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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6663  OF 2008 (Arising out of S.L.P.(C) No.10272/2007)

Yashwant Co-op. Processors Ltd. Etc. ...Appellant(s)

Versus

Union of India & Ors. ...Respondent(s)

O R D E R

Leave granted.

2. Appellants claim that they are engaged in the business activity of

bleaching, dyeing and processing of grey fabrics.  They claim that such

grey fabrics are supplied to them by power loom industries for job-work.

They were called upon to furnish Return in Form A and Form B of Textiles

Committee (Cess) Rules, 1975 on the basis that they undertook work of

manufacturing, that what they (appellants) called as job-work was in fact a

process of manufacturing and, consequently, they (appellants) were liable

to pay cess under the provisions of the Textiles Committee (Cess)  Act,

1963.  

3. Therefore,  amongst  several  questions,  which  arises  for

determination, the main question is: whether the process undertaken by

the  appellants  constituted  manufacture  or  processing,  whether  the

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appellants were job-workers or manufacturers and whether, consequently,

the appellants were liable to pay cess under the Textiles Committee (Cess)

Act read with Textiles Committee (Cess) Rules? It may also be mentioned

that  the  method  of  quantification  and  liability  also  arises  for

determination. Consequently, the meaning of the words “value of textiles”

used in the Act/Rules is also required to be decided.   

4. Before coming to the impugned judgment, we may state that the

above questions arose before the Bombay High Court in a batch of writ

petitions, whose particulars are given in Chart-I hereinbelow, which writ

petitions came to be disposed of  by the Division Bench vide its  Order

dated  18.4.2007  (impugned  order).  These  writ  petitions  covered  the

period between December, 1998 to December, 2000. It appears that there

were twelve writ petitions before the High Court. They were filed by twelve

independent processing companies/firms. We annex Chart- I accordingly

hereinbelow:

                Chart – I Demand  for  the  period  December,  1998  to  December,  2000  which  is  the  subject matter of the writ petitions whose numbers are given in the chart below: S. No.

Name of the Petitioner WP No. Amount  Demanded

1. Yashwant Co-op. Processors Ltd. 2959/07 3,15,837.00 2. Radha  Kanhaiya  Textile  Processors

Ltd. 2909/07 1,45,620.50

3. Mahesh Textile Processors 2910/07 2,13,833.00 4. Unirose Textile Processors Pvt. Ltd. 2927/07 2,69,180.00 5. Radha Mohan Processors 2930/07 2,04,934.50 6. Shantinath Synthetics Pvt. Ltd. 2928/07 1,96,568.00

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7. Balaji Dyeing & Bleaching Mills 2929/07 1,92,061.50 8. Manpasand Textile Processors Pvt.

Ltd. 2951/07 2,04,441.00

9. Jubilee Fabrics Pvt. Ltd. 2960/07 1,40,455.00 10. Swastik Dyeing & Bleaching 2922/07 3,30,364.50 11. Amit Weaving 2926/07 3,06,678.00 12. Arihant Yarn Processors 2953/07 2,01,356.00

5. However, for the period 2001-02 to 2002-03, the appellants who

were given show cause notice(s) did not file their monthly Returns under

Rule 4 of the Textiles Committee (Cess)  Rules,  1975.  Consequently,  ex

parte assessment order came to be passed. Since appellants failed to pay

cess, each of them was served with notice of demand under Rule 7 of the

Textiles Committee (Cess) Rules, 1975 on the basis of ex parte assessment

orders  (best  judgment  assessment).  The  particulars  of  such  cases  are

given hereinbelow in Chart-II:

                    Chart – II Demand for the periods 2001-02 to 2002-03 which is covered by Notice(s) of demand served upon the Assessees who failed to submit monthly Returns:

S. No.

Name of the Assessee Notice  of Demand dated

Period Amount Outstanding

1. Shantinath Synthetics Pvt. Ltd.

30.10.03 01-02  139097.50 02-03   79442.50 2,18,540.00

2. Mahesh Textiles Processors

30.10.03 01-02 196768.50 02-03  123624.00 3,20,393.00

3. Unirose Textile Processors Pvt. Ltd.

30.10.03 01-02  172394.00 02-03   23645.50 1,96,040.00

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4. Radhamohan Processors

30.10.03 01-02   77137.50 02-03   29060.00 1,06,198.00

5. Shri Balaji Dyeing & Bleaching Mills

30.10.03 01-02   39767.00 02-03   48145.00   87,912.00

6. Manpasand Textile Processors Pvt. Ltd.

08.12.05 01-02 to  02-03 1,14,878.50

7. Jubilee Fabrics Pvt. Ltd.

28.01.04 01-02  142201.00 02-03   48011.00 1,90,212.00

8. Radhakanhaiya Textiles Processors Ltd.

30.10.03 01-02   18071.00 02-03   21591.50   39,663.00

6. By  the  impugned  Order  dated  18.4.2007,  the  High  Court

dismissed the above writ petitions on the ground of delay, hence, this civil

appeal.

