By TIOL News Service

NAINITAL, MARCH 13, 2014: A unit belonging to an assessee was mortgaged in favour of  U.P. State Financial Corporation. Since the assessee failed to honour its commitment to U.P. State Financial Corporation, the Corporation took over the unit of the assessee and, thereafter, by public auction, sold the same to the appellant.

It is the case of the appellant that after the unit was sold the C.Ex Department contended that as the assessee failed to discharge its dues due and owing to the Excise Department, the appellant being the successor is liable to pay the same.

The appellant denied his liability and filed an appeal but the Commissioner(A) held that the appellant has come after lapse of time and the Statute does not authorize the Appellate Authority to condone such delay. Suffice to say, the Appeal was rejected and the Tribunal too held that there is no scope of interference inasmuch as the Appeal was so belated that there was no authority to condone the delay in preferring the Appeal.

Against this order of the Tribunal, the appellant filed a Central Excise appeal and also a Writ Petition before the Uttarakhand High Court.

The High Court viewed that the Central Excise Appeal is not interferable inasmuch as the reason for which the Appellate Tribunal rejected the Appeal is sound enough. The Appeal was, therefore, dismissed.

In the matter of the Writ Petition filed, the Counsel for the Department contended that the same is not maintainable as the appellant had challenged the recovery proceedings stemming out from the selfsame order passed by the Assessing Officer.

The High Court observed -

"4. While right to prefer Appeal is statutory, the same can be exercised to the extent Statute has granted. While a time limit has been fixed for preferring the Appeal, upon expiry of that period, the right to prefer Appeal stands extinguished. If the Appellate Authority has been authorized to condone delay of a limited period as prescribed, the same itself prescribes that he has no authority to condone delay beyond the limit so prescribed. However, the right exercised by a citizen under Article 226 of the Constitution of India is not a statutory right, but is a constitutional right. If the Constitution has limited that right, of course, then the right has to be exercised within that limit. The fact remains that the Constitution, while conferring the right under Article 226 of the Constitution, did not fetter such right by any limitation whatsoever. In those circumstances, there cannot be a contention that the writ petition is not maintainable because it is belated. If the action complained of is non est from the day one, the same can be challenged even after 100 years. The question is, whether the action complained of in the writ petition is non est or not? The Central Excise Act provides the mechanism of recovery of excise duties. It permits recovery of such duties from the merchandise of the assessee in his control. It does not permit even recovery from thosemerchandise, which have gone to the buyers of the assessee. Upon failure to recover the same, the Act permits the dues to be recovered as land revenue. The word ‘land revenue' connotes revenue, which is lawfully recoverable from the person, who is liable to pay the same for his properties. The fact remains that the property in question is not of the assessee, but of the appellant / writ petitioner. Therefore, by taking measures available for recovery of land revenue, dues due and owing by the assessee cannot be recovered from the properties of the appellant, who is a bona fide purchaser in auction."

Holding that in law, a person cannot be remediless, particularly in respect of a matter, which is void  ab initio from the day one, the High Court allowed the Writ petition and quashedthe steps taken for recovery of the dues of the assessee from the assets and properties of the appellant/writ petitioner.

(See 2014-TIOL-320-HC-UKHAND-CX)