# Oudh Sugar Mills Ltd v. U.O.I. & Ors

- **Citation:** (2023) 6 ILRA 890
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-05-31
- **Case number:** Writ-C No. 1001023 of 1999
- **Bench:** Vivek Chaudhary
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/oudh-sugar-mills-ltd-v-u-o-i-ors-50469
- **Pages:** 7

## Headnote

A. Tax Law - Central Excise Act, 1944 -
Rules 9-B & 10 - Excise duty - Demand
notice issued under Rule 10 - Time-barred
notice - Rebate - No reference of playing
fraud, collusion, willful misSt.ment or
suppression of facts to obtain rebate by
the petitioner - Only ground taken in the
demand notice is that exemption from
duty can not exceed the leviable duty
itself
-
No
reference
to
any
final
assessment carried out by the authorities
in support of its demand - Effect -
Fulfillment of conditions provided in the
Rule 9B of the Rules of 1944 is required to
be followed for an assessment to be called
as provisional assessment - National
Tobacco's case relied upon - High Court
set aside demand notice holding it suffer
from time-barred (Para 6, 8, 12 and 13)

Writ petition allowed. (E-1)

List of Cases cited:

## Text

890 INDIAN LAW REPORTS ALLAHABAD SERIES
which they have been assigned, and they
were granted admission. Their admissions
were cancelled after they had spent almost
two months on the course. The judgment of
this Court in Javed Akhtar case [Javed
Akhtar v. Jamia Hamdard, 2006 SCC
OnLine Del 1504] , in fact, goes further to
hold that an academic institution cannot be
permitted to cancel admissions after the
course had started, at any time during the
year, due to prejudice that would be caused
to the candidates who were admitted as
they would by then be unable to take
admission in any other university to which
they may have been admitted."

16. Law is, thus, well settled on the
issue involved. Once, the University has
granted admission and permitted petitioner
to continue for five long years and her
Ph.D. course is on the verge of completion,
it is now not open for the University to
restrain petitioner from completing her
course. Even presuming some irregularity
did occur at the time of admission in Ph.D.
course, the same can not now be made the
basis
for
denying
petitioner
from
completing her course. Learned counsel for
respondent University could not show from
record that petitioner has in any manner
misrepresented
or
played
fraud
or
otherwise was maliciously involved in the
said admission process. The decision was
taken by the authorities of University in
exercise of its powers. Thus, this Court
finds that the respondent University cannot
restrain petitioner from completing her
Ph.D. course and is bound to consider her
application for extension of period by one
year as per rules.

17. This Court further finds that the
country is making its best efforts to grow
from a developing nation to a developed
one. Repeatedly it is said that to become a
developed nation huge research work is
required to be conducted within the
Country. Now, when the students are
pursuing their research work and are at the
verge of completion it is highly improper
to restrain them from completing their
research on legal technicalities. The
country is in dire need of research work.
Petitioner has put more than five years in
her Ph.D. course and is on the verge of
submitting the same. Now denial of
benefit of said research work to the nation
in itself would be a huge loss. In the said
circumstances also this Court is inclined to
exercise its discretionary jurisdiction in
favour of petitioner and against the
respondent University.

18.

In
the
given
facts
and
circumstances of the case, the writ
petition is allowed and a mandamus is
issued
to
respondent
University
to
consider the application of petitioner for
extension of one year after five years of
Ph.D. course and permit her to submit
fees in accordance with law. Such a
decision
shall
be
taken
and
communicated to the petitioner by the
respondent University within a period of
15 days and accordingly petitioner shall
be permitted to complete her Ph.D.
course in accordance with law.
----------
(2023) 6 ILRA 890
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 31.05.2023

BEFORE

THE HON'BLE VIVEK CHAUDHARY, J.

