JUDGMENT
B.P. Jeevan Reddy, C.J.
1. CMWP No. 909 of 1990 and CMWP No. 1362 of 1990. These two writ petitions filed by Sardar Harinder Singh can be disposed of under a common order. The reliefs sought for in CMWP No. 1362 of 1990 are for issuance of an appropriate writ, order or direction, (1) restraining the income-tax authorities from handing over the seized goods to the Central Excise Department and (2) restraining the Central excise authorities from compelling the income-tax authorities to part with primary gold seized from the petitioner in favour of the Central Excise Department.
2. The reliefs sought for in CMWP No. 909 of 1990 are (1) to restrain the Tax Recovery Officer from realizing the income-tax dues by sale of the assets and properties of the petitioner until they sell the assets seized by them towards the tax liability of the petitioner and (2) direct the income-tax authorities to sell the seized gold and adjust it against the tax liability and the penalty imposed against the petitioner under the Gold (Control) Act, 1968.
3. The petitioner is a director of Singh Engineering Works (P) Ltd., Kanpur. His brothers are also directors of the said company. On July 16, 1981, a raid was conducted by the income-tax authorities at the office premises and residences of the directors of the company including the petitioner. The petitioner’s bank lockers in the Punjab and Sind Bank, Defence Colony, New Delhi, were also opened on the following day, i.e., July 17, 1981. From these lockers, three gold bullion bars, each weighing 250 tolas were seized. From the residence and office premises, of course, some articles, cash and other documents were seized. This raid, it is unnecessary to specify, was conducted under the provisions of Section 132 of the Income-tax Act.
4. On October 13, 1981, an order under Sub-section (5) of Section 132 of the Income-tax Act (summary assessment order) was made by the Income-tax Officer, Central Circle III, Kanpur, whereunder the petitioner was found liable to pay tax at an amount exceeding rupees fifteen lakhs. It was also directed that the assets seized from the petitioner must be utilised towards discharge of the said liability. A regular assessment was also made for the relevant assessment year and a demand notice issued under Section 156 for the tax assessed and due. The petitioner submitted a representation to the income-tax authorities requesting them to sell the seized assets in the first instance and adjust the amount realised towards the tax liability determined against him. This request was refused by the income-tax authorities, who issued a recovery certificate for the amount due against the petitioner and for realizing the same, the petitioner’s immovable properties including a house at Kanpur were brought to sale. The petitioner thereupon approached this court by way of a writ petition, being W. P. No. 303 of 1986 (Harinder Singh v. 1TO [1987] 166 ITR 763) questioning the recovery certificate as well as the proclamation of sale of his immovable properties. It is necessary to notice the contentions raised in that writ petition and the decision of the court. The contentions urged were :–
(i) In the light of the provisions of Section 132B(1) of the Income-tax Act, the Income-tax Officer had no option but to adjust the seized assets towards the tax liability inasmuch as the seized assets had been retained under Sub-section (5) of Section 132.
(ii) The income-tax authorities had no power to hand over the gold seized and kept in their possession to the authorities under the Gold (Control) Act inasmuch as the Income-tax Department had accepted to appropriate the aforesaid seized assets towards the tax due.
5. These contentions were repelled by the court. It is necessary to notice the reasoning of the court in this behalf (at pages 767, 768) :
“(i) The first question which requires determination in this case is whether the authorities under the Gold (Control) Act are entitled to take action in respect of gold which has been seized by the income-tax authorities under the Income-tax Act, although it has been retained under Section 132(5) of the Income-tax Act. It has not been disputed that the three bricks of gold which had been seized are primary gold. Under Section 8 of the Gold (Control) Act, there is a restriction on the possession of primary gold without following the procedure laid down in the Act. It has not been shown to us that the petitioner could validly hold those bricks of primary gold under the Gold (Control) Act If that be so, prima facie, the petitioner would be deemed to have contravened the provisions of the Gold (Control) Act and the Gold Control Authorities could take action against him.
