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CASE NO.: Appeal (civil)  5295 of 2006

PETITIONER: M/s. Siemens Ltd.                                                       ... Appellant

RESPONDENT: State of Maharashtra & Ors.                                     ... Respondents

DATE OF JUDGMENT: 01/12/2006

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T (Arising out of SLP (C) No. 15691 of 2005)

S.B. Sinha, J.

       Leave granted.

       Whether the High Court in exercise of its jurisdiction under Article  226 of the Constitution of India would interfere with a demand directing  payment of cess is in question in this appeal which arises out of a judgment  and order dated 8.07.2005 passed by a Division Bench of the High Court of  Judicature at Bombay in Writ Petition No. 4338 of 2005.

       The appellant is a multi location company.  It has a factory and  godown at Kalwe.  It pays cess for the goods supplied from the said factory  in terms of the provisions of the Bombay Provincial Municipal Corporation  Act, 1949.  It also owns a factory at Aurangabad.  Its office is at Kharghar.    The said factory at Aurangabad and the office at Kharghar are outside the  jurisdiction of the city limits of Navi Mumbai and, thus, outside the  territorial jurisdiction of the Bombay Municipal Corporation.  Supplies are  made to dealers directly from the appellant’s factory situated at Aurangabad  and office at Kharghar.  However, the establishment of the appellant at  Kalwe was directed to pay taxes, although according to it, no jurisdictional  fact exists therefor.   

       The demand was made terming the same as a show cause notice.  It  appears that in course of routine investigation, some vendors had made  certain complaints as regards the transactions of goods from the appellant’s  factory at Kalwa.  The appellant made its representation on receipt of the  said purported demand.  Oral and written submissions were also made on  2.05.2005 and 10.06.2005 stating that the appellant had neither been  receiving any goods within the local limits of Respondent No. 2 nor was it  an importer in respect of the goods directly sold from its Aurangabad factory  or from its sub-vendors’ manufacturing premises and, therefore, they were  not liable to pay any cess thereupon.   

       By reason of a purported show cause notice, the appellant was  directed to make payment of cess with interest immediately in respect of the  purported supplies made to Navi Mumbai parties right from 1.06.1996. It  was, however, stated:

       "You are also requested to attend at above  address at 11.00 a.m. on 4.7.05 hearing.  I am  enclosing herewith the photocopies of the bills  raised by Aurangabad Daman divisions to the Navi  Mumbai Vendees."         

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       A writ petition was filed by the appellant herein questioning the said  purported notice.  By reason of the impugned order, the High Court refused  to exercise its jurisdiction under Article 226 of the Constitution of India  stating:

"Challenge is to a show cause notice issued by the  Corporation demanding certain payment of cess on  the value of goods imported from Aurangabad and  Daman.  Petitioners may file their reply to the  show cause notice and produce the relevant  documents within two weeks.  In case the order is  adverse to the petitioner no recovery shall be made  for a period of four weeks from the date of service  of the order on the petitioner."         Before this Court a counter affidavit has been filed wherein although  inter alia it was contended that the said show cause notice cannot be termed  as an order determining the rights and obligations of the parties, it has  clearly been stated:

       "I say that the show cause notice dated  22.6.2005 at Annexure P-2 to the Special Leave  Petition indicates that the Respondent No. 2  Corporation has been deprived of lawful recovery  of Cess on the said goods imported within the  jurisdiction of the Respondent Corporation.  I say  that such evasion of Cess is in huge amounts and it  is perfectly within the rights of the respondent  Corporation to call upon all the parties involved in  the transactions to arrive at the exact finding of  fact.  I say that for arriving at the finding of fact  with regard to the said imports there are many  facts which need to be taken into account.  I say  that such factual aspects include : which is the  party which has imported the goods within the  jurisdictional limits of the respondent Corporation  what is the nature of  contract between the seller  and the said importer of  goods, is there any  mechanism used by the parties to  avoid payment  of Cess on the said import of goods, what is the  extent of Cess that is evaded as a result of such  mechanism and who ultimately can be held  responsible both for the purposes of recovery as  also for the purpose of penalty\005"

                It was further asserted:

       "\005I say that it is well known that under the  Bombay Provincial Municipal Corporation (Cess  on Entry of Goods) Rules 1996 goods purchased  from registered dealers are not subject to Cess.  I  say that in this view of the fact the entire nature of  the transactions, to which the petitioner also was  party, need to be examined and scrutinized from  the perspective of recovery of cess and  identification of  liability.  I say that if the  petitioner has directly or  indirectly supplied the  goods the petitioner itself must  come forward to  cooperate with the respondent Corporation to  enable it to discharge its duties prescribed under  the B.P.M.C. (Cess on Entry of  Goods) Rules,  1996 read with B.P.M.C. Act 1949\005"

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       The question as to whether jurisdictional fact existed for issuance of  the said notice order passed by the respondent was in question in the said  writ petition.   

       Although ordinarily a writ court may not exercise its discretionary  jurisdiction in entertaining a writ petition questioning a notice to show cause  unless the same inter alia appears to have been without jurisdiction as has  been held by this Court in some decisions including State of Uttar Pradesh v.  Brahm Datt Sharma and Anr. AIR 1987 SC 943, Special Director and  Another v. Mohd. Ghulam Ghouse and Another, (2004) 3 SCC 440 and  Union of India and Another v. Kunisetty Satyanarayana, 2006 (12) SCALE  262], but the question herein has to be considered from a different angle, viz,  when a notice is issued with pre-meditation, a writ petition would be  maintainable.  In such an event, even if the courts directs the statutory  authority to hear the matter afresh, ordinarily such hearing would not yield  any fruitful purpose [See K.I. Shephard and Others v. Union of India and  Others  (1987) 4 SCC 431 : AIR 1988 SC 686].  It is evident in the instant  case that the respondent has clearly made up its mind.  It explicitly said so  both in the counter affidavit as also in its purported show cause.

       The said principle has been followed by this Court in V.C. Banaras  Hindu University and Ors. v. Shrikant [2006 (6) SCALE 66], stating:

"The Vice Chancellor appears to have made  up his mind to impose the punishment of dismissal  on the Respondent herein.  A post decisional  hearing given by the High Court was illusory in  this case.  

In K.I. Shephard & Ors. etc. etc. v. Union  of India & Ors. [AIR 1988 SC 686], this Court  held :

"\005It is common experience that once a  decision has been taken, there is tendency to  uphold it and a representation may not really yield  any fruitful purpose."

       [See also Shri Shekhar Ghosh v. Union of India & Anr. 2006 (11)  SCALE 363 and Rajesh Kumar & Ors. v. D.C.I.T. & Ors. 2006 (11) SCALE  409]

       A bare perusal of the order impugned before the High Court as also  the statements made before us in the counter affidavit filed by the  respondents, we are satisfied that the statutory authority has already applied  its mind and has formed an opinion as regards the liability or otherwise of  the appellant.  If in passing the order the respondent has already determined  the liability of the appellant and the only question which remains for its  consideration is quantification thereof, the same does not remain in the  realm of a show cause notice.  The writ petition, in our opinion, was  maintainable.

       For the reasons aforementioned, the impugned judgment cannot be  sustained which is set aside accordingly.  The appeal is allowed and the  matter is remitted to the High Court for its consideration afresh on its own  merits.  No costs.