UNION OF INDIA Vs. ZENITH SILK MILLS

JUDGEMENT

(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:

(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: