
Vs
Sharadkumar Jayantikumar JT 1992 (3) SC 417

(Delivered by Hon'ble Pankaj Naqvi, J.
&
Hon'ble Piyush Agrawal, J.)

1. Heard Shri Kaushalendra Nath
Singh for the petitioner, Shri Ashish
Agrawal for respondent nos. 2 & 3, learned
Standing Counsel for respondent no. 1 and
Shri Ashok Singh, learned counsel for
respondent no. 4.

2. This writ petition has been filed for
the following, amongst other, reliefs:-

"I. Issue a writ of mandamus
directing the Respondents to execute the
Transfer Deed/Transfer Memorandum of
Industrial Plot No. 13A/17 U.P.S.I.D.C,
Loni Road, Site - II, Mohan Nagar,
Sahibabad, Ghaziabad, U.P., in favour of
the petitioner.

II. Issue a writ of mandamus
directing the respondents to refund the
amount paid by the petitioner to the
Assistant Commissioner, C.G.S.T. Division
- IV, Ghaziabad."

3. Learned counsel for the petitioner
submits that pursuant to an advertisement,
Central Bank of India invited bids for auction
of Industrial Plot No. 13A/17 U.P.S.I.D.C,
Loni Road, Site - II, Mohan Nagar,
Sahibabad, Ghaziabad. The petitioner a
successful bidder deposited the earnest and
the remaining amount within the specified
time. Pursuant thereto, the Bank issued sale
certificate and the deed clearly stated that the
said industrial plot is free from all
encumbrances. On 07.09.2018, the Bank
handed over the original lease deed in favour
of the erstwhile owner, letter of the UPSIDC
and the keys of the auctioned plot in favour
of the petitioner. Thereafter, the petitioner
applied for transfer of the plot in question on
11.10.2018 with all the requisite documents
before respondent no. 3, but in spite of
completion of all the formalities, respondent
nos. 2 & 3, without any rhyme or reason, are
not transferring the plot in question in favour
of the petitioner. Meanwhile, the respondent -
UPSIDC wrote a letter to the Assistant
Commissioner, Central GST, Ghaziabad on
14.10.2019 to inquire as to whether any
government dues/outstanding are pending
from the erstwhile owner of the plot in
question, i.e., M/s Sarthak Aqua Private
Limited.

4. Learned counsel for the petitioner
submits that to buy peace and to get the
matter of transfer expedited, it has
308 INDIAN LAW REPORTS ALLAHABAD SERIES
deposited a sum of Rs. 33,59,276/-, under
protest, though the same was not liable to
be paid by it, yet the transfer deed is not
being executed. Hence, the action of
respondent no. 2 in not transferring the plot
in question in favour of the petitioner since
October,
2018
is
arbitrary
and
unsustainable.

5. Shri Ashok Singh, learned counsel
for CGST has brought on record the
instructions dated 06.01.2021, which are
taken on record. On the strength of the
instructions, Shri Singh submits that some
outstanding dues are pending against the
erstwhile owner, i.e., M/s Sarthak Aqua
Private Limited, which are liable to be
recovered from the plot in question and
therefore, the letter was sent requesting
respondent no. 3 not to transfer the plot in
question in favour of the petitioner.

6. Shri Ashish Agrawal, learned
counsel for respondent - UPSIDC submits
that the Corporation has not transferred the
plot in question only on the request of
respondent no. 4; otherwise, petitioner has
completed all the formalities.

7. The Court has perused the materials
available on record.

8. It is admitted case of the parties that
the petitioner has purchased the plot in
question
from
the
Bank
in
auction
proceedings and the petitioner deposited the
earnest and the remaining amount within the
specified time after being declared as a
successful bidder. It is also admitted between
the parties that the Bank had issued sale
certificate and sale deed has also been
executed clearly stating therein that the said
industrial plot is free from all encumbrances.
On perusal of the instructions of respondent
no. 4, it also reveals that the plot in question
was never tendered/attached/seized with
regard to any outstanding dues as claimed by
respondent no. 4.

9. The Hon'ble Supreme Court in the
case of Rana Girders Limited Vs. Union of
India & Others (reported in (2013) 10 SCC
746) has decided a similar issue holding that
the dues of central excise are not a charge on
the plant & machinery or land & building.
The dues of central excise become payable
on the manufacturing of excisable items by
the erstwhile owner and therefore, these
statutory dues are in respect of those products
and not the plant & machinery which were
used for manufacturing and the same cannot
be recovered from the auction purchaser. The
relevant paragraphs of the said judgement are
quoted below:-

"6. The appellant turned out to
be the successful bidder whose bid in the
sum of Rs.43 Lakh for land and building
being highest was accepted by the UPFC.
Sale Deed dated 8th March 2002 was
executed. In this Sale Deed it was
specifically mentioned that the property
is free from all encumbrances by stating
that "the vendor herein confirms that the
property purchased through the sale deed
in favour of vendee is free from all
charges and encumbrances......." The
appellant had paid a sum of Rs.21.50
Lakh at the time of registration of the
Sale Deed and balance amount of
Rs.21.50 lakh was to be paid by the
appellant to the UPFC which was
payable together with interest at the rate
of 16% P.A. in instalments as specified in
the Schedule to the said Sale Deed. There
is
no
dispute
that
this
balance
consideration has been paid by the
appellant to the UPFC. Another condition
in the Sale Deed, which was also
mentioned in the public notice was that:
2 All. M/s Mahalakshmi Industries Vs. State of U.P. & Ors.
309

"All
the
statutory
liabilities
arising out of said properties shall be
borne by the vendee and vendor shall not
be held responsible."

7. The appellant also purchased
plant and machinery in the said auction for
a total consideration of Rs.1 Crore 93 Lakh
for which Agreement dated 15th March
2002 was executed by the parties. This
Agreement also contained both the clauses,
similar to the clauses in the Sale Deed,
namely, the said plant and machinery was
free from all encumbrances and that all the
statutory liabilities arising out of the plant
and machinery of the industrial unit were
to be borne by the purchaser i.e. the
appellant.

10. Since the appellant had
purchased the land and building as well as
plant and machinery of the borrower in the
auction conducted by the UPFC, the
respondent No.2 issued notice dated
25.8.2004 to the appellant stating that the
amount in question had now become the
liability of the appellant and demanded the
aforesaid payment. It was mentioned in the
notice that this amount was payable by the
appellant in view of the law laid down by
this Court in the case of M/s. Macson
Marbles Pvt. Ltd. Vs. Union of India2003
(158) ELT 424 SC.

14. Before us, it was strenuously
argued by the learned counsel for the
Revenue that since the excise duty is a
statutory liability such a duty has to be
paid by the person who purchased the
property of borrower in default even when
sold in auction under section 29 of the
State Financial Corporation Act. He
further argued that in any case the High
Court was right in holding that by virtue of
the stipulations in the Sale Deed as well as
in the Agreement of Sale, so far as the
appellant is concerned, it was liable to
discharge the excise liability. In the
circumstances, two questions arise for
consideration
namely
(1)
on
the
interpretation of stipulation contained in
the Sale Deed of the land and building and
Agreement of Sale of plant and machinery,
whether the appellant had agreed to
discharge the dues payable to the excise
department by the borrower. (2) Whether
such a liability arises in law (de-hors the
stipulation in Sale Deed /Agreement of
Sale) having regard to the legal provisions
contained in the Excise Act and State
Financial Corporation Act?

20. Coming to the liability of the
successor in interest, the Court clarified the
legal position enunciated in M/s. Macson
by observing that such a liability can be
fastened on that person who had purchased
the entire unit as an ongoing concern and
not a person who had purchased land and
building or the machinery of the erstwhile
concern. This distinction is brought out and
explained in paragraph 24 and 25 and it
would be useful for us to reproduce herein
below:

"Reliance has also been placed
by Ms.Rao on Macson Marbles Pvt.Ltd.
(supra) wherein the dues under Central
Excise Act was held to be recoverable from
an auction purchaser, stating:

We are not impressed with the
argument that the State Act is a special
enactment and the same would prevail over
the Central Excise Act. Each of them is a
special enactment and unless in the
operation of the same any conflict arises
this aspect need not be examined. In this
case, no such conflict arises between the
corporation and the Excise Department.
Hence it is unnecessary to examine this
aspect of the matter.

The Department having initiated
the proceedings under Section 11A of this
Act adjudicated liability of respondent No.4
and held that respondent No.4 is also liable
310 INDIAN LAW REPORTS ALLAHABAD SERIES
to pay penalty in a sum of Rs.3 lakhs while
the Excise dues liable would be in the order
of a lakh or so. It is difficult to conceive
that the appellant had any opportunity to
participate in the adjudication proceedings
and contend against the levy of the penalty.
Therefore, in the facts and circumstances of
this case, we think it appropriate to direct
that the said amount, if already paid, shall
be refunded within a period of three
months. In other respects, the order made
by the High Court shall remain undisputed.
The appeal is disposed of accordingly." The
decision, therefore, was rendered in the
facts of that case. The issue with which we
are directly concerned did not arise for
consideration therein. The Court also did
not notice the binding precedent of Dena
Bank as also other decisions referred to
hereinbefore."

21. A harmonious reading of the
judgments in Macson and SICOM would
tend us to conclude that it is only in those
cases where the buyer had purchased the
entire unit i.e. the entire business itself, that
he would be responsible to discharge the
liability
of
Central
Excise
as
well.
Otherwise,
the
subsequent
purchaser
cannot be fastened with the liability
relating to the dues of the Government
unless there is a specific provision in the
Statute, claiming "first charge for the
purchaser". As far as Central Excise Act is
concerned, there was no such specific
provision as noticed in SICOM as well.
Proviso to Section 11 is now added by way
of amendment in the Act only w.e.f.
10.9.2004. Therefore, we are eschewing our
discussion regarding this proviso as that is
not applicable in so far as present case is
concerned. Accordingly, we thus, hold that
in so far as legal position is concerned,
UPFC being a secured creditor had
priority over the excise dues. We further
hold that since the appellant had not
purchased the entire unit as a business, as
per the statutory framework he was not
liable for discharging the dues of the Excise
Department.

22. With this, we now revert to the
first issue, namely interpretation of the
clause in the Sale Deed for land and
building and similar clause in Agreement of
Sale for machinery on the basis of which
appellant is held to be liable to pay the
dues. These clauses have already been
incorporated in the earlier portion of our
judgment.

23. We may notice that in the first
instance it was mentioned not only in the
public notice but there is a specific clause
inserted in the Sale Deed/Agreement as
well, to the effect that the properties in
question are being sold free from all
encumbrances. At the same time, there is
also a stipulation that "all these statutory
liabilities arising out of the land shall be
borne by purchaser in the sale deed" and
"all these statutory liabilities arising out of
the said properties shall be borne by the
vendee and vendor shall not be held
responsible in the Agreement of Sale." As
per the High Court, these statutory
liabilities would include excise dues. We
find that the High Court has missed the
true intent and purport of this clause. The
expressions in the Sale Deed as well as in
the Agreement for purchase of plant and
machinery talks of statutory liabilities
"arising out of the land" or statutory
liabilities
"arising
out
of
the
said
properties" (i.e. the machinery). Thus, it is
only that statutory liability which arises out
of the land and building or out of plant and
machinery which is to be discharged by the
purchaser. Excise dues are not the statutory
liabilities which arise out of the land and
building or the plant and machinery.
Statutory liabilities arising out of the land
and building could be in the form of the
2 All. M/s Mahalakshmi Industries Vs. State of U.P. & Ors.
311
property tax or other types of cess relating
to
property
etc.
Likewise,
statutory
liability arising out of the plant and
machinery could be the sales tax etc.
payable on the said machinery. As far as
dues of the Central Excise are concerned,
they were not related to the said plant and
machinery or the land and building and
thus did not arise out of those properties.
Dues of the Excise Department became
payable on the manufacturing of excisable
items by the erstwhile owner, therefore,
these statutory dues are in respect of those
items produced and not the plant and
machinery which was used for the
purposes
of
manufacture.
This
fine
distinction is not taken note at all by the
High Court."

10. In view of the judgement of
the Hon'ble Supreme Court in the case
of Rana Girders Limited (supra), the
present issue is concluded in favour of
the petitioner.

11. The respondent - UPSIDC is
directed
to
execute
the
transfer
deed/transfer memo of the industrial
plot in question in favour of the
petitioner within a month from the date
of production of a copy of this order.

12. Further, with regard to refund
of
the
amount
deposited
by
the
petitioner under protest, the learned
counsel for the petitioner submits that
the amount was deposited under protest
in order to get the matter expedited and
there was no liability of the petitioner
to pay the same. Learned counsel for
the petitioner further submits that
under Article 265 of the Constitution
of
India,
any
amount
cannot
be
charged/withheld without any authority
of law.

13. Shri Ashok Singh, learned
counsel for respondent no. 4 could
not
justify
retaining
the
amount
deposited by the petitioner under
protest to the tune of Rs. 33,59,276/-.

14. The Hon'ble Supreme Court,
on various occasions, has held that no
amount can be withheld without any
authority of law. In Firm Gulam
Husain Hazi Yakub & Sons Vs. State
of Rajasthan [1963 (2) SCR 255], it
was held that a charge cannot be
imposed without legislative sanction.
In Cooperative Sugars (Chittur)
Ltd. Vs. State of Tamilnadu [1993
(Supp.) 4 SCC 42 (vide para 8)] and
District
Mining
Officer
Vs.
T.I.S.C.O. [(2001) 7 SCC 358, (vide
para 19)], it was held that a tax can
only be levied by statutory provision.
In Ahmedabad Urban Development
Authority
Vs.
Sharadkumar
Jayantikumar [JT 1992 (3) SC 417],
it was held that whenever there is
compulsory
exaction
of
money,
whether as a tax or a fee, there
should
be
a
specific
statutory
provision for the same.

15. In view of the above,
respondent no. 4 is directed to refund
the aforesaid amount deposited by the
petitioner under protest within a
month from the date of production of
a copy of this order, failing which the
authority concerned shall be liable to
pay interest @ 8% per annum till the
date of actual payment.

16. In the result, the writ
petition succeeds and is allowed.

17. No order as to costs.
----------
312 INDIAN LAW REPORTS ALLAHABAD SERIES
(2021)02ILR A312
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 17.12.2020

BEFORE

THE HON'BLE SURYA PRAKASH
KESARWANI, J.
THE HON'BLE DR. YOGENDRA KUMAR
SRIVASTAVA, J.

Writ C No. 22409 of 2020

M/s Prince Filing Station ...Petitioner
Versus
Union Gov. of India & Ors. ...Respondents

Counsel for the Petitioner:
Sri Awadhesh Kumar Singh, Sri Abhai
Kumar Singh

Counsel for the Respondents:
A.S.G.I., Anand Tiwari, C.S.C., Sri Vikas
Budhwar

Constitution of India Art. 19(1)(g), 226Competitor
in
business-Locus
standi-
where
the
claim
of
the
petitioner is solely to prevent a rival from
exercising a right to carry on business, he
has no locus standi to maintain a writ
petition - as the same would be aimed at
eliminating
healthy
competition
in
business - a person cannot claim that no
other person shall carry on business or
trade so as to adversely affect his trade or
business (Para 8,9)

Petitioner
having
retail
outlet
dealership,
challenged letter of intent (LOI) whereunder it
was proposed to offer retail outlet dealership to
respondent - Held - petitioner being rival
business man cannot be said to be a person
aggrieved & has no locus standi to maintain writ
petition - writ petition dismissed.

Writ Petition dismissed. (E-4)

List of Cases cited: -

1. Rinki Gupta Vs St. of U.P. & ors. WritC No.
14091 of 2020, 05.11.2020

2. Nagar Rice & Flour Mills Vs N.T. Gowda
(1970) 1 SCC 575

3. Jas Bhai Moti Bhai Desai Vs Roshan Kumar
(1976) 1 SCC 671

4. Mithilesh Garg & ors. Vs U.O.I. & ors. (1992)
1 SCC 168

(Delivered by Hon'ble Surya Praksh Kesarwani, J.
&
Hon'ble Dr. Yogendra Kumar Srivastava, J.)

1. Heard learned counsel for the
petitioner, learned Standing Counsel for the
respondent no. 4 and Sri Yash Padia
holding brief of Sri Anand Tiwari, learned
counsel for the respondent nos. 1, 2 and 3.

2. The petitioner having a retail outlet
dealership of MS/HSD, awarded by the
Bharat Petroleum Corporation Limited, has
filed the present writ petition principally
seeking to raise a grievance with regard to
issuance of a letter of intent (LOI) dated
15.06.2019 and Addendum to LOI dated
26.8.2020 whereunder it is proposed to
offer to the respondent no. 6 a retail outlet
dealership of Bharat Petroleum Corporation
Ltd. pursuant to an advertisement dated
25.11.2018, issued for the purpose.

3. In paragraph eight of the writ
petition, the petitioner has stated as under :-

"8. That the petitioner has also
been awarded outlet dealership of MS/HSD
by Bharat Petroleum Limited under CC
category and the proposed outlet is only
800 meter away from the side of the
petitioner's outlet and in this way, sale of
Bharat Petroleum Limited shall be badly
effected and petitioner shall be sufferer on