7. We may state at the outset that although we do not find error in

the judgment of  the High Court in dismissing the writ  petitions on the

ground  of  delay,  since  the  appellants  on  instructions  have  agreed  to

discharge their outstanding liabilities without prejudice to their rights and

contentions in the writ petitions and since interpretation of the Textiles

Committee Act/ Rules is involved, we are inclined to restore the above writ

petitions on the file of the Bombay High Court subject to the appellants

satisfying  the  following  conditions  so  that  the  Department  earns  its

revenue:

(i) In Chart-I we have furnished the names of the appellants who are

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the petitioners  and the amount  outstanding against  their  names.

Each  of  the  appellants  shall  deposit  with  the  Department  the

outstanding  amount  shown  against  its  name  within  eight  weeks

from today.

(ii) Each  of  the  appellants  whose  name  appears  in  Chart-II  (who

incidentally are also writ petitioners in the Bombay High Court) shall,

without prejudice to its rights and contentions in the writ petition,

file  its  monthly  Returns before the AO within twelve  weeks from

today.  At  the  same  time,  along  with  the  Returns,  each  of  the

appellants  whose  name  appears  in  Chart-II  shall  deposit  the

outstanding amount with the Department for the period 2001-02

and 2002-03. On such deposit, which will be under protest, the AO

will set aside the ex parte Assessment Order passed earlier and the

AO shall hear and pass an Assessment Order on such Returns on

merits  within  three  months  from  the  date  of  filing  of  the  said

Returns. If the appellants fail to deposit the outstanding amount as

indicated in Chart-II, then the ex parte order passed earlier by the

AO and  the  notice  of  demand  issued  earlier  will  stand  and  the

Department  would  be  at  liberty  to  initiate  recovery  proceedings

against such appellant (assessee).

8. On  the  appellants’  satisfying  the  above  conditions,  the  writ

petitions dismissed by the Bombay High Court on the ground of delay shall

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stand restored to the file of the High Court. Needless to mention that, if

any of the above conditions remain unsatisfied then the writ petition filed

by the processor shall not be restored to the file of the Bombay High Court

and  in  such  eventuality,  the  impugned  order  of  the  High  Court  dated

18.4.2007  shall  stand.  In  other  words,  till  the  above  conditions  are

satisfied, the High Court shall not proceed to entertain the writ petitions

mentioned  in  Chart-I,  which  concerns  the  period  December,  1998  to

December, 2000.

9. Before concluding, we may state that we have not gone into the

merits of the matter and we keep all contentions on both sides on merits

expressly open.  

10. Accordingly, the civil appeal stands disposed of with no order as

to costs.

                         ...................J.               (S.H. KAPADIA)

                        ...................J.

                                       (B. SUDERSHAN REDDY) New Delhi, November 12, 2008.

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ITEM NO.1                COURT NO.5                 SECTION III

             S U P R E M E   C O U R T   O F   I N D I A                            RECORD OF PROCEEDINGS                        Petition(s) for Special Leave to Appeal (Civil) No(s).10272/2007

(From the judgement and order dated 18/04/2007 in WP Nos.2959,  2909, 2910, 2922, 2926, 2927, 2928, 2929, 2930, 2951, 2953 & 2960 of 2007 of the HIGH COURT OF BOMBAY)

YASHWANT CO-OP.PROCESSORS LTD.ETC.                   Petitioner(s)

                       VERSUS

UNION OF INDIA & ORS.                                Respondent(s)

(With prayer for interim relief )(FOR FINAL DISPOSAL) (FOR ORDERS)

Date: 12/11/2008  This Petition was called on for hearing today.

CORAM :         HON'BLE MR. JUSTICE S.H. KAPADIA         HON'BLE MR. JUSTICE B. SUDERSHAN REDDY

For Petitioner(s) Mr. Vijay Hansaria, Sr.Adv. Mr. B.K. Barve, Adv. Mr. Sanjay Sarin, Adv. Ms. Samina Sheikh, Adv. Mr. Abhinav Ramkrishna, Adv.

                    Mr. Ashok Mathur,Adv.

For Respondent(s) No.2: Mr. B.A. Desai, Sr.Adv.

Mr. N.V. Solanki, Adv. Mr. Dattatray Vyas, Adv.

                    Mr. Chirag M.Shroff, Adv.

For UOI: Ms. S. Wasim A. Qadri, Adv.

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Mrs. Anil Katiyar, Adv. Mr. Jufer A.Khan, Adv.

          UPON hearing counsel the Court made the following                                O R D E R  

Leave granted.

Civil Appeal is disposed of in terms of the signed order, with no

order as to costs.

         (N. ANNAPURNA)       (MADHU SAXENA)         COURT MASTER     COURT MASTER

          (Signed order is placed on the file)