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CASE NO.: Appeal (civil)  2891 of 2008

PETITIONER: Excise Commissioner & Ors

RESPONDENT: Ajith Kumar & Anr

DATE OF JUDGMENT: 22/04/2008

BENCH: S.B. Sinha & D.K. Jain

JUDGMENT: J U D G M E N T REPORTABLE

CIVIL APPEAL NO.  2891         OF 2008 (Arising out of SLP (C) No.247 of 2007)

S.B. Sinha, J.

1.      Leave granted. 2.      Interpretation of G.O.(P) No.88/2000/TD dated 2.6.2000 providing for  waiver of interest upto 75% on the defaulted amount of revenue due in terms  of  the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 (the Rules) is  the question involved herein. 3.      First respondent was a licencee under the Abkari Act for the period  1.4.1993 to 31.3.1994.  They conducted business for the period 1.4.1993 to  12.8.1993 only, as their licence was cancelled by an order dated 13.8.1993.   There was a dispute between the parties in regard to the actual amount  payable as excise duty for the said period.  According to Revenue, an  amount of Rs.86,40,000/- was payable.  Respondent, admittedly, had paid an  amount of Rs.40,18,934/-.   In terms of the Rules, upon cancellation of the licence, the shop in  question came under the management of the department.  It, during the  period 31.8.1993 to 31.3.1994 The Department had collected a total sum of  Rs.31,49,288/- towards Abkari dues.   On the premise that the said amount should be adjusted from the total  liability of the first respondent, a dispute arose between the parties herein as  no credit was given in respect of the said amount of Rs.31,49,288/-.   A writ petition was filed by the first respondent which was allowed by  a judgment and order dated 11.8.2000 whereby and whereunder it was  directed that the amount collected would be adjusted towards liability due  from the appellant.  The question, however, which arose for consideration  was as to whether till the entire amount was adjusted, the first respondent  was liable to pay any interest thereupon or not.   By reason of the Government Order dated 2.6.2000, the State of  Kerala granted time to the defaulters to deposit the due amount of duty only  with interest of 25%, wherefor Rule 25A was introduced in the Rule. 4.      First respondent sought the benefit of the said Government Order  which was denied to him on the premise that he had not complied with the  conditions precedent therefor. 5.      By reason of an order dated 14.12.2001, the representation of the  respondents was rejected by the Excise Commissioner.   They were directed to deposit an amount of Rs.83,26,344/- with future  interest at the rate of 18% per annum on sum of Rs.41,16,841/- w.e.f.  8.12.2001.  A Revenue Recovery Notice was issued for recovery of the said  sum from the respondents on or about 4.4.2002.   Aggrieved by and dissatisfied therewith, the respondents filed a writ  petition before the High Court on 23.4.2002 questioning the validity of the

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said notice dated 4.4.2002.  6.      By reason of a judgment and order dated 6.10.2005, a learned Single  Judge allowed the said writ petition, directing : "In view of the above, the Original Petition is  disposed of directing the 1st respondent to grant  amnesty benefits to the petitioners on the  following terms and conditions : (i)     The Commissioner will work out the  liability by reducing 75% of the interest payable upto  31.03.1997 being waiver available under the amnesty  scheme and demand balance amount with 25% interest  without charging further interest from 01.04.1997 to  31.8.2000. (ii)    Since petitioners have not made payment as  on 31.08.2000 on account of pendency of the Original  petition, petitioners will on this amount pay statutory rate  of interest upto the date of payment i.e. from 01.09.2000  to the actual date of payment. (iii)   Petitioners are granted time till 31.12.2005  to clear the arrears with interest in two equal instalments,  first of which will be paid on or before 30.11.2005 and  the balance on or before 31.12.2005. (iv)    If payments are not made as above the  benefit of amnesty scheme granted to the petitioners with  modifications as above will stand forfeited and the  respondents are free to proceed to recover the entire  arrears. (v)     The Commissioner will give a statement as  above within two weeks from the date of production of a  copy of this judgment for petitioners to make payments  and settle liability."