However, as the primary gold has not been seized by the authorities under the Gold (Control) Act, the question that further arises for consideration is whether they could ask the income-tax authorities not to sell the gold for satisfaction of the income-tax demand and produce the same before them. In this connection, the provisions of Section 111 of the Gold (Control) Act may be looked into. It provides that the provisions of the Act or any rule or order made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment. Section 105 of the Gold (Control) Act provides as follows :
‘Officers required to assist Gold Control Officer.–All officers of police and all officers of Government engaged in the collection, or prevention of evasion, of revenue are hereby required and empowered to assist the Gold Control Officers in the execution of the provisions of this Act or of any rule or order made thereunder.’
The income-tax authorities, who would be deemed to be officers under the said section, are required and empowered to assist the Gold Control Officers in the execution of the provisions of this Act. Section 64(b) confers power on the Gold Control Authorities to ask any person, which will include an Income-tax Officer to produce before him, the primary gold which has been seized by him. It is, therefore, clear that under the provisions of the Gold (Control) Act, the officer under that Act was within his jurisdiction to have asked the Income-tax Officer not to dispose of the gold but produce the same before him for taking action under the Gold (Control) Act, in case the petitioner was still its owner.
(ii) The contention, in our opinion, appears to be not correct inasmuch as Section 132B(2) specifically provides that notwithstanding the provisions of Section 132B(1), the Income-tax Officer may follow other modes for recovering the outstanding demand. Apart from that, since the petitioner remains the owner of the gold, the Income-tax Officer cannot be prevented from handing over the same to the excise authorities.
A similar question came up for consideration before the Madras High Court in P.P. Kanniah v. ITO [1981] 129 ITR 414. It was held therein that till the sale takes place, the ownership of the properly will continue to remain in the hands of the petitioner but under distraint by the Income-tax Officer, and the Income-tax Officer cannot be prohibited from handing over the seized article to the excise authorities for the purposes of taking action under the Gold (Control) Act, 1968.
The question can also be looked at from another angle. Under the Income-tax Act, the authorities are not concerned with whether the activities of the petitioner are legal or illegal. An assessee may be earning income by indulging in illegal activities like smuggling. The income-tax authorities have got no power to stop the activities of such an assessee and the only power which they have is to levy income-tax on the income which such an assessee may be earning even from such an illegal activity. Similar is the case here. Possession of the primary gold was prohibited under the Gold (Control) Act and the petitioner has committed an offence thereunder. However, the purpose of seizure by the income-tax authorities was not to punish the petitioner for his illegal activity of possession of primary gold but was for purposes of assessing his tax liability. Sections 132 and 132B of the Act confer power on the income-tax authorities for realising the income-tax dues from the seized assets. However, if the seized asset is the subject-matter of any case and liable to confiscation, the income-tax authorities cannot be forced to appropriate the tax demand from the sale of the seized primary gold. The income-tax authorities are bound to assist the Gold Control authorities and are also liable to produce the gold before the Gold Control authorities. The steps taken by the Income-tax Officer, to recover the tax from the petitioner by attachment and sale of the house property cannot, therefore, be illegal of unauthorised.” (at page 768).
6. Accordingly, the writ petition was dismissed. The decision is reported in Harinder Singh v. ITO [1987] 166 ITR 763 (All). It is stated by counsel for both the parties before us that an application to grant leave to appeal against the said judgment has also been rejected by the Supreme Court.
