Gopachandran Nair & George Kochuparambil @ Anish v. The Principal Secretary to Government, Taxes (A) Department, Thiruvananthapuram; The Commissioner of Excise, Thiruvananthapuram; The Assistant Commissioner of Excise, Kasaragod

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN WEDNESDAY, THE 16TH MARCH 2011/25TH PHALGUNA 1932 WP(C).No. 18909 of 2010(K) -------------------------- PETITIONER(S): - --------------- 1. GOPACHANDRAN NAIR, ONATU HOUSE, PERIYAPURAM P.O., PAMBAKUDA (VIA), ERNAKULAM DISTRICT. 2. GEORGE KOCHUPARAMBIL @ ANISH, KOCHUPARAMBIL HOUSE, VAZHITHALA P.O., THODUPUZHA. BY ADV. SRI.RAJU JOSEPH, SENIOR ADVOCATE RESPONDENT(S): - --------------- 1. THE PRINCIPAL SECRETARY TO GOVERNMENT, TAXES (A) DEPARTMENT, THIRUVANANTHAPURAM. 2. THE COMMISSIONER OF EXCISE, THIRUVANANTHAPURAM. 3. THE ASSISTANT COMMISSIONER OF EXCISE, EXCISE DIVISION OFFICE, KASARGOD. GOVERNMENT PLEADER SRI.V.MANU FOR R 1-3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10/03/2011, THE COURT ON 16/03/2011 DELIVERED THE FOLLOWING: ## W.P(C)No.18909/2010 ## APPENDIX ## PETITIONER'S EXHIBITS: EXT.P1. TRUE COPY OF PROCEEDINGS OF THE BOARD OF REVENUE (EXCISE) DATED 16.12.1992. EXT.P2. TRUE COPY OF STATEMENT DATED 8.5.2005 ISSUED BY THE CIRCLE INSPECTOR, HOSDURG RANGE. EXT.P3. TRUE COPY OF ORDER PASSED BY THE 3RD RESPONDENT DATED 23.7.2008 EXT.P4. TRUE COPY OF JUDGMENT IN W.P(C)NO.23521/2008 DATED 7.8.2008 EXT.P5. TRUE COPY OF ORDER PASSED BY THE 2ND RESPONDENT DATED 16.2.2009 EXT.P6. TRUE COPY OF JUDGMENT IN W.P(C)NO.68240/2009 DATED 17.9.2009 EXT.P7. TRUE COPY OF CHALAN SHOWING REMITTANCE OF RS.3,90,000/- DATED 24.06.2009 EXT.P8. TRUE COPY OF CHALAN DATED 30.7.2009 EXT.P9. TRUE COPY OF CHALAN DATED 28.8.2009 EXT.P10. TRUE COPY OF DEMAND DRAFT DATED 7.9.2009 EXT.P11. TRUE COPY OF ORDER IN R.P.1251/2009 IN W.P(C)NO.6824 OF 2009 DATED 20.1.2010 EXT.P12. TRUE COPY OF REQUEST DATED 19.2.2010 EXT.P13. TRUE COPY OF NOTICE DATED 16.10.1992 EXT.P14. TRUE COPY OF ORDER G.ORT.NO.528/2010/TD DATED 21.6.2010 ## RESPONDENTS' EXHIBITS: TRUE COPY OF THE G.O(RT)NO.528/2010/TD DATED 21.6.2010. / TRUE COPY / P.S.TO JUDGE ## _**“C.R”**_ **P.N.RAVINDRAN, J. ----------------------------------------W.P(C).No.18909 of 2010 ----------------------------------------Dated this the 16[th] March, 2011** ## **JUDGMENT** Ext.P13 notice issued by the State Government proposing to cancel Ext.P1 order passed by the Board of Revenue and Ext.P14 order passed by the State Government cancelling Ext.P1 are under challenge in this writ petition. The brief facts of the case are as follows. 2. The first petitioner, the grandfather of the second petitioner and two others were the joint licensees of abkari shops Nos.1 to 88 of Hosdurg Range during the year 1989-90. The total rent payable by them for the said shops was Rs.93,42,100/-. The licensees had deposited 30% of the said amount as security deposit and had also furnished solvency for another 30% as required under rule 5(10) and (15) of the Abkari Shops (Disposal in Auction) Rules, 1974, which was then in force. The licensees defaulted payment of the kist in June 1989. Since the licensees did not pay the balance kist amount, the licence was cancelled. W.P(C) NO.18909/2010 -:2:- Later the shops were managed departmentally during the period from 1.11.1989 to 31.3.1990 and the sum of Rs.24,24,520/- was realised as departmental management fee. The said sum of Rs.24,24,520/- was however not adjusted against the sum of Rs.49,15,511/- payable by the licensees towards kist as on 31.3.1990. The licensees thereupon submitted an application dated 24.9.1992 to the Board of Revenue requesting that the sum of Rs.24,24,520/- realised by departmentally managing the shops may be adjusted against the amounts due from them. On that petition the Board of Revenue (Excise) called for a report from the Assistant Excise Commissioner, Hosdurg. The said officer submitted a report dated 8.10.1992 recommending such adjustment. The Board of Revenue thereafter passed Ext.P1 order dated 16.10.1992 according sanction to adjust the sum of Rs.24,24,520/- realised by departmentally managing the shops during the period from 1.11.1989 to 31.3.1990 towards the dues of the licensees. The sum of Rs.24,24,520/- was however, adjusted only on 16.10.1992 as a result of which interest was levied till that date on the principal sum of Rs.49,15,511/-. For realisation of the balance amount due after adjusting the sum of Rs,.24,24,520/- and after giving credit to the various other W.P(C) NO.18909/2010 -:3:- amounts paid directly by the licensees, revenue recovery proceedings were initiated against the licensees to recover the balance amount due from them. A few items of immovable properties belonging to the licensees were attached and sold for realisation of the balance amount due from them. However, some other items of immovable properties which were attached are still continuing under attachment. 