7.      An intra court appeal preferred thereagainst by the appellant herein,  marked as Writ Appeal No.153 of 2006, has been dismissed by a Division  Bench of the said High Court stating that no ground was made out for  interference with the directions issued by the learned Single Judge. 8.      Mr. G. Prakash, learned counsel appearing on behalf of the appellant,  in support of the appeal, inter alia, would submit that the High Court  committed a serious error in passing the impugned judgment insofar as it  failed to take into consideration that exemption from payment of interest  could be directed only in the event the entire amount was paid in terms the  notification by 2.6.2000 and in view of the fact that the first respondent  failed to deposit the said amount by the said date, the impugned judgment  cannot be sustained.  9.      Mr. Rao, learned senior counsel appearing on behalf of the  respondents, on the other hand, would support the judgment. 10.     The sole question which, thus, arises for our consideration in this  appeal is the application of Rule 25A of Kerala Abkari Shops (Disposal in  Auction Rules) Amendment Rules, 2000.  It reads thus : "25A. Reduction of interest in certain cases \026 (i)  Notwithstanding anything contained in this rule or  any other rules made under the Abkari Act 1 of  1077 or in any judgment, decree or order of any  court, the persons who are in arrears to pay rentals,  taxes duties or other amount under this rules as on  31st day of March, 1997 shall be entitled to a  reduction of 75% of the amount of interest accrued  on such rentals, taxes, duties or other amounts as  the case may be.         Provided that the entire arrears of rental,  taxes, duties or other amounts with the reduced  interest shall be paid on or before 31st day of  August, 2000.         Provided further that the maximum interest

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payable after allowing the reduction mentioned  above shall be limited to 100% of the principal  amount of rentals, duties or other amounts  outstanding as arrears. (ii)    A defaulter who opts for payment of arrears  under this rule shall make an application to the  Asst. Excise Commissioner concerned in writing  on or before 15th day of July, 2000. (iii)   On receipt of the application the Asst.  Excise Commissioner shall contact the revenue  recovery authority concerned in whose cases the  amount has been recommended for realization  under the revenue recovery act and shall calculate  the quantum of the rentals, taxes, duties and other  amounts and interest payable under Rule as on the  date of the application and the amount of interest  payable after allowing the reduction of interest  under this provision.  After getting the amount thus  calculated being remitted into the treasury the  Asst. Excise Commissioner shall withdraw the  revenue recovery requisition from the revenue  authority.  Asst. Excuse Commissioners are  authorized to get the money remitted in the  treasure in this behalf.  In those cases in which  revenue recovery proceedings have not been  initiated by the Asst. Excise Commissioner  concerned, on receipt of application from the  defaulters, the Asst. Commissioner shall quantify  the amount as said above and to get it remitted."

11.     Rule 25A, as inserted by reason of the aforementioned notification  dated 3.6.2000, contains a non obstente clause providing for a legal  entitlement to the licencees.  There cannot be any doubt whatsoever that  such exemption is hedged by two conditions precedent as provided for in the  provisos appended thereto, being : (1) the taxes, duties shall be paid with  reduced interest on or before 31st day of August, 2000; and (2) that the  defaulter who opts for payment of arrears thereunder would make an  application to the Assistant Excise Commissioner in writing on or before  15th July, 2000.   12.     Respondents herein admittedly filed a representation before the  appellants on or about 12.9.2001.  The same was, however, done on the  premise that their right to get the aforementioned amount of Rs.31,49,288/-  adjusted was determined only in O.P. No.7894 of 1994.  It appears that  during the pendency of the said writ petition, a sum of Rs.1,00,000/- was  also deposited.  What was, therefore, urged in the aforementioned  representation dated 12.9.2001 for grant of proportionate deduction in the  kist as also interest thereupon.   First Appellant, however, was of the opinion that the waiver of  interest as per the said scheme having already expired and the respondents  having not filed any application before the said authority within the  stipulated time, it was impermissible to grant the benefit of the said Rule to  the respondent, stating : "The petitioners had already executed permanent  agreement as per Rule 5(15) of the Kerala Abkari  Shops (Disposal in Auction) Rules, 1974 and  agreed to remit the duty on monthly designated  quantum of rectified spirit 6400 litres per month @  25.73 per litr.  Hence they are legally bound to pay  the duty on designated quantum of rectified spirit.   The above shops were placed under Department  Management due to the non payment of Kist in  time and D.M. arrangements made at the risk of  the Original purchasers.  The petitioners prayer  that D.M. amounts are to be accounted towards the

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arrears on the date of remittance made by the D.M.  agent itself cannot be considered, since a decision  in this regard is to be taken by the Excise  Commissioner.   As per the D.C.E. prepared after given credit  the entire remittance made by the defaulters and  the D.M. agent as stated by the petitioners  including Rs.13,71,738/- remitted before the  Tahsildar, Thodupuzha on 7.12.2001 as directed  by the Honourable High Court in O.P. Nos.10683  and 29173/01 dated 8.11.2001 as such an amount  of Rs.83,26,344/- with future interest @ 18% on  Rs.41,16,841/- with effect from 8.12.2001.  The  petitioners are legally bound to pay the amount due  to Government as stated above."

