R.K. Manisana, J.@mdashThe facts leading to the present contempt petition are thus. This Court made an order on 15-07-1991 in Civil Rule No. 3510 of 1991 directing the Assistant Collectors of Central Excise at Digboi and Tinsukia to refund the amount of Rs. 79,70,079.00 and Rs. 74,89,455.62 respectively to the petitioners within two months. But the Assistant Collectors failed to refund the money. Therefore, the present petition was filed on 16-09-1991 for initiating contempt proceedings for violation of the order of this Court. On 19-09-1991, this Court initiated contempt proceeding.
2. The question which arises for consideration is whether the respondents had committed contempt of Court in view of Central Excises and Customs Laws (Amendment) Act, 1991 (for short the ''Amending Act'') which came into force w.ei. 20-09-1991. By the Amending Act, the Central Excises and Salt Act, 1944 has been amended. Sub-section (3) of Section 11B which has been introduced into Section 11B by the Amending Act reads :-
"Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder or any other law for the time being in force, no refund shall be made except as provided in Sub-section (2)."
3. Sub-section (2) provides -
"If, on receipt of any such application, the Assistant Collector of Central Excise is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund:
Provided that the amount of duty of excise as determined by the Assistant Collector of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the Applicant, if such amount is relatable to -
(a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India;
(b) unspent advance deposits lying in balance in the applicant''s account current maintained with the Collector of Central Excise;
(c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act;
(d) duty of excise paid by the manufacturer if he had not passed on the incidence of such duty to any other person;
(e) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person;
(f) the duty of excise borne by any other such class of applicants as the Central-Government may, by notification in Official Gazette, specify:
Provided further that no notification under Clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the incidence of duty has not been passed on by the persons concerned to any other person."
(emphasis added)
Under Sub-section (2), if, on receipt of any such application, the Assistant Collector of Central Excise is satisfied that the whole or any part of the duty of excise paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Consumer Welfare Fund established u/s 12C. Under the first proviso to Sub-section (2), particulars of duty of excise, deposit, etc. to be refunded to the applicant are enumerated.
4. Learned counsel for the Petitioners has contended that Sub-section (3) nullifies the order of the Court, and therefore, such enactment is against the Constitutional system and hence invalid. Learned counsel has further contended that the petitioners are entitled to refund under the first proviso to Sub-section (2).
5. The question which arises for consideration is whether Sub-section (3) is unconstitutional and invalid.
6. In
"Notwithstanding anything contained in any judgment, decree or order of any court, it shall be lawful, and shall be deemed always to have been lawful, for the Municipal Corporation of the City of Ahmedabad to withhold refund of the amount already collected or recovered in respect of any of the property taxes to which Sub-section (1) applies till assessment of such property taxes is made, and the amount of tax to be levied and collected is determined under Sub-section (1)."
In that case, the Municipal Corporation assessed immovable properties of various textile mills on the basis of the method popularly known as "flat rate" method. According to that method in valuing the land, the value of the plants and machinery were also taken into consideration. Those assessments were challenged under Article 226 of the Constitution of India before the High Court of Gujarat by the textile mills. The High Court dismissed the petition. The aggrieved textiles mills thereafter brought up the matter in appeal before the Supreme Court. The Supreme Court opined that it was not permissible for the Municipal Corporation to value the premises on the basis of "flat rate" method. Thereafter, Sub-section (3) quoted above was introduced. The Supreme Court has held :-
"The provision attempts to make a direct inroad into the judicial powers of the State. The legislatures under our Constitution have within the prescribed limits, powers to make laws prospectively as well as retrospectively. By exercise of those powers, the legislature can remove the basis of a decision rendered by a competent court thereby rendering that decision ineffective."
(emphasis added)
7. In
"On the words used in the Act, it is plain that the Legislature attempted to overrule or set aside the decision of this Court. That, in our judgment, is not open to the Legislature to do under our constitutional scheme. It is open to the Legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but it is not open to the Legislature to say that a judgment of a court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of the law shall be otherwise than as declared by the Court."
(emphasis added)
8. In D. Cawasji & Co. v. State of Mysore - AIR 1984 SC 1780 : 1985 (19) E.L.T. 5 (SC), the question of Constitutional Validity of the Mysore Sales-Tax Amendment Act, 1969 was challenged. The relevant portion of the amended section runs as follows :-
"Section 3. Notwithstanding anything contained in any judgment, decree or order of any court or other authority, the sales tax on country liquor other than toddy levied or collected or purported to have been levied or collected shall, for all purposes, be deemed to be and to have always been validly levied or collected in accordance with law as if this Act had been in force at all material times when such tax was levied or collected and accordingly -
(a) all acts, proceedings or things done or taken by any authority or officer or person in connection with the levy or collection of such tax, shall, for all purposes, be deemed to be and to have always been done or taken in accordance with law;
(b) no suit or proceeding shall be entertained, maintained or continued in any court for the refund of any tax as paid; and
(c) no court shall enforce any decree or order directing the refund of any tax so paid".