Writ-C No. 1001023 of 1999

Oudh Sugar Mills Ltd. ...Petitioner
Versus
U.O.I. & Ors. ...Respondents
6 All. Oudh Sugar Mills Ltd. Vs. U.O.I. & Ors.
891
Counsel for the Petitioner:
Dr. R.K. Srivastava

Counsel for the Respondents:
B.B. Saxena, Deepak Seth, Ghaus Beg

A. Tax Law - Central Excise Act, 1944 -
Rules 9-B & 10 - Excise duty - Demand
notice issued under Rule 10 - Time-barred
notice - Rebate - No reference of playing
fraud, collusion, willful misSt.ment or
suppression of facts to obtain rebate by
the petitioner - Only ground taken in the
demand notice is that exemption from
duty can not exceed the leviable duty
itself
-
No
reference
to
any
final
assessment carried out by the authorities
in support of its demand - Effect -
Fulfillment of conditions provided in the
Rule 9B of the Rules of 1944 is required to
be followed for an assessment to be called
as provisional assessment - National
Tobacco's case relied upon - High Court
set aside demand notice holding it suffer
from time-barred (Para 6, 8, 12 and 13)

Writ petition allowed. (E-1)

List of Cases cited:

1. Raj Bahadur Narain Singh Sugar Mills Ltd. Vs
U.O.I. & ors.; (1997) 6 SCC 81

2. Someshwar Sahakari Sakhar Karkhana Ltd.
Vs U.O.I. & ors. 1988 (34) E.L.T. 522 (Bom.)

3. Assistant Collector of Central Excise,Calcutta
Division Vs National Tobacco Co. India Ltd.; AIR
1972 SC 2563

(Delivered by Hon'ble Vivek Chaudhary, J.)

1. By the pesent writ petition,
petitioner is praying for quashing of orders
dated 26.08.1992 passed by Assistant
Collector, Excise, Sitapur whereby demand
for tax liability was confirmed as well as
order dated 08.01.1993 passed by Assistant
Collector (Appeals), dismissing petitioner's
appeal against the order dated 26.08.1992
and order dated 05.02.1999 passed by the
Customs, Excise and Gold Appellate
Tribunal.

2. Brief facts of the case are that the
petitioner company is involved in the
manufacturing of sugar, which is subjected
to levy of Central Excise. In order to
incentivise
sugar
mills
to
continue
manufacturing during the lean season the
Central Government by notification dated
28.04.1978 offered rebate on Central
Excise levied on all sugar produced
between 01.05.1978 to 30.09.1978 in
excess of the average production of the
corresponding period of the preceding three
years.
On
14.08.1978,
the
earlier
notification was modified and the rebate
was now applicable on excess production
between
01.05.1978
to
15.08.1978.
Petitioner too submitted his claim for
rebate on excess production for the relevant
period. The same was allowed vide order
dated 04.10.1978 and a rebate of Rs.
16,79,339.65 was credited into the Personal
Ledger Account of the petitioner mill. On
08.04.1980 a demand cum show cause
notice under Rule 10 of Central Excise
Rules, 1944 (hereinafter referred to as
Rules of 1944) was served upon the
petitioner for recovery of Rs. 1,65,878.34
allegedly
claimed
and
received
by
petitioner in excess of actual rebate due to
the petitioner mill. On the basis of
petitioner's reply, by impugned order dated
26.08.1992 demand of Rs. 1,65,878.34 is
confirmed against
the petitioner and
appellate authorities have also rejected his
appeals
by
impugned
orders
dated
08.01.1993 and 05.02.1999.

3.

