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C/SCA/3969/2014 JUDGMENT

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

SPECIAL CIVIL APPLICATION NO. 3969 of 2014

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE AKIL KURESHI

and
HONOURABLE MR.JUSTICE A.Y. KOGJE

===============================================================

1 Whether Reporters of Local Papers may be allowed to see the

judgment ?

2 To be referred to the Reporter or not ?

3 Whether their Lordships wish to see the fair copy of the

judgment ?

4 Whether this case involves a substantial question of law as to

the interpretation of the Constitution of India or any order made
thereunder ?

================================================================
MEENA KRISHNA AGARWAL WD-O KRISHNA K AGARWAL....Petitioner(s)
Versus
ASSISTANT COMMISSIONER & 1....Respondent(s)
================================================================
Appearance:
MR DHARMENDRA PARIKH, ADVOCATE for the Petitioner(s) No. 1
MS NISHA THAKORE, AGP for the Respondent(s) No. 2
MR SUDHIR M MEHTA, ADVOCATE for the Respondent(s) No. 1
==========================================================

CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI

and
HONOURABLE MR.JUSTICE A.Y. KOGJE

Date : 15/01/2018

ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The petitioner has challenged the action of the respondents in
attaching her immovable properties and creating charge on such

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properties for the recovery of the dues of her husband.

2. Brief facts are as under:

3. The petitioner Smt. Meena K. Agarwal is wife of Shri Krishna

Agarwal. Said Shri Krishna Agarwal had been engaged in
manufacturing and export of goods by setting up proprietary concerns
in the name of M/s. Gujchem International and M/s. Gujarat Impex.
There are serious allegations of unpaid excise duties as also wrongly
claiming export incentives concerning the said proprietary concerns.
The Commissioner of Central Excise and Customs, Vadodara, passed
an order dated 21.12.2005 and confirmed duty demand of Rs. 1.87
crores (rounded off) against M/s. Gujchem International and Rs. 2.11
crores (rounded off) against M/s. Gujarat Impex. He also imposed
matching penalties against the said concerns in addition to imposing
personal penalty of Rs.5 crores against the petitioner's husband.

4. The petitioner's husband challenged the said order of the

adjudicating authority before the Customs Excise & Service Tax
Appellate Tribunal ('CESTAT' for short). During the pendency of the
appeals, the petitioner's husband expired on 11.07.2008. His wife i.e.
the present petitioner substituted him as his legal heir and pursued the
appeals before CESTAT. CESTAT disposed of the appeals by the
judgment dated 02.07.2009. The husband of the petitioner having died,
the Tribunal deleted the personal penalty however, confirmed the duty
demands. In this respect the Tribunal held and observed as under:

“Therefore, we hold that no penalty needs to be imposed on Shri

KKA. Further, in respect of duty liability, no precedent case has
been shown and no arguments were put forth and therefore, Mrs.
Meena K. Agarwal would be liable to pay the duty confirmed
against Shri KKA.“

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The petitioner thereafter applied to CESTAT for rectification of the said

order, since the Tribunal had declared that the duty demands against

her is confirmed. The Tribunal by an order dated 10.11.2009 allowed

the application of the petitioner, and substituted the observations of

confirming the duty against the petitioner by the following sentence:

“In view of the observation above, duty demanded from Shri

K.K.Agarwal (KKA) in the impugned order is upheld.”

5. In essence therefore, the Tribunal modified its earlier order

confirming the duty demand against the wife of the assessee and

confined its findings to confirming the duty demands against the

assessee himself. Effectively therefore, the Tribunal recognized the

position of the wife of the deceased assessee when she had appeared as

the legal heir of the appellant before the Tribunal. The Tribunal heard

her grievance against the legality of the order of the adjudicating

authority confirming the duty as the legal heir of the assessee. The

Tribunal therefore, while rejecting her appeal merely confirmed the

demand of duty against her predecessor.

6. The duty so confirmed could not be recovered. The Commissioner

of Central Excise therefore, issued a communication to the

Superintendent of City Survey, Vadodara on 09.02.2011 and called

upon him not to permit any transfer of the four immovable properties

registered in the name of Mrs. Meena Agarwal i.e. wife of the assessee.

