Full Judgment Text
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PETITIONER:
ASSISTANT COLLECTOR OF CENTRAL EXCISE, GUNTUR
Vs.
RESPONDENT:
RAMDEV TOBACCO COMPANY
DATE OF JUDGMENT25/01/1991
BENCH:
AHMADI, A.M. (J)
BENCH:
AHMADI, A.M. (J)
VENKATACHALLIAH, M.N. (J)
CITATION:
1991 AIR 506 1991 SCR (1) 126
1991 SCC (2) 119 JT 1991 (1) 199
1991 SCALE (1)70
ACT:
Central Excises and Salt Act, 1944/Central Excises and
Salt Rules 1944: Section 40(2)/Rules 32, 151, 160-‘Other
legal proceedings’- Whether includes-Issuance of show cause
notice and initiation of consequential adjudication
proceedings.
HEADNOTE:
The appellant issued a notice calling upon the
respondent who was a dealer in tobacco to show cause why
duty should not be demanded under Rule 160 of the Central
Excise Rules, 1944 on the tobacco removed from his warehouse
and not accounted for, and further to show cause why
penalty should not be imposed for infraction of the Rules.
The respondent sent a detailed reply, and after hearing him
the appellant came to the conclusion that the respondent had
evaded payment of duty. Thereupon the appellant issued a
demand notice for the duty payable and further imposed a
penalty.
The respondent filed a writ petition in the High Court
challenging the order of the appellant. The learned Single
Judge allowed the petition taking the view that the
appellant’s action was time barred because under section
40(2) of the Central Excises and Salt Act, 1944 no suit,
prosecution or other legal proceedings could be instituted
for anything done or ordered to be done under the law after
the expiration of six months from the accrual of the cause
of action. The Division Bench dismissed the appellant’s
appeal.
Before this Court it was inter alia contended on behalf
of the appellant that the expression ‘other legal
proceeding’ is preceded by particular words of a certain
genus, i.e., ‘suit’ and ‘prosecution’, indicating reference
to proceedings taken in courts only, and, therefore, the
wide words must be limited to things ejusdem generis and
must take colour from the preceding words and receive a
limited meaning to exclude proceedings of the type in
question.
Allowing the appeal of the Revenue, this Court,
HELD: (1) The rule of ejusdem generis is generally
invoked where
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127
the scope and ambit of the general words which follow
certain specific words (which have some common
characteristic and constitute a genus) is required to be
determined.[131G]
(2) The cardinal rule of interpretation is to allow the
general words to take their natural wide meaning unless the
language of the statute gives a different indication or such
meaning is likely to lead to absurd results in which case
their meaning can be restricted by the application of the
rule of ejusdem generis and they may be required to fall in
line with the specific things designated by the proceding
words. But unless there is a genus which can be
comprehended from the preceding words, there can be question
of invoking this rule. Nor can this rule have any
application where the general words precede specific words
[132B-C]
(3) The wide expression ‘other legal proceeding’ must
be read ejusdem generis with the preceding words ‘suit’ and
‘prosecution’ as they constitute a genus. [133H]
(4)‘Suit’ or ‘prosecution’ are those judicial or legal
proceedings which are lodged in a court of law and not
before any executive authority, even if a statutory one.
[132E-F]
(5) The penalty and adjudication proceedings in the
instant case did not fall within the expression ‘other legal
proceeding’ employed in section 40(2) of the Act, as it
stood prior to its amendment by Art.22 of the 1973, and
therefore, the said proceedings were not subject to the
limitation prescribed by the said sub-section. [ 133H; 134A]
Public Prosecutor, Madras v. R. Raju & Anr. etc.,
[1973] S.C.R. 812; Universal Cables Ltd. v. union of India,
[1977] E.L.T. (J92); Amar Chandra v. Excise Collector,
Tripura, A.I.R. 1972 S.C. 1863; C.C. Industries & Ors. v.
H.N. Ray & Anr., [1980] E.L.T. 442, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2341 of
1978.
From the Judgement and Decree dated 16.11.1977 of the
Andhra Pradesh High Court in Writ Appeal No. 358 of 1976.
Altaf Ahmed, Additional Solicitor General, P.
Parmeshwaran and Dilip tandon for the Appellant.
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A.S. Nambiar and B. Parthasarthy for the Respondent.
