- (1.) Before the Gujarat High Court, Ambuja Synthetics Mills (assessee) had challenged the validity of Rule 96ZQ(5)(ii), which reads as under: Rule 96ZQ(5)(ii): (5) If an independent processor fails to pay the amount of duty by the date specified in Sub-rule (3) he shall be liable to: (i)... (ii) a penalty equal to an amount of duty outstanding from him at the end of such month or rupees five thousand, whichever is greater.
(2.) As can be seen from the above quoted impugned sub-rule, penalty equal to an amount outstanding at the end of the stipulated period was leviable. The impugned Rule was challenged as ultra vires the Constitution and beyond the legislative competence of the Rule making authority. By judgment in the case of Ambuja Synsthetic Mills v. Union of India reported in 2004 175 ELT 85, the Gujarat High Court read down the Rule holding that it was not mandatory . We quote hereinbelow Para 9 of the said judgment which reads as under: In our view, there is no reason as to why same analogy should not be applied in the instant case also. The Apex Court in the above decision has also pointed out that the Section should be read as containing a rebuttable presumption and clarifying the position, the Apex Court observed in paragraph 11 as under: ...This would mean that it will be open to the registered dealer to satisfy the authorities concerned that the non-submission of the statement under Sub-sections (1) and (2) of Section 7 was not with the intention to facilitate the evasion of the entry tax. In other words, Sub-section (5) of Section 7 places the burden of proof on the registered dealer to show that the non-submission of the statement under Sub-sections (1) and (2) of Section 7 was not with a view to facilitate the evasion of entry tax. The Apex Court pointed out that, "if a registered dealer is unable to satisfy the authorities in this regard then, in the absence of satisfaction, the presumption is that non-submission of statement has facilitated the evasion of entry tax". It is in view of this that the Apex Court held that the Section does not suffer from any vice and the Section is required to be construed to mean that the presumption contained therein is rebuttable and secondly, the penalty stipulated therein is only the maximum amount which would be levied and the assessing authority has the discretion to levy lesser amount depending upon the facts and circumstances of each case. Construing Section 7(5) in this manner, the Apex Court pointed out that the decision of the High Court that Section 7(5) is ultra vires cannot be sustained. Applying this analogy in the instant case also, it is difficult to accept the contention raised by the petitioner that the said Rule is ultra vires. However, at the same time, the authority concerned is required to read the Rule in the manner indicated above.
(3.) Following the said decision numerous matters came to be disposed of both, by the High Court and the Tribunal.;