Counsel
for
the
petitioner
challenges the impugned orders on the
ground that the order dated 04.10.1978,
approving petitioner's claim for rebate of
892 INDIAN LAW REPORTS ALLAHABAD SERIES
Rs. 16,79,339.65 is final and therefore
demand notice dated 08.04.1980 for
recovery of Rs.1,65,878.34 is time-barred.
As per Rule 10 of the Rules of 1944 no
demand can be made after a period of six
months, while show cause notice for
recovery of rebate is issued after almost
eighteen months and is therefore clearly
time-barred. He further challenges the
finding that the order dated 04.10.1978
approving the rebate is passed on the basis
of provisional assessment and therefore not
hit by the statutory limitation of Rule 10 of
the Rules of 1944. He further submits that
the limitation of six months is not
applicable only on such final assessment
which are obtained by fraud, collusion,
wilful misstatement or suppression of facts
and since it is not alleged in the show cause
notice,
said
Rule
is
therefore,
not
applicable in the present case. In support of
his case counsel for the petitioner relies
upon judgment of the Supreme Court in the
case of Raj Bahadur Narain Singh Sugar
Mills Ltd. vs Union of India and Ors.;
(1997) 6 SCC 81.

4.

Learned
counsel
for
the
respondents, Mr. Deepak Seth opposes the
submissions
of
the
counsel
for
the
petitioner and claims that there is no
illegality in the impugned order. He
submits that order dated 04.10.1978 itself
states that it is only a provisional order and
therefore is not hit by the limitation
prescribed under Rule 10 of the Rules of
1944. Counsel for the respondents submits
that facts of the case in Raj Bahadur
(supra) are distinguishable from the
present case as it is with regard to a final
order. This fact is evident from paragraph 2
of
the
judgment
which
states
that
appellant's rebate claim has been preaudited
as
admissible
under
the
notification. This means that the rebate
claim was sanctioned after audit of the
records and thus it was not a provisional
order. Therefore, he submits that, the
contention of counsel for the petitioner that
the order dated 04.10.1978 was final, does
not hold its ground. Bar placed on demands
after six months by Rule 10 of Rules of
1944 is applicable only on final orders of
assessment. In support of his argument
counsel for the respondent places reliance
upon a Division Bench judgment of the
Bombay High Court in the case of
Someshwar Sahakari Sakhar Karkhana
Ltd. vs. Union of India and Ors. 1988
(34) E.L.T. 522 (Bom.). The Division
Bench of the Bombay High Court was also
faced with a similar set of facts where
statutory limitation provided under Rule 10
of the Rules of 1944 was invoked by the
petitioner against the demand notices.
Rejecting the contention of the petitioners,
the Bombay High Court held that the order
approving the rebate was only a provisional
assessment and therefore the demand notice
is not barred by limitation.

5 . I have heard counsel for the parties
and
perused
the
record
with
their
assistance.

6. A perusal of the demand notice
dated 08.04.1980 shows that there is no
reference
to
fraud,
collusion,
wilful
misstatement or suppression of facts by
petitioner as grounds for obtaining the
rebate by the petitioner. The only ground
taken in the demand notice is that
exemption from duty can not exceed the
leviable duty itself. Relevant portion of the
demand cum show cause notice dated
08.04.1980 reads,

"Whereas it appears that M/S
Oudh Sugar Mills Ltd., Hargaon Distt.
Sitapur (L.4 No. 15/Sug/Bly/54) have
6 All. Oudh Sugar Mills Ltd. Vs. U.O.I. & Ors.
893
contravened the provisi-ons of Rule 10 of
Central Excise Rules, 1944 in as much as
they have claimed and received excess
rebate of Rs. 1,65,878.34 Paise on
23379.83 Qtls. on free sale of sugar during
the year 1977-78 un-der Notification No.
108/78 Dated 28.4.78 as per details given
below. This is in violation of the principles
laid down by the Government of India,
Ministry of Finance that an exemption from
duty can not exceed the leviable duty itself.
In this case M/S Oudh Sugar Mills Ltd.,
Hargaon have claimed and received Rebate
at a level higher than the Excise duty,
which is to be refunded/ deposited by M/S
Oudh Sugar Mills Ltd., Hargaon under
Rule 10 of Central Ex cise Rules, 1944."