7. At this stage, we think it relevant to refer to the proceedings taken under the Gold (Control) Act. The Superintendent, Gold Control, New Delhi, summoned the petitioner and recorded his statement on August 17, 1981, and August 18, 1981. On the basis of the said statement and other materials available with the Central Excise Department, a show-cause notice was issued to the petitioner calling upon him to explain why the seized gold weighing 750 tolas (valued at Rs. 15,00,000) should not be confiscated under Section 71 of the Gold (Control) Act and further why a penalty should not be imposed on him under Section 74 of the said Act. The petitioner submitted an explanation thereto and a personal hearing was also afforded to him. On June 10, 1986, the Collector, Central Excise, New Delhi, passed orders levying a penalty of Rs. 7,50,000 under Section 74 of the Gold (Control) Act. In so far as confiscation of the seized gold was concerned, the matter was deferred in view of the fact that the said gold was still in the hands of the Income-tax Department. It was observed that as and when the gold bars are received by the Central Excise Department, further action towards confiscation shall be taken under the provisions of the Gold (Control) Act. The petitioner preferred an appeal to the CEGAT, questioning the validity of the order dated June 10, 1986. The appeal was, however, dismissed on February 19, 1990. It is stated that the Delhi High Court has directed the CEGAT to refer questions of law arising out of its order to the High Court under Section 35G of the Central Excise Act.
8. It would be immediately clear from the above facts that both these writ petitions are liable to be dismissed on the ground of res judicata (based on general principles). The reliefs sought for in these two writ petitions are practically the same, which were urged and were negatived by this court in its decision aforesaid (Harinder Singh v. ITO [1987] 166 ITR 763). The said decision of this court has become final inasmuch as the Supreme Court has declined to grant leave to appeal against the same. We have already set out hereinbefore the decision of this court. It expressly holds that the income-tax authorities must be deemed to be officers within the meaning of Section 105 of the Gold (Control) Act and further that by virtue of Section 64(b) of the Gold (Control) Act, the Gold Control authorities are empowered to call upon any person, including the Income-tax Officer, to produce before him the primary gold which has been seized by him. It was also observed that the officers under the Gold (Control) Act were within their jurisdiction to have called upon the Income-tax Officer not to dispose of the gold but to produce the same before him for taking action under the Gold (Control) Act. Yet another observation made was that prima facie the petitioner must be deemed to have contravened the provisions of the Gold (Control) Act and the Gold Control authorities could take action against him in that behalf. The court went further and observed that the Income-tax Officer cannot be prevented from handing over the seized articles to the excise authorities and that if the seized assets are subject-matter of any case and are liable to confiscation, the income-tax authorities cannot be forced to appropriate the same towards the tax due. In other words, it was held that the income-tax authorities cannot be compelled to sell or adjust the value of the seized primary gold towards their tax arrears. It was accordingly held that the action taken by the income-tax authorities to recover the tax by attachment and sale of his house property cannot be characterised as illegal or unauthorised. We are of the opinion that the said decision covers all the reliefs prayed for in these two writ petitions and accordingly these writ petitions must fail on this ground alone. The decision of this court referred to above, it must be noted, was rendered on March 25, 1987, by which date, the Collector, Central Excise, New Delhi, had already passed his order (dated June 10, 1986) under the provisions of the Gold (Control) Act.
9. For the sake of completeness, however, we shall refer to the facts brought to our notice by Sri R.N. Trivedi, learned counsel for the petitioner. Besides the facts stated above, he brought to our notice the following facts, which really emerge from the correspondence between the Income-tax Department and the Gold Control authorities, placed before us. We may briefly refer to the said correspondence.
(i) On October 14, 1985, the Assistant Collector, Central Excise, Kanpur, wrote a letter to the Income-tax Officer, Central Circle III, Kanpur, requesting the latter not to dispose of the seized gold until further orders from him inasmuch as the said gold is liable to be confiscated under the provisions of Section 71 of the Gold (Control) Act, 1968.
(ii) On January 6, 1987, the Deputy Collector, Central Excise, Kanpur, wrote a letter to the Inspecting Assistant Commissioner informing the latter that they are awaiting clarification from the Ministry in respect of the seized gold and ornaments and that on receipt of such clarification, further action will be taken.