9. The facts of that case, in brief, were as follows. The State Government had the monopoly of the first sale of Arrack which is country liquor other than Toddy. The manufacture of Arrack by distillation was done in the State under State control and the entire quantity manufactured by distillation in the State was sold to the State Government which in its turn supplied Arrack to bonded depots in Taluks. Under the Mysore Excise Act Arrack was liable to excise duty at the rates prescribed by the Government. . The State did not collect excise duty from the distillers. From the distillery was transferred to Bonded Depots and excise duty together with cesses thereon was collected from the contractors who were given the privilege or right to effect retail sales of Arrack. There was no dispute as to the amount of the sales tax payable by the licensee upto 01-04-1966. However, w.e.f. 01-04-1966 the State Government started collecting sales tax computed on the sale price of Arrack together with excise duty and cesses payable thereon. The validity of the collection of sales tax on the aforesaid basis was challenged by filing a writ petition in the High Court of Mysore. The High Court held that the State Government was not entitled to collect any amount by way of sales tax on excise duty, Health cess and Education cess imposed on Arrack. The order of the High Court was appealed to the Supreme Court, and the appeal was withdrawn. Therefore, the State became liable to refund the tax collected. Faced with this situation the amendment aforesaid was made. The Supreme Court has held that the Amending Act was to nullify the judgment and order of the High Court and was invalid and unconstitutional.
10. In another similar case before the High Court of Andhra Pradesh in RPS Jr. College v. R.V. Iyer - AIR 1989 (SC) 96 the Andhra Pradesh High Court after considering the earlier decisions of the Supreme Court cited above, it has been held that:
"No legislature has power to ask the instrumentalities of the State to disobey or disregard the decision given by courts. Such a law is a direct inroad into the judicial power of the State nor the Legislature is competent to declare indirectly that the decision is open to review by a new law. In such an event it is a naked encroachment into judicial power and amounts to legislative overruling a judicial decision in exercise of legislative power, a negation of constitutional scheme.".
11. Relying upon the decisions in the above-cited cases, the learned counsel for the petitioner, has contended that Sub-section (3) overrides or nullifies, or sets aside the decision of the Court and, therefore, it is invalid and unconstitutional.
12. The decisions in the above-cited cases indicate that the legislature can remove the basis of a decision rendered by a competent Court thereby rendering that decision ineffective. In other words, it is open to the legislature within certain limits to amend the provisions of an Act retrospectively and declare what law shall be deemed to have been; otherwise, it would encroach upon the judicial power to overrule a decision of a competent Court in exercise of legislative power, which is impermissible. Therefore, the decisions do not lay down that the legislature cannot at all render a decision of a competent Court ineffective.
13. Coming to the case on hand, the object or reasons for enacting the Amending Act are in following words :-
"The question of unjust enrichment in cases of goods subject to duty of excise or customs has been the subject matter of discussion for quite sometime now. The concept of ''unjust enrichment'', in so far as it relates to the said duties, is that any refund of these duties made to any manufacturer or importer, who may have initially paid these duties but had passed on the same to the buyers, would be in the nature of a windfall gain to such manufacturer or importer."
The object of the Amending Act is to safeguard ''unjust enrichment'' as, if the duty of excise so collected is refunded, it would be in the nature of a windfall gain to the manufacturer or importer. The Amending Act points towards redetermining as to whether tax or duty collected are refundable declaring what law shall be deemed to have been on the date of judgment, decree or order of the Court or Tribunal before the Amending Act came into force. Although the Amending Act renders a decision of the Court or Tribunal ineffective, it is not by way of interpretation of a law contrary to the law declared by the Court, that is to say, - the Amending Act removes the basis of a decision rendered by a competent Court or Tribunal. The Amending Act does not at all provide that duty of excise or whatever the duty collected shall be retained by the Government. As already stated, it only provides to redetermine the question of refund on the basis of law what should it would have been. For these reasons, Sub-section (3) of Section 11B is valid.
14. With regard to the next contention of the learned counsel for the petitioner that the tax or duty is refundable under the first proviso to Sub-section (2), we cannot decide this question in this proceeding. It is for the Assistant Collector to decide the question.
15. In the above view of the matter the respondents have not committed contempt of Court. The petition is rejected accordingly.