13.     The total demand as against the respondents was calculated as under:

"DCB STATEMENT IN RESPECT OF A.S.  GROUP NO.II/93-94 ETTUMANOOR RANGE

Kist arrears 5075709 Duty on designated quantum  1646720 D.N. Fee 2 Cost of establishment 4000 Interest on kist 403352 Interest as quantum of  Rectified spirit 125854 Interest on Kist of  establishment and penal  interest 492

Principal Interest Total Total Demand as on 1.4.94 6726429 539700 7266129 Deducted D.M. and duty of  Rectified Spirit collected  during D.M. period (242910   719372 \026 3149288)

2609588

539700

3149288

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Balance

4116841

Nil

3149288 Interest upto 12/94 (9  months)

555774 4672615 Remitted Rs.100000/- as  per TR No.2066/94 dated  31.12.94 at Tahsildr,  Thodupuzha

100000

100000

Interest from 1/95 to 1/01  (83 months)

455774

4572615

Total as on 11/01

4116841

5581241

9698082

Remitted Rs.1371739/- as  per Receipt No.21 Book  No.321 at Taluk Officer,  Thodupusha dated  7.12.2001

1371738

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8326344

Assistant Excise Commissioner Kottayam."

14.     It is not in dispute that during the period 1.4.1993 and 31.3.1994, the  respondents paid a sum of Rs.41,16,841/-.  A sum of Rs.31,49,288/- was  also realized by the State during the said period.  Appellants, it would appear  from he annexure appended to the order of the Excise Commissioner dated  14.12.2001, evidently did not adjust the said amount of Rs.31,49,288/- from  the total amount.  It was done only after the judgment of the High Court.   The said amount should have, in law, been adjusted as on 1.4.1994.   As the matter was pending adjudication before the High Court, the  respondents were unable to file any such application on or before 15.7.2000  for waiver of interest or pay any amount on or before 31.8.2000.   The judgment of the High Court was passed only on 11.8.2000.  In  terms of the said judgment, the appellant were directed to inform the  respondent as regards the outstanding liability.  A fresh demand, therefore,  was to be raised.  The said order was not complied with.  The said order was  unsuccessfully challenged before the Division Bench.  A SLP therefrom to  this Court also failed. 15.     If the benefit of the said notification could not be availed of by the  respondents because of the pendency of the writ petition, in our opinion, the  High Court cannot be said to have committed any jurisdictional error in  passing the impugned judgment. 16.     Lex non cogit ad impossibillia is a well known maxim which means  that nobody can be asked to do a thing which is impossible to be performed.         Rule 25A confers a right.  How the said right is to be exercised is a  matter of procedure.  The procedural provisions are normally directory and  not imperative.  A substantial compliance of the procedural provisions  ordinarily would subserve the purpose and object for which the same has  been made. 17.     A sum becomes due only when it is definite and only when a demand  therefor is made.  If no demand could legally be made from the respondents  for the entire sum as they were entitled to adjustment of a sum of  Rs.31,49,288/-, we do not see how even in equity, the appellants were  entitled to ask for strict compliance of the said GOMs.     A party to the lis, it is trite, cannot take advantage of his own wrong.   If the State, in law, was liable to adjust the said amount of Rs.31,49,288/-, a  valid demand could have been raised only in respect of the balance sum.   The High Court was not concerned with the amount of interest as the sum  was required to be calculated on the amount legally due and recoverable and  not on the amount specified in the notice. 18.     Strong reliance has been placed on a judgment of this Court in  Solomon Antony and Ors. etc. v. State of Kerala and Ors. [(2001) 3 SCC  694].  The said decision was rendered on the fact of the case.  Therein the  question which arose for consideration was as to whether the contractors  were liable to pay the duty on import in relation to the unlifted portion of the  designated quantum of rectified spirit as provided for in the Rules.   Respondents did not disclaim their liability.  They, in fact contended that the  entire liability for the period between 1.4.1993 and 31.3.1994 should be  taken into consideration but then for determining the actual liability the  appellants were bound to give credit to each and every pie which was  realized during the said period.  The contention of the State, to our mind, is  wholly unjust and unfair.  If there was a default on the part of the  respondents as a licencee, interest would be charged only for the period  during which licence amount was not paid.  Interest cannot be charged  although no amount was due.  Some amount might be due but not the entire  amount on which interest is being claimed.   19.     For the reasons aforementioned, there is no merit in the appeal.  The  appeal is dismissed with costs quantified at Rs.10,000/- (Rupees ten  thousand only).