S.D. Raghunandan Singh Vs. State of Karnataka and ors. - Court Judgment

Excerpt:
- central excise act, 1944.[c.a. no. 1/1944]. sections 4 & 2(f): [s.h. kapadia & b. sudershan reddy, jj] excise duty valuation assessee manufacturing plant and equipment falling under sub-heading 8479.90, cet act, 1985 under a composite contract with certain other parties, it supplying to them in addition to the equipments manufactured by it, various duty-paid bought-out items to facilitate the setting up of the plants at their sites held, value of such bought-out items if includible in the assessable value of the equipments manufactured, depends on the facts of each case. even erection of a plant by assembling certain items at site could constitute manufacture under the excise law. -- section 11aa: rate of interest in the peculiar circumstances of the case, demand reduced and payment directed to be made within eight weeks. further directed that in case of non-compliance therewith, the department would be entitled to levy interest @ 9% p.a. -- sections 35-b & 35-a(3) (as amended in 2001) & central excise tariff act, 1985, sub-heading 8479.90: appeal to appellate tribunal maintainability assessee manufacturing plant and equipment falling under sub-heading 8479.90, cet act, 1985 under a composite contract with certain other parties, it supplying to them in addition to the equipments manufactured by it, various duty-paid bought-out items to facilitate the setting up of the plants at their sites department raising demand for a certain period in respect of such bought-out items and rejecting the assessees contention that no duty was payable on those items later, it reducing the period but maintaining the quantum of excise duty commissioner (appeals) holding the value of the bought-out items to be includible in value of the equipments but remanding the matter for quantification of duty liability keeping in view the reduction in the demand period this time, the assessee pointing out to the adjudicating authority that in the alternative it was entitled too modvat credit adjudicating authority, however, confirming the demand assessee again approaching commissioner (appeals) who in turn deciding against the assessee for want of evidence in its favour moreover, he not considering the assessees claim to modvat credit held, in such circumstances, held, the assessee could rightly raise in the second round before the adjudicating authority, its contentions on the quantification of the duty. the assessees alternative claim to the benefit of modvat credit raised at that stage, did not mean that the conclusion reached by the commissioner (a) in the first round of litigation as to excisability or dutiability of the items in question had become final. nor was that order binding on the appellate tribunal. after 2001 amendment to section 35-a, the commissioner (a) continues to exercise the powers of adjudicating authority in the matters of assessment. hence, appeal to appellate tribunal against the order of commissioner (a) passed in the second round, is maintainable. -- sections 35-l, 35-g, 3 & 4: quantification of excise duty relevant factors assessee manufacturing plant and equipment falling under sub-heading 8479.90, cet act, 1985 under a composite contract with certain other parties, it supplying to them in addition to the equipments manufactured by it, various duty-paid bought-out items to facilitate the setting up of the plants at their sites quantification of duty payable on such bought-out items duty initially demanded for one-year period but by a corrigendum the period reduced to six months liability to duty disputed held, in such circumstances, even if the bought-out goods were dutiable, the assessee is entitled to benefit of modvat credit. moreover, the duty for the reduced period of six months could not be the same as for the larger period of one year. in the peculiar circumstances of the case, instead of remanding it, the demand was reduced from rs.94,03,500 to rs.23,56,000/. - ultimately, the commission recommended 132 names for appointment to the existing vacancies. 6. we have heard learned counsel for the promotees as well as the direct recruits, the learned counsel for v. narayanappa as well as the parties which seek impleadment and since all the appeals are interconnected we proceed to dispose them of by this common judgment.order1. no order on the application for the impleading parties but counsel heard.2. the facts leading to these appeals, briefly stated, are as under: on 18th april, 1956, 10 posts of first division clerks were sanctioned by the government of mysore in the department of sales tax. on reorganisation of the states with effect from 1st november, 1956, a large number of clerks in the commercial tax department of the state of bombay stood allocated to the state of mysore, now karnataka. the said clerks were treated as equivalent to second division clerks in the state of mysore by the central government. thereafter, with effect from 23rd november, 1957, additional 93 posts of first division clerks came to be created in addition to the existing 90 posts and 10 other posts of first division clerks in the department. earlier to the creation of the 93 additional posts, the state public service commission had invited, applications for filling up 10 posts in the cadre of first division clerks. after the reorganisation of the state and the creation of 93 new posts, the state public service commission issued a fresh advertisement inviting applications for filling up the said posts. the advertisement also stated that those who had already applied in response to the first advertisement, need not apply again. ultimately, the commission recommended 132 names for appointment to the existing vacancies. the state government by an order made sometimes in january, 1958, appointed 73 candidates from the list forwarded by the commission. the letters of appointment issued to these 73 direct recruits indicated that their appointments were against the 93 posts created on 23rd november, 1957. what happened thereafter, led to a controversy between the newly appointed direct recruits and respondents 4 to 81 before the high court who were promoted as first division clerks in october, 1959 and thereafter. these promoted first division clerks were later given deemed date retrospective promotion with effect from 23rd november, 1957. on account of this retrospective promotion, the 73 direct recruits were required to slide down in seniority and, therefore, they filed a writ petition no. 7327 of 1969 challenging the government decision. the writ petition was heard by a learned single judge of the high court of karnataka, who, by his judgment and order dated 26th july, 1973, dismissed the petition. against the said dismissal, the direct recruits, original petitioners, filed an appeal before a division bench of the high court. the division beach by its order dated 27th march, 1979 allowed the appeal and reversed the judgment of the learned single judge holding that since the 73 direct recruits occupied the additionally created posts, the promotees could not have been given retrospective promotion from 23rd november, 1957 as it would result in both the promotees and the direct recruits occupying the very same 73 out of 93 posts which was irreconcilable. if the situation is viewed differently it would appear that once the promotees occupied the 93 posts from the date they were created on 23rd november, 1957, the direct recruits could not be adjusted against the 73 of the 93 posts and their appointments would be in jeopardy. in that view of the matter, the division bench, while reversing the decision of the learned single judge, directed as under:accordingly, these appeals are allowed and in reversal of the order under appeal the writ petition is allowed and exhibits a-l to a-6 and c are quashed reserving liberty to respondents 1 to 3 to pass fresh orders after a review of the matter in accordance with law.against the said decision of the division bench, civil appeal's nos. 2821-22 of 1980 have been preferred by the promotees. in the appeals so filed before this court, an interim order was made on 27th november, 1980 for maintenance of status quo as on that day pending disposal of the appeals. it was further directed that if any promotions are made in future in accordance with the impugned judgment, they will abide by the result of the appeals.3. pursuant to the decision of the division bench, the state government undertook a review as per its memorandum dated 5th april, 1980. this review was of course subject to the decision that may be rendered by this court in civil appeals nos. 2821-22 of 1980. according to this review, all the 73 direct recruits were placed above the promotees on the plea that under the karnataka state civil services (regulations of promotion, pay and pension) act, 1973, which had come into force before the division bench disposed of the appeal, no retrospective promotion could be granted. this review was the subject-matter of challenge in 3 applications filed by the promotees before the karnataka administrative tribunal at bangalore. all the 3 applications were disposed of by a common order dated 11th march, 1988. by the said order the tribunal came to the conclusion that the review was not strictly in conformity with the order of the division bench and in particular paragraphs 10 and 13 thereof. the tribunal, therefore, set aside the review order and gave the following directions:1, the respondents 1 and 2 are directed to give effect to para 13 of the order of the appellate court in w, a, nos. 24-25 / 73 in the manner indicated above keeping in view the observations made by the court in para 10 of the order quoted above and by us in this order.2. respondents 1 and 2 are directed to prepare a fresh seniority list on the basis of the orders made under item 1 above.3. on the basis of the seniority list prepared under 2 above the promotions made after 1-11-1956 shall be reviewed under the ppp act and the service examination act of 1976, and appropriate eligibility dates shall be assigned and on the basis of such review such seniority lists of all relevant cadres shall be prepared and all consequential benefits admissible under law shall be extended.4. whatever action is taken in pursuance to the orders made by us in these applications shall be subject to the decision of the supreme court in the appeals filed against the order of the appellate court in w.a. 24 and 25/73.5. time six months.4. the direct recruits being aggrieved by this order of the tribunal preferred civil appeals nos. 1670-72 of 1988.5. it appears that after the review, one