3. While matters stood thus, the Government introduced an amnesty scheme as per G.O(Ms)No.108/08/TD dated 26.5.2008. By the said scheme the Government ordered that if 75% of the principal amount due by way of kist is remitted, interest and penalty and 25% of the principal amount shall stand waived. The licensees including the petitioners thereupon moved an application claiming the benefit of the amnesty scheme. On that application the 3[rd] respondent passed Ext.P3 order dated 27.3.2008 whereby he directed payment of the sum of Rs.33,80,543/- towards full and final settlement of the liability. 25% of the said amount was to be paid within 15 days from the date of receipt of Ext.P3 and the balance in three equal monthly instalments. Along with Ext.P3 an adjustment statement was also annexed. The said statement discloses that the sum of W.P(C) NO.18909/2010 -:4:- Rs.24,24,520/- realised by departmentally managing the shops was adjusted only on 16.10.1992. The petitioners thereupon filed W.P(C)No.23521 of 2008 in this Court contending that the amount realised by departmentally managing the shops should have been adjusted as and when the proceeds were realised and not on 16.10.2002. It was contended that if that had been done, the liability of the licensees would have been much lesser. By Ext.P4 judgment delivered on 7.8.2008 a learned single Judge of this Court directed the Commissioner of Excise to examine the said contention in the event of the petitioners filing an appropriate representation before him in that regard within ten days from the date of receipt of a copy of the said judgment. The petitioners accordingly filed a petition dated 13.8.2008 claiming such adjustment. By Ext.P5 letter dated 16.2.2009 the Excise Commissioner informed the petitioners that in view of rule 13 of the Abkari Shops Departmental Management Rules, 1972 the fee collected by departmentally managing the shops cannot be adjusted towards the liability of the petitioners as they had not completed the security. The petitioners thereupon filed W.P(C) No.6824 of 2009 in this Court challenging Ext.P5. By Ext.P6 judgment delivered on 17.9.2009, a learned single Judge of this W.P(C) NO.18909/2010 -:5:- Court held that the sum of Rs.24,24,520/- should have been credited in the account on 31.3.1990. The writ petition was accordingly disposed of with a direction to the authorities to refix the total amount due from the licensees, after crediting the sum of Rs.24,24,520/- in the account on 31.3.1990. 4. While W.P(C)No.6824 of 2009 was pending, the petitioners remitted the sum of Rs.15,60,000/- in four instalments as can be seen from Exts.P7, P8 and P9 receipts and Ext.P10 demand draft. Though the respondents therein filed R.P.No.1251 of 2009 seeking a review of Ext.P6 judgment, by Ext.P11 order passed on 20.1.2010, the review petition was dismissed. After the review petition was dismissed, the petitioners submitted Ext.P12 petition before the Commissioner of Excise requesting him to release the attachment of the landed properties belonging to them stating that they have paid the entire amount due to the Government under the amnesty scheme. While matters stood thus, the Government issued Ext.P13 notice dated 2.6.2010 calling upon the petitioners to show cause why Ext.P1 order of the Board of Revenue should not be set aside. In that notice it was stated that as per rule 13 of the Kerala Abkari Shops Departmental Management Rules, 1972, which was in force at the W.P(C) NO.18909/2010 -:6:- relevant time, the departmental management fee was liable to be forfeited as the petitioners had not completed the security. The instant writ petition was thereupon filed on 16.6.2010 challenging Ext.P13 notice and seeking the following reliefs:- - _(i) A writ of certiorari or any other writ, direction or order quashing all proceedings pursuant to Ext.P13, as illegal, unjust and against Exts.P4 & P6 judgments and the law declared by this Hon'ble Court in various judgments and approved by the Hon'ble Supreme Court._ - _(ii) A declaration that the Abkari arrears in respect of A.S.Nos.1 to 88 of the Hosdurg Range for the year 1989-90 was duly cleared by the petitioner in accordance with the amnesty scheme of 2008 and the properties under attachment as part of recovery steps to realise the said abkari dues are released from attachment._ - _(iii) A writ of mandamus or any other writ direction or order directing the respondents to release the properties from attachment and inform the revenue department about the