Shree Ganesh Forging Company vs Union of India

Harish Tandon, J.—The petitioner has assailed in this writ petition the notice of demand dated 20-12-2013 by the Assistant Commissioner of Central Excise, Howrah, North Division-II, 5, Clive Row, Kolkata u/s 142(1)(c)(ii) of the Customs Act, 1962 read with Rule 4 of the Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995. A confusion is tried to be created in the name of the firm upon whom the aforesaid notice is issued. It is an admitted position that one Maram Laksmi Narayana was carrying on the business, which attracts the excise duty, as proprietor in the trade name and style of "Shree Ganesh Forging Co." The said proprietor defaulted in payment of excise duty and a proceeding was initiated. Subsequently, the proprietor died and according to the department the fact of the death of the said proprietor was not communicated. The proceeding was culminated into an order. It further, came out that one of the sons preferred an appeal against the said order before the Tribunal but subsequently withdrew the same. According to the petitioner, after the death of the proprietor the assessee number was surrendered and, therefore, the said proprietorship concern was no longer in existence. Thereafter, all the sons constituted a partnership firm by executing on a deed of partnership and carrying on the business which also attracts the excise duty in the trade name and style of "Shree Ganesh Forging Co." having separate assessee number. The petitioner says that being a different legal entity, the notice issued against, the demand of the erstwhile proprietorship concerned is bad and, therefore is not binding upon the partnership firm.

Mr. Chakraborty, learned Advocate for the petitioner heavily relies upon a judgment of the Supreme Court in the case of the State of Punjab Vs. Jullunder Vegetables Syndicate, to contend that the assessment proceeding cannot continue against the dissolved firm. He further, relies upon a judgment of the Karnataka High Court in the case of CCE Vs. Press Fab Precision Components Pvt. Ltd., in support of his contention that proviso to Section 142(1)(C)(ii) of the Customs Act cannot be invoked against the successor prior to the introduction of the said proviso which came into effect on and from 10-9-2004.

Mr. Saraf, learned Advocate for the department brought to my notice that the Central Excise registration certificate annexed to this writ petition where-from it appears that after the death of the father one of the sons continued the business as a proprietor thereof which was later on converted into a partnership firm upon execution of a deed of partnership. This Court, therefore, does not find any strength on the submission of the petitioner that both the proprietorship concern and the partnership firm are two separate distinct entity rather the documents annexed to this writ petitioner suggests that the said proprietorship firm continues and later on converted into a partnership firm.

The statutory, liability which accrued to a proprietorship concern cannot be said to have evaporated because of the action of the erring parties. There is more strong reasons in support of the above that the entire assets belonging to the proprietorship concern came to be vested in the partnership firm and, therefore, even if, a separate Excise registration number is provided to a partnership concern it cannot escape from its liability towards the excise duty imposed on the said proprietorship firm.

The judgment rendered by the Supreme Court in the Jullundur Vegetable Syndicate''s case (supra) is distinguishable on facts because of the provisions contained under East Punjab General Sales Tax Act, 1948. The Apex Court upon taking note of the definition clause of the "dealer" as well as the restriction being imposed in the different provisions of the said Act held that the authorities were not justified in adjudicating the assessment on a dissolved firm. The present case is not a case where the assessment imposition is made upon a dissolved firm nor this Court finds any similar provisions contained under Central Excise Act, 1944 which was thereunder the East Punjab General Sales Tax Act, 1948.

So far as, the judgment rendered by the Karnataka High Court in the case of Press Fab Precision Components (P.) Ltd.''s case (supra) is concerned, this Court finds that the demand was made prior to coming in effect of the proviso to Section 142(1)(C)(ii) of the Central Excise Act, from the successor assessee. It is held that when the said provision is not made to operate retrospectively the authorities cannot take recourse to such provisions to justify the demand.

Admittedly, the proceeding was initiated after the introduction of the proviso in the year 2007 though for a earlier period.

The proprietor who was alive at that point of time did not take any such plea. Nor this Court, has been apprised of such fact when an appeal by one of the sons who is also the partner of the partnership firm to be aforesaid plea in an appeal filed before the Tribunal. Since the appeal abates it necessarily implies that the original order stood affirmed.

This Court, therefore, does not find that aforesaid plea could at all be taken at the instance of the petitioner before this Court more so, at the stage when the notice is issued contemplating to take action relating to the attachment of the properties.

This Court, therefore, does not find any ambiguity in an action of the respondent authorities and, therefore the writ petition is devoid of merit. The same is hereby dismissed. There shall be no order as to costs.

After the delivery of this order the petitioner prays for stay of operation of this order. This Court does not find any merit on the aforesaid submission, the prayer is thus refused. Let certified copy of this order be given to the parties, if applied within a week from date of application.