of the pormotees, v. narayanappa filed a writ petition in the high court of karnataka challenging the review on the ground that he was not a party to the original writ petition which had given rise to the appeal disposed of by the division bench. the high court refused to entertain the petition on the ground that the very same issue was pending consideration by this court in appeals nos. 2821 -22 of 1980. liberty was, however, granted to the petitioner to approach the high court, if need be, after the decision of this court in the said appeals. aggrieved by the said order, the said v. naryayanappa has approached this court by way of civil appeal no. 81 of 1983. the learned counsel for the appellant in the said appeal has stated that the fate of his appeal would depend on the view this court may take in civil appeals nos. 2821-22 of 1980 arising out of the division bench judgment.6. we have heard learned counsel for the promotees as well as the direct recruits, the learned counsel for v. narayanappa as well as the parties which seek impleadment and since all the appeals are interconnected we proceed to dispose them of by this common judgment.7. the controversy seems to have arisen presumably because the state government while granting ante-dated promotions to the promotees, who were first division clerks with effect from 23rd november, 1957, did not realise that out of the 93 newly created posts, 73 were already occupied by direct recruits under orders issued sometime in january, 1958, therefore, when the state government passed an order on 25th may, 1963 granting deemed date promotions to the promotees with effect from 23rd november, 1957, it created a situation whereby out of the 93 newly created posts, 73 came to be occupied by both promotees and direct recruits. that is why, the division bench rightly pointed out that it had created an irreconcilable situation which could not be allowed to continue. it was for this reason that the division bench reversed the order of the learned single judge holding that while the state government may have power to grant retrospective promotions in certain situations, in the present case the exercise of that power had led to an irreconcilable situation which could not be tolerated. the division bench, therefore, set aside the order of 25th may, 1963 granting what the state government called retrospective promotions and allowed the writ petition of the direct recruits with a direction that the state government may pass fresh orders after a review of the matter in accordance with law. now, while passing the fresh orders as a sequel to the division bench judgment, the state government granted seniority to all the 73 direct recruits over the promotees on the plea that under the provisions of the karnataka state civil services (regulations of promotion, pay and pension) act, 1973, retrospective promotion was impermissible. the tribunal intervened with this order of the government in the 3 applications filed before it challenging the said review especially on the ground that the state had overlooked the observations of the division bench in paragraphs 10 to 13 of its judgment. in that view of the matter, the tribunal gave the directions reproduced earlier.8. at the hearing of these appeals, it was pointed out to us that all the promotees have since retired and the only reason why they are contesting these appeals is that some of them may get benefit in the fixation of their pension and other retiral benefits. even if we were to come to the conclusion that the subsequent order of the tribunal against the review undertaken by the government is unassailable and we were to dismiss the appeals preferred by the promotees, the state government will once again be required to undertake a review which would create disturbance in the service, having regard to the facts of the present case and, in particular, keeping in view the fact that all the erstwhile promotees have since retired, we think it would be in the interest of all concerned that notional promotions may be given to the erstwhile promotees on the basis of existing vacancies at the material date, ignoring 73 posts which were already occupied by the direct recruits and refix their pension and other retiral benefits on the basis of that notional date of promotion without disturbing the seniority of the 73 direct recruits. the effect of this order will be that some of the promotees will be given a notional date of promotion which may be ante-dated for the limited purpose of working out their retiral benefits depending on the availability of posts to which they could have been appointed after leaving out the 73 posts occupied by the direct recruits. we once again make it clear that this would be for the limited purpose of working out the pensionary benefits of the promotees who could have been adjusted against the available posts, other than the 73 posts occupied by the direct recruits without disturbing their seniority. this may be done within a period of four months so that some of the retired promotees who may get the benefit under this order may avail of the enhanced pensionary benefits. the orders passed by the courts/tribunal below will stand substituted by this order. all the appeals will stand disposed of accordingly. there will be no order as to costs in all the appeals.