same._ This writ petition came up for admission before this Court on 17.6.2010. On that day it was adjourned to 21.6.2010 to enable W.P(C) NO.18909/2010 -:7:- the learned Government Pleader to get instructions. However, on 21.6.2010, Ext.P14 order was passed cancelling Ext.P1 on the short ground that though Ext.P13 notice was issued, objections have not been filed. The Government also held that Ext.P1 order passed by the Board of Revenue was in violation of the then existing rules. The writ petition was thereupon amended challenging Ext.P14 and seeking the following additional relief:- _(iv) A writ of certiorari or any other writ, direction or order quashing Ext.P14 as illegal, unjust, malafide and without jurisdiction._ In the meanwhile Writ Appeal No.1158 of 2010 filed by the respondents from Ext.P6 judgment was dismissed by judgment delivered on 20.7.2010. 5. The main contention raised in the writ petition is that in view of Ext.P6 judgment of this Court, which has become final and binding between the parties, the sum of Rs.24,24,520/which was realised by departmentally managing the shops during the period from 1.11.1989 to 31.3.1990 was liable to be adjusted and therefore the Government erred in cancelling Ext.P1. It is contended that as the benefit of the amnesty scheme was also given to the petitioners by Ext.P3 order which in turn was based W.P(C) NO.18909/2010 -:8:- on Ext.P1 order passed by the Board of Revenue and the petitioners had complied with the stipulations in Ext.P3, the Government erred in cancelling Ext.P1. It is further contended that rule 13 of the Kerala Abkari Shops Departmental Management Rules, 1972, which enables forfeiture of the fee realised by departmentally managing the shops consequent on failure to pay kist, was amended to provide for such forfeiture only with effect from 23.12.1993 and therefore, it cannot have application to the case on hand. 6. A counter affidavit dated 31.8.2010 has been filed on behalf of the second respondent wherein the principal contention raised is that as the licensees had run the shops during April, May and June 1989 without paying the kist, the security amount deposited by them was adjusted towards the kist for the said months and that being the situation as they had not completed the security, the fee realised by departmentally managing the shops was liable to be forfeited under rule 13 of the Abkari Shops Departmental Management Rules, 1972, which was in force during the relevant time. It is contended that as Ext.P1 order was passed in violation of rule 13 of the Abkari Shops Departmental Management Rules, 1972 it was liable to be W.P(C) NO.18909/2010 -:9:- cancelled and was rightly cancelled by the Government. It is further contended that the fee realised by departmentally managing the shops cannot be adjusted towards the money due from the contractors. 7. I heard Sri.Raju Joseph, learned Senior Advocate appearing for the petitioners and Sri.V.Manu, learned Government Pleader appearing for the respondents. I have also gone through the pleadings and the materials on record. The fact that the petitioners and the other licensees were in default in remitting the kist is not in dispute. The fact that the sum of Rs.24,24,520/was realised by departmentally managing the shops during the period from 1.11.1989 to 31.3.1990 is also not in dispute. The Board of Revenue had on an application filed by the petitioners and the other licensees accorded sanction to adjust the sum of Rs.24,24,520/- thus collected towards the dues of the licensees. Ext.P1 order was passed in that regard more than 18 years back, on 16.10.1992. Later when the Government introduced an amnesty scheme as per G.O(Ms)No.108/08/TD dated 26.5.2008 the petitioners sought the benefit of the said scheme and at that stage also the said amount of Rs.24,24,520/- was adjusted and the licensees were asked to remit the balance sum of W.P(C) NO.18909/2010 -:10:- Rs.33,80,543/-. However, the said amount was adjusted in the accounts only with effect from 16.10.1992. At that stage the petitioners moved this Court by filing W.P(C).No.6824 of 2009 wherein they contended that the said amount should have been adjusted atleast on 31.3.1990. The said contention was accepted by a learned single Judge of this Court by Ext.P6 judgment, which has become final. If the respondents had a case that in view of rule 13 of the Abkari Shops Departmental Management Rules the amount realised by departmentally managing the shops was liable to be forfeited for the reasons now put forward in this writ petition, they ought to have taken steps to have Ext.P1 modified in time. In view of the fact that while giving the benefit of the amnesty scheme introduced in the