M/S. Heera Gold Exim Limited vs. Commissioner Of Central Tax

Facts

M/s. Heera Gold Exim Limited and its Director filed a writ petition challenging an Order in Original dated July 13, 2023, passed by the Commissioner of Central Tax. This order confirmed a demand of Rs. 10,50,96,633/- for central excise duty on sales between March 2016 and June 2017, imposed a penalty of Rs. 10,50,96,633/- for contraventions with intent to evade duty, and a further penalty of Rs. 1 crore on a Director for alleged illegal activities related to the goods. The petitioners argued that the order was passed without providing them with effective defense, as crucial documents seized by the department were not made available. They also contended that their bank accounts were seized, hindering their ability to prefer a statutory appeal.

Held

The Court held that the writ petition was not maintainable. It noted that the impugned order was passed approximately six months prior to the filing of the writ petition, which was significantly beyond the statutory limitation period of three months for filing an appeal under Section 35(B)(a) of the Act. While the writ petition was initially filed earlier, it was returned due to defaults and refiled later. The Court also observed that the petitioner's contentions regarding the nature of their sales (purchased from third parties, not first sales) and whether they manufactured goods required a thorough appreciation of facts and evidence. Such factual disputes are not suitable for adjudication under the extraordinary writ jurisdiction of Article 226 of the Constitution. The Court pointed out that the impugned order itself referred to a statement by a director admitting to manufacturing gold articles and not paying central excise duty. Therefore, the Court concluded that it would not be proper to test the veracity of the order in writ jurisdiction at that juncture. The Court explicitly left open the right of the petitioner to prefer a statutory appeal in accordance with the provisions of the Act.

Key Issues

1. Whether the impugned Order in Original No. HYD-EXCUS-001-COM-006-23-24 dated 13.07.2023 is arbitrary, without jurisdiction, in violation of principles of natural justice, without authority of law, and violative of Articles 14, 19(1)(g), and 265 of the Constitution of India, and contrary to the Central Excise Act, 1944 and its Rules? 2. Whether the acts and omissions of the 3rd, 4th, and 5th Respondents in not providing documents violated principles of natural justice, and whether they should be directed to furnish all seized documents, data, and extracts? 3. Whether the 1st Respondent should be directed to adjudicate the Show Cause Notice No. 01/2021-22 dated 08.04.2021 only after receiving all data from the 3rd, 4th, and 5th Respondents and granting sufficient opportunity to the petitioners? Petitioner's Arguments: The petitioners argued that the impugned order was passed without providing an effective defense, as essential documents seized by the department were not returned. They claimed that the seizure of bank accounts prevented them from preferring a statutory appeal. They also contended that the jewelry and coins sold were purchased from third parties and were not manufactured by them, implying that the duty might have already been paid by the original manufacturers. Respondents' Arguments: The respondents did not explicitly record arguments in the judgment. However, the impugned order, as referred to in paragraph 7 of the judgment, noted a statement from one of the petitioner's directors accepting that the establishment was engaged in manufacturing gold articles and was neither registered nor paying central excise duty.