Garware Polyester Ltd. Vs State of Maharashtra (Bombay High Court)
Refusal to Follow Unstayed High Court Judgment Prima Facie Contempt: Bombay HC Issues Notice to Tax Officer
The Bombay High Court issued a show cause notice to a Deputy Commissioner of Sales Tax after recording a prima facie view that his refusal to follow an unstayed High Court judgment amounted to contempt. The officer had stated in an assessment order that the Sales Tax Department had not accepted the judgment and had initiated legal proceedings against it.
The order highlights that departmental disagreement with a judgment does not, by itself, justify refusing to implement it. Importantly, the Court issued a notice calling for an explanation; it did not finally hold the officer guilty of contempt or impose punishment.
Case Details
The order was passed on July 1, 2010, in M/s. Garware Polyester Ltd. & Anr. v. State of Maharashtra & Ors., Writ Petition No. 1085 of 2010, by a Division Bench comprising Justices V.C. Daga and S.J. Kathawalla.
The petitioners were represented by P.C. Joshi with Piyush Shah. S.K. Nair appeared for the respondents. The proceedings arose before the Court in its ordinary original civil jurisdiction.
Assessment Order Brought to Court’s Attention
During the hearing, counsel for the petitioners drew attention to an assessment order dated August 25, 2009, passed by Moreshwar Nathuji Dubey, Deputy Commissioner, LTU, Aurangabad.
The assessment order recorded, among other things, that the judgment in Commissioner of Sales Tax v. Pee Vee Textiles Ltd., reported in 26 VST 281, had not been accepted by the Sales Tax Department. It further stated that legal proceedings had been initiated against that judgment.
The objection before the High Court thus concerned the officer’s refusal to follow an existing judicial decision on the stated basis of departmental non-acceptance and a legal challenge. The short order does not set out the underlying assessment computation or the substantive tax issue decided in Pee Vee Textiles.
Absence of Stay Was Crucial
The parties informed the Bench that the judgment in Pee Vee Textiles had not been stayed. That fact was central to the Court’s response.
The Court considered the refusal to follow and implement its judgment prima facie contemptuous because the decision remained unstayed. The Department’s statement that it had initiated proceedings against the judgment did not persuade the Bench to overlook the officer’s conduct.
The distinction in the order is between challenging a judicial decision through legal proceedings and treating that challenge as sufficient reason to withhold compliance. On the facts recorded, there was a challenge to the judgment, but no stay of its operation.
Show Cause Notice Under Contempt of Courts Act
The High Court directed issuance of a show cause notice to the Deputy Commissioner, returnable after four weeks. The officer was required to explain why action under the Contempt of Courts Act should not be initiated against him.
The notice was directed personally to the officer who had passed the assessment order. The Court’s concern therefore extended beyond the Department’s litigation position to the conduct of the authority responsible for refusing implementation.
However, the wording of the order remains significant: the Court expressed a prima facie view and sought an explanation. The supplied order contains no subsequent response from the officer, final contempt finding, sentence or monetary penalty.
Communication and Independent Service Directed
Counsel appearing for the respondents accepted the notice and undertook to communicate the Court’s order to the Deputy Commissioner.
The Bench additionally directed the Registry to issue an independent show cause notice to the officer. Thus, communication through government counsel was accompanied by a separate direction for formal notice from the Registry.
These directions formed part of the procedure for obtaining the officer’s response. They should not be read as a final determination of his liability under the contempt law.
Writ Petition and Stay Proceedings
On the writ petition itself, the High Court issued Rule, returnable early, and directed notice to the Advocate General of Maharashtra.
It also issued Rule on the stay application, returnable after eight weeks. The order records waiver of service by counsel for the respondents.
These procedural directions do not record a final decision on the petition’s merits. Equally, issuance of Rule on stay should not be described as an order actually granting stay of the disputed assessment.
The Court directed that the matter be heard with Appellate Side Writ Petition Nos. 10637 of 2009, 8431 of 2009, 313 of 2010, 3909 of 2010 and Writ Petition No. 1291 of 2010 from the Nagpur Bench.
Significance of the Order
The order serves as a pointed reminder that an assessing authority cannot treat departmental non-acceptance of an unstayed High Court judgment as sufficient justification for refusing to follow it.
Its immediate consequence was the issuance of a personal show cause notice, requiring the Deputy Commissioner to explain his conduct.
Cases Discussed
- Commissioner of Sales Tax Vs. Pee Vee Textiles Ltd. — 26 VST 281 (Bombay High Court). The unstayed judgment whose implementation was refused.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
2. At this stage, it is relevant to note that learned Counsel for the petitioner has brought to our notice the assessment order dated 25th August, 2009 passed by Mr.Moreshwar Nathuji Dubey, Dy.Commissioner, LTU, Aurangabad, wherein, Shri.Dubey has interalia; recorded that the judgment of this Court in the case of Commissioner of Sales Tax Vs. Pee Vee Textiles Ltd. (26 VST 281) is not accepted by the Sales Tax Department and legal proceeding is initiated against the said judgment. Parties have informed this Court that the decision of this Court in Commissioner of Sales Tax Vs. Pee Vee Textiles Ltd.(supra) is not stayed. In view thereof, the refusal to follow and implement the judgment of this Court by Mr.Dubey in our considered view prima facie; amounts to contempt of this Court. In view thereof, issue show cause notice to Mr.Moreshwar Nathuji Dubey, Dy.Commissioner, LTU, Aurangabad, returnable after four weeks to show cause, as to why action under the provisions of the Contempt of Courts Act should not be initiated against him.
3. Mr.Nair, AGP accepts notice and undertakes to communicate this order to Mr.Dubey. Registry to issue independent show cause notice to Mr.Dubey.
4. To be heard along with Appellate Side Writ Petition Nos.10637 of 2009, 8431 of 2009, 313 of 2010, 3909 of 2010 and Writ Petition No.1291 of 2010 (Nagpur Bench).