year 2008 to the petitioners, the amount realised by departmentally managing the shops was also given credit to, the respondents cannot, in my opinion, now be heard to contend that the order passed in the year 1992 by the Board of Revenue should not have been passed as the amount was liable to be forfeited. Under rule 13 of the Abkari Shops Departmental Management Rules as it stood in force in the year 1990, the amount collected as departmental management fee had to be credited towards the dues of the original contractor, if he W.P(C) NO.18909/2010 -:11:- had completed the security and was liable to be forfeited, if he had not completed the security. It was only with effect from 23.12.1993 that rule 13 was amended to stipulate that the departmental management fee collected from a shop while it was under departmental management due to default in payment of kist, shall be liable to be forfeited. The amended provision in the Abkari Shops Departmental Management Rules will not apply to the case on hand for the reason that it came into force on 23.12.1993. Then the short question is whether the amount realised by departmentally managing the shops was liable to be forfeited as per the rules then in force. 8. Apart from the statement in paragraph 4 of the counter affidavit that though the contractors had not paid any amount as kist, they had run the shops during April, May and June, 1989 and therefore the security amount deposited by them was adjusted towards the kist payable for the said three months, no material has been produced to substantiate the said contention. No such case is set out either in Ext.P13 notice or even in Ext.P14 order. The Government have in Ext.P14 only stated that the licensees had not cleared the security amount. There is no finding in Ext.P14 order that the licensees had not W.P(C) NO.18909/2010 -:12:- completed the security. The meaning of the term 'completed the security' is also not explained in the counter affidavit. Further in rule 5(16) of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 as it then stood, it was stipulated that the departmental management fee collected from a shop while it was under departmental management due to default of payment of security, kist etc., shall be liable to forfeiture at the discretion of the Excise Commissioner, meaning thereby that a discretion was left with the departmental authorities to direct that the amount realised by departmentally managing the shops need not be forfeited. The relevant portion of rule 5(16) of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 reads as follows:- _“5(16) .... The departmental management fee collected from a shop while it was under departmental management due to default of payment of security, kist etc. shall be liable to forfeiture at the discretion of the ” Excise Commissioner. (emphasis supplied)_ Rule 12 of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 empowered the Board of Revenue or a superior Excise Officer to exercise all powers delegated to the subordinate officers and to set aside, modify or otherwise revise any order passed by any Excise Officer subordinate to the Board or to him as the case W.P(C) NO.18909/2010 -:13:- may be. Rule 12 reads as follows:- _“12. It shall be competent to the Board of Revenue or a superior Excise Officer to exercise all powers delegated to the Subordinate Officers and to set aside, modify or otherwise revise any order passed by any Excise Officer subordinate to the Board or to him as the case may be.”_ In view of rule 12 read with the last limb of rule 5(16) of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 it is evident that the Board of Revenue was competent to direct that the amount realised by departmentally managing the shops need not be forfeited. Ext.P1 order was therefore, one within the competence of the Board of Revenue. Then the question is whether the Government could have, in exercise of the power conferred on it under rule 13 of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974, suo motu revised the said order after the expiry of nearly 18 years. Rule 13 reads as follows:- _“13. The Government may suo motu, revise the orders of the Board of Revenue or any subordinate officer, provided that no order shall be passed under this rule unless the person affected by such order is given an opportunity to be heard.”