The Allahabad High Court in the case M/S Wave Distilleries Breweries Ltd v. State Of U.P. And 2 Others observed and has held that once the initiation of proceedings is bad in law, all consequential proceedings shall fail in the matter.
The bench of Justice Piyush Agrawal in the case observed while dealing with the recovery without show cause notice under the Excise Act that once the initiation of the proceedings itself is bad, the consequential proceedings automatically fails in the eyes of law.
The court in the case observed that Certain samples were drawn by the Excise officials from the CL – 2/wholesale suppliers, which was not under control of the petitioner, but the same being under control of some other entity, i.e., whole seller under the control of Excise Department.
The counsel appearing for the petitioner argued before the court that Rule 776 of U.P. Excise Manual was not complied with while drawing the samples as no person of the distillery was present.
It was also argued before the court that 5 days after passing of the impugned order, the amount of alleged duty and the penalty as it is stated under Section 74-A was withdrawn from the advance duty register which amounts to Rs. 1,49,85,677.20.
Further, it has been argued before the court that Section 11(2) of the Excise Act provides a period of one month for filing revision and instead of giving petitioner a month’s time to file revision, the authorities proceeded to recover the amount rendering the revision virtually infructuous.
The counsel appearing for the petitioner argued before the court that show cause notice was issued before passing order under section 74-A of the Excise Act and thus, was in violation of principles of natural justice.
On the other hand, the counsel appearing for the respondent while defending the impugned order that on inspection and after drawing the samples, there was shortage beyond the permissible limit and hence, action has rightly been taken.
The court observed that it was admitted that no notice under section 74-A(1) of the Act was given and the procedure under Rule 776 was not complied with in letter and spirit.
The court while considering the facts and circumstances of the case observed and has directed that after deducting 25% of the amount recovered from the petitioner towards the deposit for filing the revision, the remaining amount shall be kept in a fixed term interest bearing account in a Nationalized Bank. Further, the court directed the Commissioner of Excise Tax, U.P., Lucknow for filing his personal affidavit regarding the compliance of the order.