The Judgement of the Court was delivered by
AHMADI, J. This appeal, on certificate, is directed
against the decision of the High Court of Andhra Pradesh
which was quashed the imposition of duty and levy of penalty
on the ground that the show cause notice was issued after
the expiry of the period of six months from the accrual of
the cause of action. The facts leading to this appeal are
as follows:
The respondent M/s. Ramdev Tobacco Company, a sole
proprietory concern, was at all material times a dealer in
tobacco having a licenced warehouse at Guntur. The dealer
was liable to pay duty on the tobacco received at his
warehouse and transported to another dealer. On August 30,
1972 the appellant issued a notice calling upon the
respondent to show cause why duty should not be demanded
under Rule 160 of Central Excise Rules, 1944 (‘the Rules’
hereafter) on 64,444 kgs. of VFC Farmash Tobacco removed
from his warehouse and not accounted for in the warehouse
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register maintained under the Rules. The respondent was also
asked to show cause why penalty should not be imposed for
infraction of Rules 151 and 32(1) of the Rules for illicit
removal of the aforementioned quantity of tobacco. This
show cause notice was founded on the allegation that in 1970
the respondent obtained six transport permits (T.P. 2) dated
January 13, 1970, February 10, 1970, March 26, 1970, May 16,
1970, July 24, 1970 and August 5, 1970 and transported under
each permit more than the quantity of tobacco allowed
thereunder in contravention of the aforementioned rules.
The respondent sent a detailed reply to the said show cause
notice on November 4, 1972. After giving a personal hearing
to the respondent on September 18, 1973 the appellant came
to the conclusion that the respondent had evaded payment
of duty on 1272 bags weighing 48,304 Kgs, of VFC Farmash
tobacco and issued a demand under Rule 160 in the sum of
Rs.1,66,165.76 under adjudication order No. 173/74 dated
April 9, 1974. In addition thereto the appellant imposed a
penalty of Rs. 100 for contravention of Rules 151 and 32(1)
of the Rules. Thereupon the respondent filed a writ
petition No.2600 of 1974 under Article 226 of the
Constitution challenging the aforesaid order of the
appellant. This writ petition was heard and disposed of by
a learned Single Judge of the High Court who took the view
that the appellant’s action was time barred inasmuch as it
was initiated after the expiry of the period of six months
from the accrual of the cause of action. According to the
learned Judge under section
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40(2) of the Central Excises and Salt Act, 1944 (‘the Act’
hereinafter) no suit, prosecution or other legal proceeding
could be instituted for anything done or ordered to be done
under the law after the expiration of six months from the
accrual of the cause of action. Since a period of more than
six months had indisputably expired from the dates on which
the excess tobacco was transported under the six transport
permits in question, the action was clearly time barred. In
this view of the matter the writ petition was allowed and
the demand made under the impugned adjudication order both
in respect of duty and penalty was quashed. The present
appellant questioned the correctness of this view in appeal,
Writ Appeal No. 358 of 1976, but in vain. The Division
Bench found the view taken by the learned Single Judge in
accord with its view in Writ Petition No. 2516 of 1974
decided on April 1, 1976. It, therefore, dismissed the
appeal but since it had granted a certificate to appeal in
the case relied on, it also granted a similar certificate
which has given rise to this appeal.
Sub-section (2) of section 40 of the Act as it stood at
the relevant point of time before its amendment by Amendment
Act 22 of 1973 read as under:
"No suit, prosecution or other legal proceeding
shall be instituted for anything done or ordered to
be done under the Act after the expiration of six
months from the accrual of the cause of action or
from the date of the act or order complained of".
Before we proceed to analyse this sub-section it would be
advantageous to bear in mind that sub-section (1) of this
section bars the institution of any suit, prosecution or
other legal proceeding against the Central Government or its
officer in respect of any order passed in good faith or any
act in good faith done or ordered to be done under the Act.
The second sub-section prescribes a period of limitation for
suits, prosecutions and other legal proceedings instituted,
lodged or taken for anything done or ordered to be done
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under the Act. That is why in Public Prosecutor, Madras v.
R.Raju & Anr., etc., [1973] SCR 812 it was urged on a
conjoint reading of the two sub-sections that sub-section
(2) applied only to Government and could not come to the
rescue of a tax payer. Rejecting this contention this Court
held:
"The two sub-sections operate in different fields.
The first sub-section contemplates bar of suits
against the Central Government or against the
officers by protecting them in
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respect of orders passed in good faith or acts done
in good faith. It is manifest that the second sub-
section does not have any words of restriction or
limitation of class of persons unlike sub-section
(1). Sub-section (2) does not have any words of
qualification as to persons. Therefore, sub-
section (2) is applicable to any individual or
person."