_ 9. On a plain reading of rule 13 it may appear that no W.P(C) NO.18909/2010 -:14:- period of limitation is prescribed for exercising the power of suo motu revision. It is now well settled by a series of decisions of the Apex Court that the words “at any time” occurring in provisions of law which empower the Government to suo motu revise orders passed by subordinate officers will not empower the Government to exercise such power, after the expiry of a reasonable period of time. It has beena held that though there is no prescription regarding the period within which the power of suo motu revision has to be exercised, the exercise of such power has to be within a reasonable time. In this context it is apposite to refer to the decision of the Apex Court in _**Santoshkumar Shivgonda Patil v. Balasaheb Tukaram Shevale**_ (2009) 9 SCC 352 wherein it was held as follows:- _“11. It seems to be fairly settled that if a statute does not prescribe the time-limit for exercise of revisional power, it does not mean that such power can be exercised at any time; rather it should be exercised within a reasonable time. It is so because the law does not expect a settled thing to be unsettled after a long lapse of time. “Where the legislature does not provide for any length of time within which the power of revision is to be exercised by the authority, suo motu or otherwise, it is_ W.P(C) NO.18909/2010 -:15:- _plain that exercise of such power within reasonable time is inherent therein.”_ In the instant case, apart from stating that Ext.P1 order passed by the Board of Revenue was in violation of the existing rules, the Government have not set out any reason why the power of suo motu revision was not exercised within a reasonable time. The Government have no case that Ext.P1 order was fraudulently obtained. The Government have also not stated in Ext.P13 notice or in Ext.P14 order or even in the counter affidavit filed in the case that it was unaware of Ext.P1 order. The only reason set out to justify Ext.P14 is that Ext.P1 order was passed in violation of rule 13 of the Kerala Abkari Shops Departmental Management Rules, 1972. The Government have not evidently referred to the provisions in the Kerala Abkari Shops (Disposal in Auction) Rules, 1974, which empowered the Board of Revenue to pass such orders. The words “at any time” are also singularly lacking in rule 13 of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974. In such circumstances I am of the opinion that the Government could not have exercised the suo motu power of revision to invalidate Ext.P1, 18 years after it was passed. 10. In the instant case, the Excise Commissioner W.P(C) NO.18909/2010 -:16:- moved the Government for cancelling Ext.P1 order only on 30.3.2010 and that too only after the petitioners moved the Excise Commissioner and later this Court, contending that the sum of Rs.24,24,520/- which was adjusted only on 16.10.1992 pursuant to Ext.P1 order ought to have been given credit to and adjusted as on 31.3.1990. The Board of Revenue had while passing Ext.P1 order evidently exercised the power conferred on the Excise Commissioner under the last limb of rule 5(16) of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 by resort to rule 12 of the said rules. A combined reading of rule 5(16) and rule 12 of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 makes it evident that it was open to the Board of Revenue to exercise the power of the Excise Commissioner and to direct that the fee realised by departmentally managing the shops need not be forfeited. Ext.P1 was therefore perfectly within the competence of the Board of Revenue. The finding in Ext.P14 that Ext.P1 order passed by the Board of Revenue was in violation of the then existing rules and thus irregular, cannot therefore be sustained. Further, in view of Ext.P6 judgment which has attained finality, the respondents are bound to adjust the sum of Rs.24,24,520/- as on 31.3.1990. By that judgment this Court W.P(C) NO.18909/2010 -:17:- had directed that the statement appended to Ext.P3 order, by which the petitioner's application for the benefit of the amnesty scheme was accepted, be revised by giving credit to the sum of Rs.24,24,520/- on 31.3.1990. In view of the said direction, which binds the respondents, even if the order passed by the Board of Revenue is later set aside, the respondents cannot contend for the position that the said sum of Rs.24,24,520/- is liable to be forfeited. Therefore, for that reason also Ext.P13 notice and Ext.P14 order cannot be sustained. In the result I allow the writ petition, quash Ext.P13 notice and P14 order and direct the second respondent to pass appropriate orders on Ext.P12 petition submitted by the petitioner expeditiously and in any event within one month from the date on which they produce a certified copy of this judgment before him. The parties shall bear their respective costs. ## **P.N.RAVINDRAN, Judge.** ## **ahg.** **P.N.RAVINDRAN, J. --------------------------W.P(C).No.18909 of 2010 ----------------------------** ## **JUDGMENT** **16[th] March, 2011**