This article is written by Rida Zaidi, a law student of Faculty of Law, Aligarh Muslim University. This article seeks to answer the question regarding the subsequent change in law affecting the position of the parties in respect of the case in M/S Topcem India v.Union of India.

This article has been published by Shoronya Banerjee.

Introduction

This article deals with the question of whether a subsequent change in law will affect the position of the parties. The present question was decided by the Guwahati High Court in the landmark case of M/s Topcem India v. Union of India & Ors (2021). The said case was regarding the exemption of the people working in the industrial units of north-eastern states from the education cess and secondary and higher education cess as a part of the Industrial Policy 1997 and 2007 to encourage the workmen regarding the production of the excise goods. The appellants that were the people working under the industrial units of north-eastern states raised the contention that they were particularly exempted from paying the cess. The case of M/S Unicorn Industries v. Union of India (2019) overruled the case of M/S SRD Nutrients Pvt Ltd v. Commissioner of Central Excise Guwahati (2021)where it was held that the cess which is already paid should be refunded back to the parties as they were exempted from this cess. The case of Unicorn Industries v. Union of India (2019) overruled the judgment of the case of M/S SRD Nutrients Pvt. Ltd v. Commissioner of Central Excise Guwahati (2021), declaring the judgment as ‘per incuriam’ meaning thereby ‘through lack of care’ stating that the refunds that were made to the people of north-eastern states working under the industrial units were erroneous and should be revoked. 

This article shall be inclusive of the above-mentioned question in respect to the case of M/S Topcem India v. Union of India (2021) and would deal with the answer to the question in detail.

An overview of the case of M/S Topcem India v. UOI & Ors

The appellants for the case- M/S Topcem

The Respondents for the case- Union of India & Ors.

1. In this case, there were several petitions filed by the people who were working in the industrial units of the state of north-east whose refunds were not granted before the Guwahati High Court. The appellant contended that they were exempted from paying the education cess and the secondary and higher education cess by the industrial policy of 1997 and 2007. Though they had already paid it, they prayed for a refund.
2. The Supreme Court in the case of SRD Nutrients Pvt Ltd v. Union of India (2021), held that as the workmen of the industrial units were exempted from paying both the cess they are entitled to a refund and the Department of Excise Duty should do the needful.
3. The Apex Court sanctioned the refund as under Section 11A of the Central Excise Act,  1944 which deals with the recovery of duties, not paid, not levied, shortly paid, shortly levied or erroneously refunded.
4. The Guwahati High Court in the case of M/S Unicorn Industries v. Union of India (2019) overruled the judgment of the SRD Nutrients Pvt Ltd v. Union of India (2021) that no notification was published stating that this group of the society is exempted from paying the education cess and the secondary and higher education cess and therefore, they are not exempted.
5. The Department of Excise Duty asserted that the refund was erroneous in the light of the previous judgment being held ‘per incuriam’ and has to be revoked.
6. The appellants were issued a show-cause notice by the Central Excise Department to show reasons as to why the refunds should not be revoked as they fall under Section 11A of the Central excise Act, 1944. 

Issues involved

1. Whether the refunds granted in the judgment of M/S SRD Nutrients Pvt Ltd v. Union of India (2021) were erroneous as the judgment of Unicorn Industries v. Union of India (2019) overruled it and held the SRD case as per incuriam?
2. Whether a quasi-judicial body under the Department of Central Excise Duty granting refunds can revisit the order passed by a collateral authority under the Central Excise Act?

The contentions of both parties in the case 

Petitioner’s contentions

1. The petitioner raised the contention that the circulars being issued from time to time by the Government of India regarding the Industrial Policy Resolution, 1997, that wherever any excise duty is charged, the education cess and secondary and higher education cess is calculated altogether and it is not to be calculated separately. The excise duty along with the education cess is charged on all excisable goods and if excise duty is not levied upon the workmen of industrial units, no education cess will be levied as well.
2. The petitioners asserted that the refund sanctioned to them was held by the Court in the case of SRD Nutrients Pvt Ltd v. Union of India (2021), which was relevant and enforceable at that point in time and it is immaterial that a subsequent case changed the law regarding the matter. Thus, the show-cause notice issued by the Central Excise Department does not fall under Section 11A(i) of the Central Excise Act,1944.
3. The learned counsel contended that for the application of Section 11A of the Central Excise Act,1944, subsection(4) of the Act has to be fulfilled.
4. The counsel contended that the respondent’s only ground for issuing a show-cause notice is that the case of SRD Nutrients Pvt Ltd v. Union of India (2021) was overruled by M/S Unicorn industries declaring the previous judgment as per incuriam.
5. The petitioners contended that, to revoke the refunds on grounds as mentioned under Section 11A of the Central Excise Act,1944 such as fraud, collusion, misstatements, etc. are invoked and thus, Section 11A cannot be attracted.
6. The learned counsel asserted that if a judgment is declared as per incuriam, only its precedential value is deteriorated and not its binding facts and it will still act as a conclusive judgment.
7. The learned counsel asserted that the show cause notice is contrary to the provisions of Section 11A of the Act and is only issued on the ground that it is erroneous.
8. The petitioners asserted that no officer of the concerned department can revisit the orders made by him or his predecessor officer and only an appeal can be filed if he is aggrieved from the concerned order under Section 35 of the Act, but no such appeal has been filed, and thus, the writ petitions have attained finality.
9. Applying the principle of res judicata they cannot reopen the issue already decided in finality in the previous case.

