Decided on August 17,1983



A.P.RAVANI, J. - (1.) What should be the approach of court in passing interim order in matters where the imposition and recovery of tax is challenged by a litigant ? Can the court be oblivious of the socio-economic consequences of its orders ? How and by taking into consideration which factors the question as to `prima facie case and `balance of convenience should be decided ? These are some of the questions which have arisen in this petition filed by the Union of India under Article 227 of the Constitution challenging the legality and validity of an ex parte injunction order dated January 31 1983 passed by the Civil Judge (S.D.) Surat.
(2.) Respondent No. 1-original plaintiff is a Company having its office and factory at Surat. (respondent-Company for short). The respondent-Company imported certain man-made fiber filament yarn which was subject to custom duty. On the goods imported in India the custom duty was leviable at the relevant time as mentioned in Schedule I to the Custom Tariff Act 1975 The duty leviable at the relevant time was as follows: 1 Basic customs duty chargeable under Section 12 of the Customs Act 1962 read with Section 2 of the Act. 2 Additional duty (countervailing duty) chargeable under Section 3 of the Act. 3 Auxiliary duty on imported goods recoverable under Section 44 of the Finance Act 1982 The Government issued an exemption notification (as amended from time to time) being No. 149 of 1977 dated July 15 1977 exempting viscose filament yam below 600 Deniers and other commodities on filament yarn from the whole of that duty of customs leviable thereon which is specified in the First Schedule of Custom Tariff Act 1975 Similarly another notification No. 38 of 1978 dated September 1 1978 (as amended from time to time) was issued by the Government exempting Polyester filament yarn and other goods specified therein from so much of that portion of the duty of customs leviable thereon as is in excess of the rates specified in Column 3 of the Customs Tariff Act. The respondent-Company desired to have these notifications so construed as exempting the goods imported by them from all custom duties that is not only the basic duty of customs but also additional customs duty under Section 3 of the Customs Tariff Act and auxiliary duty under Section 44 of Finance Act No. 2 of 1982 Therefore the respondent-Company preferred a writ petition being Writ Petition No. 2245 of 1982 in the Delhi High Court sometime in July 1982 The Delhi High Court had granted interim order in favour of the Company in that petition but ultimately vacated the same by order dated October 6 1982 The Collector of Customs issued demand notice dated December 9 1982 and gave reminder dated December 31 1982 and called upon the respondent-Company to make the payment of the amount of customs duty which had fallen due. The amount involved was Rs. 10 3 12.44 P ten lakhs three thousand and twelve and forty-four paise (the figures are given by the Counsel for the petitioners at the Bar and the same are not controverted by the other side).
(3.) After the receipt of the aforesaid notice the respondent-Company filed a suit being Regular Civil Suit No. 135 of 1983 on January 31 1983 in the Court of Civil Judge (S.D.) Surat. The respondent-Company prayed for an injunction restraining the Union of India from recovering the aforesaid amount covered by the respective demand notices. The respondent-Company also prayed for declaration to the effect that the demand notices were not legal and valid. On the same day i.e. January 31 1983 the learned Civil Judge granted an ex parte injunction order in restraining the Union of India from enforcing the demand notices. In effect the recovery of an amount of little over Rs. 10/- lakhs was stayed. The order was served upon the Department probably on the same day. The Union of India appeared in the suit and filed written statement as well as reply to application Exhibit 5. In para 2 (c) of the petition the dates on which the case has been adjourned without hearing application Exhibit 5 are mentioned and they are as follows: 4, 18, 28, 30, 2, 30 Thereafter there was summer vacation in courts and the case was adjourned to June 24 1983 On June 24 1983 also no hearing took place. There-fore feeling aggrieved by the ex parte order and inaction on the part of the lower court for not proceeding further with the matter the Union of India has moved this Court by filing the present petition on July 19 1983 The petition came up for hearing before a Division Bench consisting of P. D. Desai Acting C.J. and G. T. Nanavati J. However the Division Bench thought that the matter was of Single Judge and the same be posted for orders before the Single Judge. That is how the matter has come up for hearing before me.;

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