7. Supreme Court in the case of Raj
Bahadur (supra) has held such notices to
be in violation of Rule 10 of the Rules of
1944. Relevant paragraphs of judgment in
the case of Raj Bahadur (supra) reads:

"3.
On
30-7-1979
the
Superintendent, Central Excise, Hardwar,
issued to the appellants a notice. It stated
that the appellants "were erroneously
sanctioned rebate of Rs 15,59,252.18 ... as
against
Rs
12,90,966.42
on
excess
production of 62,022.76 quintals of sugar
achieved during the period from 1-5-1978
to 15-8-1978 ...". The notice set out the
details of the rebate granted and the details
of clearances and stated that, from these
details, "it is obvious that the factory has
availed
exemption
in
excess
by
Rs
2,68,285.76 which was not admissible to
them". The appellants were required to
show cause why such excess rebate
"granted to them erroneously should not
be recovered from them under Rule 10 of
the Central Excise Rules, 1944".

4. The appellants showed cause
and contended that the notice was timebarred under Rule 10. The period of six
months by which time the notice to demand
the amount back should have been issued
expired on 17-4-1979. Since the notice had
been issued on 30-7-1979, which was
beyond the period of six months, the
demand was time-barred. The notice did
not mention that the refund of duty had
been obtained by fraud, collusion, wilful
misstatement or suppression of fact, which
attracted the limitation period of five years.
The entire data having been divulged to the
authorities at the time the claim was
preferred, there was no justification for the
notice after the period of six months. The
reply to the notice also dealt with the
merits of the claim to the rebate.

5. On 10-2-1983 the Assistant
Collector of Central Excise, Saharanpur,
confirmed the demand made by the notice.
He dealt first with the merits of the claim to
rebate and then stated:

"Since the amount of rebate was
much more than the duty actually paid the
party should have informed the department
about this fact and also should have
themselves paid the excess amount by
making a debit entry in the P/L A/C and the
.206 free sale sugar which they have
cleared as levy sugar and enjoyed the
rebate @ Rs 54 instead of Rs 9.60 was
incorrect. This fact they should have also
informed the department and by concealing
all these facts they have made wilful
misstatement and suppressed the fact with
the intention to evade payment of duty. The
show-cause notice issued under Rule 10
was also correct as the same was in force
at the time of issue of show-cause notice."
894 INDIAN LAW REPORTS ALLAHABAD SERIES

.....

.....

9. We have set out the relevant
parts of the show-cause notice. It speaks of
an erroneously granted rebate. There is no
mention in it of any collusion, wilful
misstatement or suppression of fact by the
appellants for the purposes of availing of
the larger period of five years for the
issuance of a notice under Rule 10. The
party to whom a show-cause notice under
Rule 10 is issued must be made aware that
the allegation against him is of collusion or
wilful misstatement or suppression of fact.
This is a requirement of natural justice. It
is also the law, laid down by this Court in
CCE v. H.M.M. Ltd. [1995 Supp (3) SCC
322 : (1995) 76 ELT 497] It has been said
there with reference to Section 11-A of the
Central Excises and Salt Act, 1944, which
replaced Rule 10, that if the authorities
propose to invoke the proviso to Section
11-A(1), the show-cause notice must put the
assessee to notice which of the various
commissions and omissions stated in the
proviso is committed to extend the period
from six months to five years. Unless the
assessee is put to notice, the assessee
would have no opportunity to meet the case
of the authorities. The defaults enumerated
in the proviso were more than one and if
the authorities placed reliance on the
proviso, it had to be specifically stated in
the show-cause notice which was the
allegation against the assessee falling
within the four corners of the said proviso.

10. In view of the fact that the
notice fails to refer to any of the acts of
commission or omission enumerated in the
relevant proviso to Rule 10, the notice,
given more than six months after the date
of the order of refund, is time-barred. Put
differently, the Superintendent who issued
it had no authority to do so."

8. Thus failure of the excise tax
authority to lay out the grounds for
extending the limitation period is a
sufficient
ground
for
quashing
such
demand notices and therefore further
proceedings on the basis of such faulty
notices are without jurisdiction. The
judgment of the Division Bench of Bombay
High Court in the case of Someshwar
Sahakari Sakhar Karkhana Ltd. (Supra)
also does not hold good in the light of
aforesaid judgment of Supreme Court in
the case of Raj Bahadur (Supra).

9. The next submission of learned
counsel for respondents is that order dated
04.10.1978 by which rebate was granted was
a provisional order and not a final order,
therefore, the period of limitation as well as
condition of Rule 10 of Rules of 1944 was
not required to be fulfilled. He further
submits that Rule 10 of Rules of 1944 would
apply only in case of final order. For the said
purposes he relied upon the language of the
said order dated 04.10.1978.

10. Learned counsel for the petitioner
disputes the same and submits that the said
order dated 04.10.1978 is a final order. The
aforesaid order dated 04.10.1978 reads as
follows:-

"1. In terms of Govt. of India
Notification No. 108/78-CE dated 28.4.78
M/s Oudh Sugar Mills Hargaon are
provisionally allowed rebate on the quantity
asnoted on reverse of sugar produced in
excess during the months of May 78 to
Sept.78 against levy sugar and free sale
sugar respectively. The amount should be
credited in the Personal Ledger A/c. by the
factory asbasic excise duty.
6 All. Oudh Sugar Mills Ltd. Vs. U.O.I. & Ors.
895

2. It should be ensured that the
entire quantity produced during the months
May to Sept. 78 is cleared from the factory
andif there is any loss due to any reson the
quantitiy of rebate may be reduced
accordingly.

3. The particulars of adjustment
of rebate claim in personal ledger account
may please be reported to this office as
well as the Supdt. Central Excise MOR II
Sitapur and the Chief Accounts Officer
Central Excise, Allahabad.

4. Before the rebate is credited to
the
Personal
Ledger
account
the
jurisdictional superintendent may please be
approached for the purpose."

11. A perusal of 1st & 2nd paragraphs
of the said order dated 04.10.1978, shows
that the order is provisional only to the
extent it states to clear the entire quantity
produced during the months of May to
September, 1978 is concerned and in case
any lesser quantity is cleared from the
factory than the quantity produced during
the months of May to September, 1978, the
loss due to the same may be reduced
accordingly. Therefore, except for the said
condition the order with regard to the
rebate granted to the petitioner is final. It
cannot by any stretch of imagination be a
grant of provisional rebate. Hence, the said
order is a final order. Thus, this submission
of counsel for the respondents also does not
have any force.

12. Even otherwise counsel for the tax
authority could not produce any final
assessment before this Court. Further
provisional assessment is provided under
Rule 9B of the Rules of 1944. As per the
same, instance of provisional assessment
arises when (a) the assessee is unable to
determine the value of excisable goods and
(b) when the asessee is unable to determine
the correct classification of the goods.
Before
approving
the
provisional
assessment, the assessee is also asked to
furnish a security bond. In the present case,
learned counsel for the authorities could
not show any such bond or order approving
the provisional assessment. The demand
cum show cause notice is issued under Rule
10, but there is no reference to any final
assessment carried out by the authorities in
support of its demand. In the case of
Assistant Collector of Central Excise,
Calcutta Division vs. National Tobacco
Co. India Ltd.; AIR 1972 SC 2563, a
three judges bench of the Supreme Court
has held that fullfilment of conditions
provided in the Rule 9B of the Rules of
1944 is required to be followed for an
assessment to be called as provisional
assessment. Relevant paragraph of the
judgment in the case of National Tobacco
(supra) reads,