This document does not form part of the record but is made available to

us by the learned AGP from the original files of the Superintendent of

City Survey, Vadodara, copy of which is taken on record. In this

communication, the Superintendent of City Survey Office was conveyed

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that the department is contemplating attachment of four flats, details of

which were supplied in the said document, for which the sale deed were

registered under the Index dated 30.07.2008. The communication

further conveyed that the apprehensions of the department that the

individual may dispose of the property to avoid paying the government

revenue. The City Survey Superintendent was requested not to permit

transfer of such properties till further communication. It is not in

dispute that all the properties were purchased in the name of the

petitioner under registered sale deeds dated 31.03.2008.

7. The petitioner had also received a notice of recovery issued in

March, 2011 from the department of Central Excise calling upon her to

pay total amount of Rs. 12.79 crores (rounded off) which had remained

unpaid inclusive of interest, failing which, steps will be taken to realise

the same in terms of Customs (Attachment of Property of Defaulters for

the recovery of Government Dues) Rules 1995. The petitioner responded

to such notice by a letter dated 22.03.2011, pointing out that the

CESTAT has deleted the penalty but confirmed the duty demands

against the proprietary concerns of her husband. She further

contended that all the four properties proposed to be attached were

purchased by her out of her own source of income and not acquired by

her through inheritance from her late husband and the department

therefore, cannot attach such properties. Her stand in specific terms

were as under:

“During these years I have owned 4 properties which are

proposed to attached by the authority, are purchased out of my
own source of income and since purchase of the said properties
are in my name. These properties are not from the inheritance of
Late Shri K.K.Agarwal and therefore authority has no jurisdiction

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to attach the said properties which has nothing to do with the

liability of Late Shri K.K. Agarwal and therefore any proposal or
the action to attach my properties are nothing but a wrongful
action on the part of the authorities and therefor the action taken
so far is illegal and without any jurisdiction.”

8. Department further persisted with the issue and once again

called upon her to pay up the dues under letter dated 29.03.2011.
Counsel for the petitioner submitted that in response to such letter, the
petitioner had also placed before the departmental authorities the
certificate issued by the Chartered Accountant dated 10.06.2011, giving
full details of the source from which the petitioner had purchased such
properties. Despite which the department did not lift the attachment.
Even the appeal filed by the petitioner against the action of the City
Survey Superintendent imposing such attachment was opposed by the
department and was dismissed by the Deputy Collector by an order
dated 31.05.2013.

9. Having heard the learned counsel for the parties, the issues
before us are rather simple. Against the two proprietary concerns of the
deceased husband of the petitioner, substantial central excise dues
have been confirmed by the judgment of CESTAT. In absence of any
further challenge to this judgment, the duty demands have attained
finality. Such dues have remained unpaid. The husband of the
petitioner having expired, the department seeks recovery of dues from
her immovable properties. The assessee having expired, the government
dues can be recovered from his properties even in the hands of his legal
heirs who might have inherited such properties. In other words, the
property of the deceased can be made answerable for recovery of the
unpaid dues of the department. The personal properties of the legal heir
which has nothing to do with the inheritance, simply cannot be utilised
for such recoveries. In fact, it is not even the case of the department

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that the recoveries can be effected from the wife of the deceased out of
her own personal properties.

10. The issue therefore, in short is that if any of the four immovable
properties can trace their acquisition to the source provided by the late
husband of the petitioner, the same can be made answerable for the
recoveries of the unpaid dues of the department but not otherwise. In
other words, if the petitioner is correct in contending that all the four
immovable properties were purchased by her from her own source of
income, the department cannot carry out coercive recovery against
such properties merely because her husband died leaving behind
sizable departmental dues. The departmental authorities have not
applied their minds to this aspect of the matter. It is not clear in what
manner the petitioner has placed such certificate of the Chartered
Accountant dated 10.06.2011 before the departmental authorities. To
avoid any confusion, we allow the petitioner to place the same before
the Commissioner of Central Excise, Vadodara, alongwith
representation pointing out the source of acquisition of such properties.
This shall be done latest by 31.01.2018. Commissioner of Central
Excise, Vadodara, shall examine such details and pass a speaking
order. If his conclusion is that the petitioner had acquired such
properties from her own source of income, he shall lift the attachment
on such properties and communicate the same to the City Survey
Superintendent. If his conclusion is to the contrary, he will give brief
reasons for the same. He will be guided by the observations of this
judgment. Such an order may be passed preferably within four months
from the date of receipt of representation of the petitioner.

10. The petition stands disposed of. Rule is discharged.

(AKIL KURESHI, J.)

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(A.Y. KOGJE, J.)

SINDHU NAIR

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