(iii) On May 25, 1987, the Revenue Secretary in the Ministry of Finance decided in a joint meeting held on that day that the income-tax dues shall be recovered initially from the house property and thereafter by sale of the seized gold and the surplus gold, if any, shall be handed over to the Gold Control authorities. This decision was said to have been taken in the light of the peculiar circumstances of the case.
(iv) On May 6, 1988, the Commissioner of Income-tax (Central), Kanpur, wrote to the Collector, Central Excise, Kanpur, requesting for necessary clearance to enable the Income-tax Department to sell the seized gold for realizing the tax arrears. In this letter, reference is made to a communication dated March 15, 1988, from the Deputy Secretary, Ministry of Finance, New Delhi, which is said to contain certain directions, probably those referred to in (iii) above. In this letter, the Commissioner of Income-tax complained that the Central Excise authorities were not adhering to the said directions.
(v) On June 1, 1988, the Commissioner of Income-tax (Central), Kanpur, again wrote a letter to the Collector, Central Excise, Kanpur, asking for permission to sell the gold.
(vi) On July 13, 1988, the Central Excise Collector, Kanpur, wrote to the Commissioner of Income-tax (Central), Kanpur, to the following effect:
“It is to inform you that you may dispose of the seized gold/gold ornaments after realization of the amount of Rs. 7.5 lakhs imposed as penalty for violation of the Gold (Control) Act/Rules from the sale of the confiscated gold and remit the same to us.”
Evidently, the expression “confiscated gold” is a mistake for seized gold ; admittedly, no order of confiscation has yet been passed in respect of the said gold under the provisions of the Gold (Control) Act.
(vii) On September 13, 1990, the income-tax authorities wrote to the Central Excise authorities, setting out the decision of the Revenue Secretary taken in a joint meeting of the Income-tax and Central Excise Officers held on September 25, 1987, and May 2, 1989, and contending that the Central Excise Department has no jurisdiction over the gold seized by and in the custody of the Income-tax Department and no proceeding whatsoever can be taken under the Gold (Control) Act for confiscation of the said gold.
(viii) In view of the difference of opinion between the two departments, a meeting was held in the room of the Member (Investigation) of the Central Board of Direct Taxes on May 29, 1990, in which it was agreed that “if approved, notwithstanding the position taken so far by the Income-tax Department that the seized primary gold has to be necessarily dealt with as per the provisions of the Income-tax Department (that the seized primary gold has to be necessarily dealt with as per the provisions of the Income-tax Act) as an administrative measure, the seized primary gold would be handed over to the Gold control authorities for confiscation. Such a step would also be in line with the practice of the Income-tax department of handing over the primary gold found during the course of income-tax searches to the Gold control authorities. In so far as the seized gold articles and ornaments are concerned, the Income-tax Department would go ahead with the auction for recovery of taxes as is generally done with seized gold ornaments in other cases. The Gold Control Administrator on his part agreed to get the gold ornaments cleared by the Gold Control Authorities for disposal by the income-tax authorities for recovery of taxes. The adjudication proceedings, if any, will be finalised expeditiously for this purpose.” It is this decision which led the petitioner to approach this court by way of these two writ petitions.
10. Sri R. N. Trivedi, the learned Additional Advocate-General, appearing for the writ petitioner, urged the following contentions :–
(i) That the gold seized under Section 132 of the Income-tax Act cannot be the subject-matter of any proceeding under the Gold (Control) Act inasmuch as the Gold (Control) Act has no application to “any gold… in the possession, custody or control of Government” as provided in Section 3 of the Gold (Control) Act, 1968.