"27. However, on a consideration
of the arguments raised on the merits of
that point, we find it is difficult to hold that
there
was
a
provisional
assessment.
CEGAT has adverted to certain reasons for
arriving at such a finding. Rule 9-B of the
Central Excise Rules has been quoted in the
impugned judgment. The title of the rule is
"Provisional
Assessment",
in
which
situations are detailed when provisional
assessment could be made. CEGAT pointed
out in the judgment certain admissions made
by the Department such as the absence of any
express order of provisional assessment as
required under Rule 9-B, absence of any
circumstance for making a provisional
assessment and that it was not stated in the
show cause notice that the assessment made
during the relevant period was provisional.
The Assistant collector had treated the
896 INDIAN LAW REPORTS ALLAHABAD SERIES
assessment as provisional solely on the
premise that the matter was sub judice and
hence "all the assessment for the period April
1981 to 15.3.1983 were, therefore, made
provisional". CEGAT has rightly found that
the said yardstick was hardly sufficient to
make an assessment provisional."

13. In light of the aforesaid, demand
cum show cause notice dated 08.04.1980 is
held to be time-barred and therefore
impugned
orders
dated
26.08.1992,
08.01.1993 and 05.02.1999 passed on the
basis of the said time-barred notice are
hereby set aside.

14, Writ petition is allowed.

15. The respondents are directed to
refund the money deposited by the petitioner
in accordance with law.
----------
(2023) 6 ILRA 896
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 31.05.2023

BEFORE

THE HON'BLE VIVEK CHAUDHARY, J.

Writ-C No. 1002443 of 2012

Principal M.R. Jaipuria School , Lko.
 ...Petitioner
Versus
Deputy
Transport
Commissioner
Passenger Tax Lko & Ors. ...Respondents

Counsel for the Petitioner:
Ghaus Beg

Counsel for the Respondents:
C.S.C.

A. Motor Vehicle Law - UP Motor Vehicles
Taxation Act, 1997 - Section 4(3) - School
Bus Registration - Seizure - Allegation of
carrying
wedding
guest
without
permission - No opportunity of hearing
was given - Mistake has been accepted by
the motor vehicle owner/ petitioner -
Effect - Tax imposed - Legality challenged
- Held, tax is assessed on the basis of
owner's application accepting his guilt -
Hence, there was no requirement of
providing any opportunity of hearing to
the petitioner. (Para 5 and 6)

B. Motor Vehicle Law - Motor Vehicles Act,
1988 - UP Motor Vehicles Taxation Act,
1997
-
Violation
-
Two
separate
proceeding under the Act of 1988 as well
under the Act of 1997 were initiated for
the same act - Permissibility - Held, there
are two separate Acts i.e. Motor Vehicles
Act, 1988 and UP Motor Vehicles Taxation
Act, 1997, which are violated by the act of
petitioner, therefore, proceedings under
both the Acts are bound to be held. (Para
7)

C. Motor Vehicle Law - Motor Vehicles Act,
1988 - Section 2(47) - UP Motor Vehicles
Taxation Act, 1997 - Section 2(n) - Word
'Transport Vehicle' - Scope and applicability
- Under the Taxation Act of 1997, a
transport vehicle is merely a good carriage
and a public service vehicle. The word
'public vehicle' only includes vehicles in
which passengers are carrying on rent -
School bus is not covered within the
definition of 'public service vehicle' under
the Taxation Act of 1997 - Thus, school bus
is not a transport vehicle so far as the
Taxation Act of 1997 is concerned while the
same is a transport vehicle under the Act of
1988 - While the Act of 1988 is a Central
Act, the Taxation Act of 1997 is a St. Act,
which provides for taxation on transport
and commercial vehicles - Since the scope
and subject matter of both the aforesaid
Laws deal with entirely separate subjects, it
would not be proper to borrow definition
while the same is already provided under
the Act. (Para 11, 13 and 14)

Writ petition dismissed. (E-1)

(Delivered by Hon'ble Vivek Chaudhary, J.)