Judgment:
ORDER

1. No order on the application for the impleading parties but counsel heard.

2. The facts leading to these appeals, briefly stated, are as under:

On 18th April, 1956, 10 posts of First Division Clerks were sanctioned by the Government of Mysore in the Department of Sales Tax. On reorganisation of the States with effect from 1st November, 1956, a large number of clerks in the Commercial Tax Department of the State of Bombay stood allocated to the State of Mysore, now Karnataka. The said clerks were treated as equivalent to Second Division Clerks in the State of Mysore by the Central Government. Thereafter, with effect from 23rd November, 1957, additional 93 posts of First Division Clerks came to be created in addition to the existing 90 posts and 10 other posts of First Division Clerks in the Department. Earlier to the creation of the 93 additional posts, the State Public Service Commission had invited, applications for filling up 10 posts in the cadre of First Division Clerks. After the reorganisation of the State and the creation of 93 new posts, the State Public Service Commission issued a fresh advertisement inviting applications for filling up the said posts. The advertisement also stated that those who had already applied in response to the first advertisement, need not apply again. Ultimately, the Commission recommended 132 names for appointment to the existing vacancies. The State Government by an order made sometimes in January, 1958, appointed 73 candidates from the list forwarded by the Commission. The letters of appointment issued to these 73 direct recruits indicated that their appointments were against the 93 posts created on 23rd November, 1957. What happened thereafter, led to a controversy between the newly appointed direct recruits and respondents 4 to 81 before the High Court who were promoted as First Division Clerks in October, 1959 and thereafter. These promoted First Division Clerks were later given deemed date retrospective promotion with effect from 23rd November, 1957. On account of this retrospective promotion, the 73 direct recruits were required to slide down in seniority and, therefore, they filed a Writ Petition No. 7327 of 1969 challenging the Government decision. The writ petition was heard by a learned single Judge of the High Court of Karnataka, who, by his judgment and order dated 26th July, 1973, dismissed the petition. Against the said dismissal, the direct recruits, original petitioners, filed an appeal before a Division Bench of the High Court. The Division Beach by its order dated 27th March, 1979 allowed the appeal and reversed the judgment of the learned single Judge holding that since the 73 direct recruits occupied the additionally created posts, the promotees could not have been given retrospective promotion from 23rd November, 1957 as it would result in both the promotees and the direct recruits occupying the very same 73 out of 93 posts which was irreconcilable. If the situation is viewed differently it would appear that once the promotees occupied the 93 posts from the date they were created on 23rd November, 1957, the direct recruits could not be adjusted against the 73 of the 93 posts and their appointments would be in jeopardy. In that view of the matter, the Division Bench, while reversing the decision of the learned single Judge, directed as under:

Accordingly, these appeals are allowed and in reversal of the order under appeal the writ petition is allowed and Exhibits A-l to A-6 and C are quashed reserving liberty to respondents 1 to 3 to pass fresh orders after a review of the matter in accordance with law.

Against the said decision of the Division Bench, Civil Appeal's Nos. 2821-22 of 1980 have been preferred by the promotees. In the appeals so filed before this Court, an interim order was made on 27th November, 1980 for maintenance of status quo as on that day pending disposal of the appeals. It was further directed that if any promotions are made in future in accordance with the impugned judgment, they will abide by the result of the appeals.

3. Pursuant to the decision of the Division Bench, the State Government undertook a review as per its Memorandum dated 5th April, 1980. This review was of course subject to the decision that may be rendered by this Court in Civil Appeals Nos. 2821-22 of 1980. According to this review, all the 73 direct recruits were placed above the promotees on the plea that under the Karnataka State Civil Services (Regulations of Promotion, Pay and Pension) Act, 1973, which had come into force before the Division Bench disposed of the appeal, no retrospective promotion could be granted. This review was the subject-matter of challenge in 3 applications filed by the promotees before the Karnataka Administrative Tribunal at Bangalore. All the 3 applications were disposed of by a common order dated 11th March, 1988. By the said order the Tribunal came to the conclusion that the review was not strictly in conformity with the order of the Division Bench and in particular paragraphs 10 and 13 thereof. The Tribunal, therefore, set aside the review order and gave the following directions:

1, The respondents 1 and 2 are directed to give effect to para 13 of the order of the Appellate Court in W, A, Nos. 24-25 / 73 in the manner indicated above keeping in view the observations made by the Court in para 10 of the order quoted above and by us in this order.

2. Respondents 1 and 2 are directed to prepare a fresh seniority list on the basis of the orders made under Item 1 above.

3. On the basis of the seniority list prepared under 2 above the promotions made after 1-11-1956 shall be reviewed under the PPP Act and the Service Examination Act of 1976, and appropriate eligibility dates shall be assigned and on the basis of such review such seniority lists of all relevant cadres shall be prepared and all consequential benefits admissible under law shall be extended.

4. Whatever action is taken in pursuance to the orders made by us in these applications shall be subject to the decision of the Supreme Court in the appeals filed against the order of the appellate Court in W.A. 24 and 25/73.