(ii) That for taking any proceeding under the Gold (Control) Act, whether for confiscation or for levying penalty, as the case may be, seizure of the offending goods is the first essential step. Unless the gold is seized, it cannot be confiscated. Actual physical control of the gold by the Gold Control Authorities is essential before it can be confiscated. Since the gold in question has not so far been seized by the Gold Control Authorities, it cannot be seized nor can any proceeding be taken now in view of the fact that the said Act has since been repealed with effect from June 6, 1990. The mere fact that the said gold was handed over by the Income-tax Department to the Gold Control Authorities (Central Excise Authorities) on November 27, 1990, (that is, after the repeal of the Gold (Control) Act) cannot clothe the Central Excise authorities with the power to initiate proceedings under the said Act with respect to the gold in question.
(iii) A show-cause notice under Section 79 of the Gold (Control) Act can be issued only within six months of the seizure. It cannot be issued thereafter. Since no seizure has been effected so far, no show-cause notice can be issued now or hereafter in view of the repeal of the Gold (Control) Act.
(iv) The effect of the order deferring the confiscation proceedings (the reference is to the order of the Collector, Central Excise, dated June 10, 1986, referred to hereinbefore) is to drop the proceedings for confiscation altogether. In other words, it must be deemed that the show-cause notice, in so far as it proposed to confiscate the gold, must be deemed to have been withdrawn.
(v) There is no provision in the Income-tax Act which empowers or permits the income-tax authorities to hand over the seized gold to the Gold Control Authorities, when demanded by the latter.
(vi) The respondents are guilty of inordinate delay in either selling the gold or in handing over the same to the Gold Control Authorities, which delay has itself caused immense prejudice to the petitioner. The income-tax arrears have gone up substantially on account of the statutory interest which accrues automatically. The petitioner is in no way responsible for the said delay.
(vii) The decision of the Revenue Secretary taken on May 25, 1987, is referable to Section 109 of the Gold (Control) Act. If so, it could not have been reviewed later on May 29, 1990. Even the said first mentioned order was not communicated to the petitioner ; it was communicated to the income-tax authorities, and that is sufficient communication.
11. We are of the opinion that none of the said contentions can be accepted. All these contentions are concluded by the decision of this court reported in Harinder Singh v. ITO [1987] 166 ITR 763 or they are contentions which ought to be raised in the proceedings taken under the Gold (Control) Act. We shall proceed to deal with each of the contentions seriatim.
(i) The first contention, though not specifically raised by the petitioner in his earlier writ petition (Harinder Singh v. ITO [1987] 166 ITR 763), is barred by the principles of constructive res judicata, which is held by the Supreme Court to be applicable to writ proceedings also. Even otherwise, we are of the opinion that custody or control of statutory authorities created by the Income-tax Act is not the possession, custody or control of the Government within the meaning of Section 3 of the Gold (Control) Act, The statutory authorities, who have seized the gold, are independent of, and distinct from the Government in so far as performance of duties and functions under the Act are concerned ; they cannot be mixed up.
(ii) The second contention is one which ought to have been raised in the proceedings for confiscation as and when they are initiated in pursuance of and as contemplated by the order of the Collector, Central Excise, dated June 10, 1986, which has been affirmed by the CEGAT by its order dated February 19, 1990. We do not think it advisable or appropriate to forestall all the decisions of the authorities under the Gold (Control) Act. Indeed, under the order dated June 10, 1986, the Collector, Central Excise, has already expressed the opinion that the said primary gold is also liable to be confiscated but has merely put off the actual order of confiscation awaiting receipt of the said gold from the income-tax authorities. It is not for us to say whether the said finding is warranted or not. We are only referring to the same to point out that this contention ought not to be considered by us in these writ petitions.
(iii) The third contention is also one which ought to be raised in proceedings already taken under the Gold (Control) Act or which may be taken hereafter. This contention is actually based upon the language of Sections 79 and 71 of the Gold (Control) Act which correspond to subsection (2) of Section 110 and Section 124 of the Customs Act. In a case arising under the said provisions of the Customs Act, a Bench of this court has decided that failure to issue a show-cause notice within six months has only one result, viz., that the seized goods have to be returned to the persons from whom they were seized, but that issuance of a show cause notice after the expiry of six months is not barred by law (vide CMWP No. 726 of 1981–Mohammed Ali v. Union of India–decision rendered by B.P. Jeevan Reddy C.J. and R.R.K. Trivedi J.). Be that as it may, we do not think it appropriate to express any final opinion on the question.
