Case Note & Summary
The Petitioner, M/s Runwal Constructions, a partnership firm registered under the Indian Partnership Act, 1932, engaged in construction and development, filed a writ petition under Article 226 of the Constitution of India challenging three notices dated 29th/30th January 2008, 17th October 2008, and 14th May 2009 issued by the Assistant Commissioner of Central Excise, Mulund Division (Respondent No. 2). These notices purported to prohibit and restrain the Petitioner from transferring or charging a property situated at Mulund, Mumbai, for alleged non-payment of excise duty by Respondent No. 3, M/s Bluemoon Engineers Limited (formerly HMP Engineering Ltd.). The Petitioner claimed it had purchased the property prior to the creation of any excise duty demand against Respondent No. 3 and had no liability for the dues. The court examined the validity of the attachment notices and held that the Assistant Commissioner could not attach property sold to a third party before the demand arose, especially without issuing notice to the purchaser. The court quashed the impugned notices, allowing the petition.
Headnote
A) Central Excise - Recovery of Duty - Attachment of Property - Section 11 of Central Excise Act, 1944 - The court considered whether the Assistant Commissioner could attach property sold by the defaulter to a third party prior to the demand for excise duty. Held that attachment is not permissible without notice to the purchaser and when the sale predates the demand. (Paras 1-3)
B) Constitutional Law - Writ Jurisdiction - Article 226 of Constitution of India - The court exercised its writ jurisdiction to quash notices attaching property of a third party who was not given an opportunity of hearing. Held that such action violates principles of natural justice. (Paras 1-2)
Issue of Consideration
Whether the Assistant Commissioner of Central Excise can attach property of a third-party purchaser for recovery of excise duty dues of the seller, when the property was sold prior to the creation of the demand and without notice to the purchaser.
Final Decision
The court allowed the petition and quashed the impugned notices dated 29th/30th January 2008, 17th October 2008, and 14th May 2009.
Law Points
- Attachment of property for recovery of excise duty
- Third-party purchaser protection
- Section 11 Central Excise Act
- 1944
- Notice to purchaser
- Prior sale before demand
- Writ of Certiorari
Case Details
2021 LawText (BOM) (04) 26
Writ Petition No. 1335 of 2009
Sunil P. Deshmukh, Abhay Ahuja
Mr. Vikram Nankani, Sr. Adv. a/w Mr. Saket Mone and Mr. Subit Chakrabarti i/by Vidhii Partners - Advocate for the Petitioner, Mr. Sham Walve a/w Ram Ochani - Advocate for the Respondents
Union of India, The Office of the Assistant Commissioner of Central Excise, Mulund Division, Mumbai III, M/s. Bluemoon Engineers Limited
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Nature of Litigation
Writ petition under Article 226 challenging attachment notices for recovery of excise duty.
Remedy Sought
Quashing of notices dated 29/30 January 2008, 17 October 2008, and 14 May 2009 prohibiting transfer of property.
Filing Reason
Petitioner's property was attached for excise duty dues of Respondent No. 3, though Petitioner had purchased the property prior to the demand.
Issues
Whether the Assistant Commissioner can attach property of a third-party purchaser for excise dues of the seller without notice to the purchaser.
Whether the sale of property prior to the demand for excise duty protects the purchaser from attachment.
Submissions/Arguments
Petitioner argued that it was a bona fide purchaser without notice of any dues and that the attachment was illegal.
Respondents argued that the property was liable for recovery of excise duty dues of the seller.
Ratio Decidendi
A third-party purchaser of property cannot be subjected to attachment for excise duty dues of the seller when the sale predates the demand and no notice was given to the purchaser. Such attachment violates principles of natural justice and Section 11 of the Central Excise Act, 1944.
Judgment Excerpts
By this petition filed under Article 226 of the Constitution of India, 1950, the Petitioner is challenging notices dated 29th / 30th January, 2008, 17th October, 2008 and 14th May, 2009 by which the Respondent No. 2 purports to prohibit and/or restrain Petitioner from transferring or charging the property situated at Mulund, Mumbai for alleged non-payment of Excise duty by Respondent No. 3.
Procedural History
The Petitioner filed Writ Petition No. 1335 of 2009 in the High Court of Judicature at Bombay challenging three attachment notices issued by the Assistant Commissioner of Central Excise. The petition was reserved on 18th March 2021 and pronounced on 22nd April 2021.
Acts & Sections
- Constitution of India, 1950: Article 226
- Central Excise Act, 1944: Section 11
- Indian Partnership Act, 1932:
