M/S.V.K.Palappa Nadar Poultry Farms PVT. LTD. vs. The Superintendent Of CGST And Central Excise

Facts

The appellant, M/s.V.K.Palappa Nadar Poultry Farms Pvt., Ltd., filed a writ petition seeking to prohibit the CGST and Central Excise authorities from recovering dues from its properties. The recovery action stemmed from an order passed by the Commissioner of General Excise on February 17, 2009, concerning default in payment of excise duty by four entities: V.K.P.K Arivuthurai and Brothers, V.K. Palappanadar and Co, V.K.P.K Ammaiyappan & Brothers, and V.K Palappanadar Firm. A subsequent communication dated February 17, 2023, to the Sub Registrar, Rajapalayam, informed that properties in the name of V.K. Palappanadar Firm were to be frozen due to an offence case and adjudication resulting in a tax default of Rs.1.78 Crores. The appellant contended that the properties sought to be frozen did not belong to the defaulting entities but to the appellant company, which is a separate legal entity.

Held

The Court held that the writ appeal had no merits. It found that the appellant had been part of the proceedings since 2009, when the original order was issued by the Commissioner of Central Excise following a surprise check of four companies. The Court agreed with the learned Single Judge's decision to dispose of the writ petition by permitting the appellant to approach the Commissioner of CGST & Central Excise with all available materials. The Commissioner was directed to afford a personal hearing, conduct an enquiry, and pass a speaking order on the appellant's claim. Crucially, the Court noted that the learned Single Judge had provided a protective umbrella by restraining coercive action against the appellant until the Commissioner's order was passed, thereby protecting the petitioner's interest. Simultaneously, the Court acknowledged the need to protect the revenue's interest, finding the order freezing the transaction of the appellant's property to be a proper measure for that purpose. Therefore, the writ appeal was dismissed.

Key Issues

1. Whether the recovery proceedings initiated against the properties of the writ petitioner are without jurisdiction and void ab initio, particularly concerning the levy of assessment and adjudication of the appellant's property under Section 11 of the Central Excise Act, 1944, read with Section 142 of the Customs Act, given that the appellant claims to be a separate legal entity from the defaulting companies. Petitioner's arguments: The appellant argued that it is a distinct legal entity and the liability of the defaulted companies cannot be fastened upon it. The assessment and adjudication concerning its property are without jurisdiction and therefore void ab initio. Revenue's arguments: The revenue contended that the appellant is part and parcel of the defaulted entities and has been proceeded against since 2009. The communication to the Sub Registrar to freeze the property was a consequence of ongoing adjudication. The proper forum to question the order is the authority who passed it.