(iv) The fourth contention is also one which ought to be raised in the proceedings under the Gold (Control) Act already pending or which may be taken hereafter. It would not be advisable or appropriate to express any opinion on this question in these writ petitions, since that would amount to forestalling the decision of the Gold Control Authorities, even when they had no opportunity of expressing themselves on the question,
(v) So far as the fifth contention is concerned, it is already concluded against the petitioner by the decision of this court reported in Harinder Singh v. ITO [1987] 166 ITR 763. It is accordingly rejected.
(vi) We have not been able to appreciate the argument based upon delay.
The question of delay is not really relevant in so far as confiscation proceedings under the Gold (Control) Act are concerned, though we do not mean by this that those proceedings should not be concluded with reasonable promptitude. It is enough to direct that proceedings, if found warranted, under the Gold (Control) Act shall be initiated forthwith and if proceedings have already been initiated, they shall be concluded as early as possible.
So far as the delay on the part of the income-tax authorities is concerned, it may be seen that they have already passed assessment orders and the only thing remaining is the recovery of the tax due. When they sought to proceed against the other properties of the petitioner, it was he who interdicted the same by filing WP No. 303 of 1986 (see [1987] 166 ITR 763) and again subsequently by filing the present writ petitions. So far as the sale of gold or adjustment of its value against the income-tax arrears is concerned, such a question cannot arise in view of the decision in WP No. 303 of 1986 (see [1987] 166 ITR 763). We are of the opinion that the Department has not been proved to have been guilty of any unreasonable delay. It is the petitioner who had been agitating from the very beginning that the seized primary gold should be sold first or its value be adjusted against the tax arrears and he has been obtaining stay of recovery proceedings taken against his other properties from time to time including in W.P. No. 909 of 1990. As a matter of fact, in W.P. No. 1362 of 1990, the petitioner has also obtained an order directing the income-tax authorities not to hand over the seized gold to the Gold Control Authorities. In such a situation, we are unable to appreciate the argument based upon delay. This contention is accordingly rejected.
(vii) Regarding the seventh contention urged by learned counsel for the petitioner, we are of the opinion that the decision of the Revenue Secretary to the Government of India is not statutory, nor can it be related to Section 109 of the Gold (Control) Act. The main reliance of learned counsel is upon the decision of the Revenue Secretary dated May 25, 1987. It is relevant to note that this decision of the Revenue Secretary is really contrary to the decision of this court in (see [1987] 166 ITR 763), a decision rendered in a writ petition filed by the petitioner himself, relating to this very controversy. Moreover, the said decision of the Revenue Secretary was, admittedly, not communicated to the petitioner. Before it could be acted upon, it was revised by the Revenue Secretary on September 25, 1990. On the latter date, the Revenue Secretary decided that the usual procedure followed in such cases be followed in the instant case. In the circumstances, we do not think that the petitioner can found any rights on the decision of the Revenue Secretary dated May 25, 1990, which was only an inter departmental decision, which was revised and modified before it could be acted on and before it was communicated to the petitioner.
12. For the above reasons, these writ petitions fail and are accordingly dismissed. There shall be no order as to costs.
13. CMWP No. 1460 of 1990 and CMWP No. 50 of 1991. These two writ petitions are filed by Smt. Mohinder Kaur, mother of the petitioner in Writ Petitions Nos. 1362 and 909 of 1990, disposed of hereinabove. The facts of these cases are more or less identical, except one fact, on the basis of which we are inclined to allow Writ Petition No. 50 of 1991.