This the appellant’s contention that sub-section (2) was
confined only to the Government officers was found to be
unwarranted on the plain words of the provision and was also
repelled by reference to other comparable statutes which
went to show that whenever the legislature intended to limit
the application against the Government officers, the
Legislature had chosen appropriate words of limitation to
restrict the operation of the provision. It follows,
therefore, that the application of the sub-section extended
to any person, not being a Government Officer, against whom
any suit, prosecution or other legal proceeding was
commenced for anything done or ordered to be done under the
Act.
The next contention convassed in that case by the
learned counsel for the appellant was that the words
"anything done or ordered to be done" employed in the sub-
section would not include anything done in violation of the
Act. This Court after referring to the definition of the
word ‘act’ in the General Clauses Act, 1897, which extended
to illegal omissions also, and the case law on the subject
observed at page 820 as under:
"These decisions in the light of the definition of
the word ‘act’ in the General Clauses Act establish
that non-compliance with the provisions of the
statute by omitting to do what the act enjoins will
be anything done or ordered to be done under the
Act. The complaint against the respondents was
that they wanted to evade payment of duty. Evasion
was by using and affixing cut and torn banderols.
Books of account were not correctly maintained.
There was shortage of banderols in stock.
Unbanderolled matches were found. These are all
infraction of the provisions in respect of things
done or ordered to be done under the Act."
It is, therefore, clear from the above observation that any
omission or infraction of the statutory provision would also
fall within the ambit of the provision. Non-payment of duty
or dues which a dealer is under an obligation to pay under
the statute was, therefore, held to fall within
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the scope of the provision. In that case the complaint
against the respondents was that to evade the payment of
duty they had used and affixed cut and torn banderols and
had failed to maintain the accounts correctly resulting in
shortage in stocks. The respondents were prosecuted for
contravention of the Rules punishable under sections 9(b)
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and 9(d) of the Act as also under section 420 read with
section 511 and 109, I.P.C. The respondents pleaded the bar
of section 40 of the Act as it then stood. The High Court
upheld the contention that the prosecution was barred by the
rule of limitation incorporated in section 40 as the same
was instituted after the expiry of six months from the date
of the commission of the alleged offences. This Court on
the aforesaid line of reasoning affirmed the High Court’s
decision.
But the question is whether the issuance of a show
cause notice and the initiation of the consequential
adjudication proceedings can be described as ‘other legal
proceedings’ within the meaning of sub-section (2) of
section 40 of the Act? If the said departmental action
falls within the expression ‘other legal proceeding’ there
can be no doubt that the action would be barred as the same
indisputably was initiated six months after the accrual of
the cause action. So the crucial question is whether the
issuance of the show cause notice dated August 30, 1972 and
the passing of the impugned order in adjudication
proceedings emanating therefrom constitutes ‘other legal
proceeding’ within the meaning of section 40(2) of the Act
to fall within the mischief of that sub-section which bars
such proceedings if commenced after a period of six months
from the accrual of the cause of action. The learned
Additional Solictor General submitted that the expression
‘other legal proceeding’ must be read ejusdem generis with
the proceeding expressions ‘suit’ and ‘prosecution’ and if
so read it becomes crystal clear that the department’s
action cannot come within the purview of ‘other legal
proceeding’. How valid is this contention is the question
which we are called upon to answer in the present appeal.
The rule of ejusdem generis is generally invoked where
the scope and ambit of the general words which follow
certain specific words (which have some common
characteristic and constitute a genus) is required to be
determined. By the application of this rule the scope and
ambit of the general words which follow certain specific
words constituting a genus is restricted to things ejusdem
generis with those preceding them, unless the context
otherwise requires. General words must ordinarily bear
their natural and larger meaning and need not be confined
ejusdem generis to things previously enumerated unless the
language of the statute spells out an intention to that
effect. Courts
132
have also limited the scope of the general words in cases
where a larger meaning is likely to lead to absurd and
unforeseen results. To put it differently, the general
expression has to be read to comprehend things of the same
kind as those referred to by the preceding specific things
constituting a genus, unless of course from the language of
the statute it can be inferred that the general words were
not intended to be so limited and no absurdity or unintended
and unforeseen complication is likely to result if they are
allowed to take their natural meaning. The cardinal rule
of interpretation is to allow the general words to take
their natural wide meaning unless the language of the
statute gives a different indication or such meaning is
likely to lead to absurd results in which case their meaning
can be restricted by the application of this rule and they
may be required to fall in line with the specific things
designated by the preceding words. But unless there is genus
which can be comprehended from the preceding words, there
can be no question of invoking this rule. Nor can this rule
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have any application where the general words precede
specific words.