5. Time six months.

4. The direct recruits being aggrieved by this order of the Tribunal preferred Civil Appeals Nos. 1670-72 of 1988.

5. It appears that after the review, one of the pormotees, V. Narayanappa filed a Writ Petition in the High Court of Karnataka challenging the review on the ground that he was not a party to the original Writ Petition which had given rise to the appeal disposed of by the Division Bench. The High Court refused to entertain the petition on the ground that the very same issue was pending consideration by this Court in Appeals Nos. 2821 -22 of 1980. Liberty was, however, granted to the petitioner to approach the High Court, if need be, after the decision of this Court in the said appeals. Aggrieved by the said order, the said V. Naryayanappa has approached this Court by way of Civil Appeal No. 81 of 1983. The learned Counsel for the appellant in the said appeal has stated that the fate of his appeal would depend on the view this Court may take in Civil Appeals Nos. 2821-22 of 1980 arising out of the Division Bench judgment.

6. We have heard learned Counsel for the promotees as well as the direct recruits, the learned Counsel for V. Narayanappa as well as the parties which seek impleadment and since all the appeals are interconnected we proceed to dispose them of by this common judgment.

7. The controversy seems to have arisen presumably because the State Government while granting ante-dated promotions to the promotees, who were First Division Clerks with effect from 23rd November, 1957, did not realise that out of the 93 newly created posts, 73 were already occupied by direct recruits under orders issued sometime in January, 1958, Therefore, when the State Government passed an order on 25th May, 1963 granting deemed date promotions to the promotees with effect from 23rd November, 1957, it created a situation whereby out of the 93 newly created posts, 73 came to be occupied by both promotees and direct recruits. That is why, the Division Bench rightly pointed out that it had created an irreconcilable situation which could not be allowed to continue. It was for this reason that the Division Bench reversed the order of the learned single Judge holding that while the State Government may have power to grant retrospective promotions in certain situations, in the present case the exercise of that power had led to an irreconcilable situation which could not be tolerated. The Division Bench, therefore, set aside the order of 25th May, 1963 granting what the State Government called retrospective promotions and allowed the Writ Petition of the direct recruits with a direction that the State Government may pass fresh orders after a review of the matter in accordance with law. Now, while passing the fresh orders as a sequel to the Division Bench judgment, the State Government granted seniority to all the 73 direct recruits over the promotees on the plea that under the provisions of the Karnataka State Civil Services (Regulations of Promotion, Pay and Pension) Act, 1973, retrospective promotion was impermissible. The Tribunal intervened with this order of the Government in the 3 applications filed before it challenging the said review especially on the ground that the State had overlooked the observations of the Division Bench in paragraphs 10 to 13 of its judgment. In that view of the matter, the Tribunal gave the directions reproduced earlier.

8. At the hearing of these appeals, it was pointed out to us that all the promotees have since retired and the only reason why they are contesting these appeals is that some of them may get benefit in the fixation of their pension and other retiral benefits. Even if we were to come to the conclusion that the subsequent order of the Tribunal against the review undertaken by the Government is unassailable and we were to dismiss the appeals preferred by the promotees, the State Government will once again be required to undertake a review which would create disturbance in the service, Having regard to the facts of the present case and, in particular, keeping in view the fact that all the erstwhile promotees have since retired, we think it would be in the interest of all concerned that notional promotions may be given to the erstwhile promotees on the basis of existing vacancies at the material date, ignoring 73 posts which were already occupied by the direct recruits and refix their pension and other retiral benefits on the basis of that notional date of promotion without disturbing the seniority of the 73 direct recruits. The effect of this order will be that some of the promotees will be given a notional date of promotion which may be ante-dated for the limited purpose of working out their retiral benefits depending on the availability of posts to which they could have been appointed after leaving out the 73 posts occupied by the direct recruits. We once again make it clear that this would be for the limited purpose of working out the pensionary benefits of the promotees who could have been adjusted against the available posts, other than the 73 posts occupied by the direct recruits without disturbing their seniority. This may be done within a period of four months so that some of the retired promotees who may get the benefit under this order may avail of the enhanced pensionary benefits. The orders passed by the Courts/Tribunal below will stand substituted by this order. All the appeals will stand disposed of accordingly. There will be no order as to costs in all the appeals.