14. So far as Writ Petition No. 1460 of 1990 is concerned, it has admittedly become infructuous. The prayer in this writ petition is to issue an appropriate writ, order or direction, restraining the income-tax authorities from handing over the seized primary gold to the Gold Control Authorities and also for a writ of mandamus directing the Gold Control Authorities not to compel the income-tax authorities to hand over the seized gold to them. It is now an admitted fact that the gold has in fact been handed over to the Gold Control Authorities and, for that reason, the reliefs asked for in the writ petition do not survive. It is accordingly dismissed as having become infructuous. There will be no order as to costs.
15. We shall now take up Writ Petition No. 50 of 1991. This writ petition prays for a writ of certiorari quashing the order dated December 31, 1990, passed by the Collector, Central Excise, Kanpur. Under this order, the Collector has confiscated the seized primary gold (two gold bricks weighing 500 tolas) recovered from the petitioner under Section 71 of the Gold (Control) Act. No penalty has, however, been levied under the said order, inasmuch as penalty had already been levied in this behalf by an earlier order dated June 21, 1989. We shall confine our attention to the order dated December 31, 1990.
16. The main ground urged by Sri R.N. Trivedi, learned counsel for the petitioner, in this writ petition is that the said order of confiscation has been passed without a prior show cause notice and without giving an opportunity to the petitioner to show cause against the confiscation. Since we are inclined to accept this contention, we shall state the facts relevant thereto.
17. On July 16, 1981, a search was conducted in the premises bearing No. 7/25, Tilak Nagar, Kanpur, said to be the residential premises of the petitioner, Smt. Mohinder Kaur and her husband, Sardar Inder Singh, who was then alive. Two gold bricks, apart from certain gold jewellery, were seized. Certain gold ornaments were also seized from bank lockers. The searches and seizures took place on July 16, 1981, as stated above as well as on August 4, 1981, and August 21, 1981. Thereafter, a show cause notice was issued by the Collector, Central Excise, Kanpur, on January 20, 1983. It is necessary to notice the contents of this show-cause notice. In the first instance, it refers to search and seizure of primary gold and gold jewellery and then to the unco-operative attitude of the petitioner. Paragraph 7 of the show cause notice then alleges, “from the above it is evident that Smt. Mohinder Kaur had acquired the ownership, possession, custody or control of primary gold in the shape of two gold bricks weighing 500 tolas (each weighing 250 tolas) and 144 gold sovereigns, total weighing 6977 gms. recovered from her residential premises at Kanpur in violation of Section 8 of Gold (Control) Act, 1968, and has in her possession, custody, control the gold/gold ornaments/gold articles more than the prescribed limit in violation of the provisions of Section 16 of the Gold (Control) Act, 1968. Having made the above allegation, paragraphs 8 and 9, which are crucial for the present purpose, called upon the petitioner to show cause against the proposed action. Paragraphs 8 and 9 read as follows :
“8. Smt. Mohinder Kaur is hereby required to show cause to the Collector of Central Excise, Kanpur, as to why the seized gold ornaments weighing 145.900 gms. valued at Rs. 15,270 (seized by the Central Excise Officers) in respect of which the offence appears to have been committed under Section 16 of the Gold (Control) Act, 1968, should not be confiscated under Section 71 of the said Act and why penalty be not imposed upon her under Section 74 of the said Act in respect of gold ornaments weighing 6,977 gms. presently under the custody of the Income-tax Department, Kanpur, and gold/gold ornaments weighing 3,442 gms. presently under the custody of the Income-tax Department, New Delhi.
9. Smt. Mohinder Kaur may further note that the gold/gold ornaments seized by the income-tax authorities and presently lying in their custody is also liable to confiscation under Section 71 of the Gold (Control) Act, 1968.”