There can be little doubt that the words ‘other legal
proceeding’ are wide enough to include adjudication and
penalty proceedings under the Act. Even the learned
Additional Solicitor General did not contend to the contrary
but what he said was that since this wide expression is
preceded by particular words of a certain genus, namely,
words indicating reference to proceedings taken in courts
only, the wide words must be limited to things ejusdem
generis and must take colour from the preceding words and
should, therefore, receive a limited meaning to exclude
proceedings of the type in question. There can be no doubt
that ‘suit’ or ‘prosecution’ are those judicial or legal
proceedings which are lodged in a court of law and not
before any executive authority, even if a statutory one. The
use of the expression ‘instituted’ in section 40(2)
strengthens this belief. Since this sub-section has been
construed by this Court in Raju’s case (supra) not to be
confined in its application to only Government servants but
to extend to others including the assessees and since the
words ‘for anything done or ordered to be done under this
Act’ are found to be comprehensive enough to include acts of
non-compliance or omissions to do what the Act and the Rule
enjoin, the limitation prescribed by section 40(2) would
undoubtedly hit the adjudication and penalty proceedings
unless the expression ‘other legal proceeding’ is read
ejusdem generis to limit its ambit to legal proceedings
initiated in a court of law.
The scope of section 40(2) as it stood before its
amendment pursuant to Raju’s case came up for consideration
before a Division
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Bench of the Madhya Pradesh High Court in Universal Cables
Ltd. v. Union of India, [1977] ELT (J92) wherein the
question raised for determination was whether penalty
procedings taken under Rule 173Q for the infraction of Rule
173C with a view to evading payment of duty fell within the
expression ‘other legal proceeding’ used in the said sub-
section. The High Court conceded that the expression when
read in isolation is wide enough to include any proceeding
taken in accordance with law, whether so taken in a court of
law or before any authority or tribunal but when read with
the preceding words ‘suit’ or ‘prosecution’ it must be given
a restricted meaning. This is how the High Court expressed
itself at page J 106:
"Now the language of section 40 (2) is: ‘no suit,
prosecution or other legal proceeding shall be
instituted’. ‘Suit’ and ‘prosecution’ which
precede the expression ‘other legal proceeding’ can
be taken only in a Court of Law".
After stating the expanse of the ejusdem generis rule, as
explained in Amar Chandra v. Excise Collector, Tripura, AIR.
1972 SC 1863 at 1868 (Sutherland, Volume 2 pages 399-400)
the High Court observed that there was no indication in the
said sub-section or elsewhere in the Act that the said
general words were intended to receive their wide meaning
and were not to be construed in a limited sense with the aid
of the ejusdem generis rule. A departmental proceeding like
penalty proceedings were, therefore, placed outside the
scope of the said sub-section. This view was quoted with
approval by a learned Single Judge of the Bombay High Court
in C.C. Industries & Others v. H.N. Ray and Another, [1980]
ELT 442 at 453. These two cases, therefore, clearly support
the view canvassed before us by the learned Additional
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Solicitor General.
We have given our careful consideration to the
submission made on behalf of the appellant, reinforced by
the view expressed in the aforesaid two decisions. In
considering the scope of the expression ‘other legal
proceeding’ we have confined ourselves to the language of
sub-section (2) of section 40 of the Act before its
amendment by Act 22 of 1973 and should not be understood to
express any view on the amended provision. On careful
consideration we are in respectful agreement with the view
expressed in the aforesaid decisions that the wide
expression ‘other legal proceeding’ must be read ejusdem
generis with the preceding words ‘suit’ and ‘prosecution’ as
they constitute a genus. In this view of the matter we must
uphold the contention of the learned Additional Solicitor
General that the penalty and adjudication
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proceedings in question did not fall within the expression
‘other legal proceeding’ employed in section 40 (2) of the
Act as it stood prior to its amendment by Act 22 of 1973
and therefore, the said procedings were not subject to the
limitation prescribed by the said sub-section.
Mr. Nambiar, the learned counsel for the respondents
strongly argued that we should not entertain the submission
based on the ejusdem generis rule since it was not raised
before the High Court. That indeed is true but being a pure
question of law we have though it fit to entertain the
same. We therefore, do not entertain this objection.
In the result we allow this appeal and set aside the
order passed by the learned Single Judge as well as the
Division Bench which affirmed it and dismiss the
respondent’s writ petition itself. We also set aside the
order by which the appellant was directed to pay costs. We
restore the adjudication order dated April 4, 1974 and all
consequential orders, if any, passed thereunder. Interim stay
granted on August 16, 1979 is vacated and the appellant will
be entitled to recover the dues from the security furnished
pursuant to that order. The appeal is allowed accordingly
with no order as to costs.
R.S.S. Appeal allowed.
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