18. A reading of paragraphs 8 and 9 of the show-cause notice would show that in paragraph 8 the petitioner was called upon to show cause “as to why the seized gold ornaments weighing 145.900 gms.” be not confiscated under Section 71 of the Act and further why penalty be not levied under Section 74 of the Act in respect of the aforesaid gold ornaments as well as the gold weighing 6,977 gms. and gold ornaments seized from her. But so far as primary gold (two gold bricks weighing 500 tolas) is concerned the petitioner was not called upon to show cause. Paragraph 9 merely stated that the petitioner “may further note that the gold/gold ornaments seized by the income-tax authorities and presently lying in their custody is also liable to be confiscated under Section 71 of the Gold (Control) Act, 1968.” In other words, the show-cause notice, in so far as it proposed confiscation, is confined to gold ornaments weighing 145.900 gms. valued at Rs. 15,270. The petitioner was not called upon to show cause against the confiscation of primary gold. Of course, so far as penalty was concerned, the penalty was sought to be levied for unauthorised possession of not only the aforesaid gold ornaments (weighing 145.900 gms.) but also the gold seized from her residence as well as from her bank lockers.
19. In pursuance of the aforesaid show cause notice, proceedings were taken and an order was passed on June 21, 1980, by the Collector, Central Excise, Kanpur. In this order, the Collector opined that the gold jewellery as well as the gold bricks were liable to confiscation under Section 71 of the Gold (Control) Act, but when it came to passing final orders, he confiscated, only the gold ornaments weighing 145.900 gms. under Section 71 of the Act. So far as the primary gold and gold guineas were concerned, he deferred his orders inasmuch as they were in the custody of the Income-tax Department on that day and had not been received by the Gold Control Authorities Under the said order, he also levied penalty upon the petitioner. After the Income-tax Department made over the primary gold to the Gold Control Authorities, the impugned order was passed on December 31, 1990. In this order, the Collector merely refers to the earlier order dated June 21, 1989, and says that since the passing of the said order, gold bricks weighing 5,825 gms. have been received from the Income-tax Department on November 27, 1990, and, therefore, the impugned orders were being passed. The entire primary gold was confiscated. Before passing this order, no fresh show-cause notice was issued by the Collector. The impugned order was admittedly passed in pursuance of the show-cause notice dated January 20, 1983, and in continuation of the earlier order of the Collector dated June 21, 1989.
20. It would be evident from the facts stated above that so far as the primary gold is concerned, there was no notice issued by the Collector calling upon the petitioner to show cause why the said primary gold should not be confiscated. The only show-cause notice issued to the petitioner is the one dated January 20, 1983. As stated above, it merely called upon the petitioner to show cause why the gold ornaments weighing 145.900 gms. be not confiscated. So far as the primary gold is concerned, all that the show-cause notice stated was that the petitioner may note that the “Gold/ gold ornaments seized by the income-tax authorities and presently lying in their custody” is also liable to confiscation under Section 71 of the Gold (Control) Act, 1968. “Asking the petitioner to note the said fact is not equivalent to, and cannot be construed as a show-cause notice calling upon the petitioner to show cause against the confiscation of the primary gold. Confiscation of gold is a serious action fraught with serious consequences to the person concerned. In such a case, we would not be unjustified in insisting upon strict compliance with the provisions of the Act.
21. Section 79 of the Gold (Control) Act says :–
“No order of adjudication of confiscation . .. shall be made unless the owner of the gold, … is given a notice in writing,
(i) informing him Of the grounds on which it is proposed to confiscate such gold, …. and
(ii) giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the confiscation . . . and, if he so desires, of being heard in the matter.”
22. It is thus clear that Section 79 requires not only a notice being given to the person concerned informing him of the grounds on which it is proposed to confiscate such gold but also giving him an opportunity of making a representation in writing against the confiscation. In the present case, it cannot be said that the said requirements have been complied with. On this ground alone, the impugned order (confiscating the primary gold weighing 5,825 gms.) is liable to be quashed.
23. The writ petition (No. 50 of 1991) is accordingly allowed and the impugned order dated December 31, 1990, is quashed. There shall be no order as to costs.