Respondent’s contentions

1. After the Apex Court pronounced the judgment in M/S Unicorn India v Union of India (2019) the department issued show-cause notices to the appellant to show causes as to why they are entitled to the refund. As the Court has held the view observed by the Guwahati High Court in SRD Nutrients Pvt Ltd v Union of India (2021)that the petitioners who were entitled to the refund, that particular judgment was held per incuriam and shall not be binding upon the subsequent case laws.
2. The respondents’ issued show-cause notices to the appellant asking them as to why they should not be inquired about the recovery of the refund. The respondent also framed the show cause in a tabular form informing the petitioners the amount to be extracted from each of them, authorities issuing the notice and the goods manufactured by them.
3. Because the writ petitions involve common questions of law, they represent all the petitioners. As the judgment made in M/S Unicorn Industries v Union of India (2019) has declared the previous case of SRD Nutrients per incuriam, so the show-cause notices were issued in pursuance of the obedience of the law and were not erroneous.
4. The show-cause notices were issued within the period of stipulated time and are covered under the provisions of Section 11A of the Central Excise Act.
5. The judgment passed in the M/S Unicorn industries had overruled the previous case as per incuriam so the effect of the latter case would be retrospective, and which, in turn, has made the refunds erroneous and are bound to be recovered.
6. The learned counsel for the respondents asserted that the judgment was based on a pure and abstract question of law and thus the principle of res judicata cannot be applied.
7. The refund will result in unjust enrichment.

Observation of the court of law 

1. The Guwahati High Court observed that the main issue which arose, in this case, was that the refunds that were granted were erroneous and as the meaning of the word ‘erroneous’ is defined in several judgements by the Apex Court, that the error of law or deviating from law and/or  an order which is not in accordance with law can be treated as erroneous, but where a law has subsequently changed or reversed it cannot permit the revisional authority to reopen or re-evaluate it. 
2. A subsequent change in law will not affect the decisions which are already decided conclusively and will not have a retrospective effect making the decided cases improper and illegal. And if the effect is applied as retrospective, it will lead to endless litigation and wastage of the Court’s time and resources. If the subsequent law will affect retrospectively it will be notified in the particular judgment. There is absolutely no ground involved in the said case which declares the refunds as erroneous under Section 11A of the Central Excise Act. And the only ground is that the SRD case is held per incuriam by the Apex Court. 
3. The second issue which was involved in this case was whether the Department of Central Excise Duty exercising quasi-judicial authority can reopen or re-evaluate an order passed by the Court or not. As per the provisions of the Central Excise Act, the officers of the department can revisit or re-evaluate the decisions under the provisions of the statute or judicial remedy. And under Section 35 of the Act, it can be done through the means of appeal or review application. 
4. The essential question which was decided in M/S Topcem v. Union of India (2021) is whether a subsequent change in law will affect the position of parties or not. Here the Court was of the view that where a case has been decided in finality and when the rights of the parties are determined, the subsequent reversal or change in law will not affect the position of the parties. The judgment will cease to have precedential value but will still be conclusive. 
5. The Court dismissed and quashed the show cause notice issued by the Department as they were issued without jurisdiction under Section 11A, but the writ petitions filed by the petitioners were permitted.

Precedent judgments referred to in this judgment

1. In the case of M/S Malabar Industrial Limited v. Commissioner of Income Tax State Kerala,(2000), the Court defined the term ‘erroneous’ as the incorrect assumption of facts or incorrect application of the law.
2. In the case of PV George & Ors v. State of Kerala & Ors (2007), the judgment was that, unless indicated by the Court regarding an order to operate prospectively, it will always operate retrospectively.
3. In the case of HP Nurpur bus operators Union  (1995) ,the judgment observed that, once the Court has declared some provisions as invalid, all the subsequent orders passed under the same head would be invalid.
4. In the case of Indian Railway SAS Staff v. Union of India (1955), the judgment was referred to,, as the Court held that, as the present case involves a pure question of law, the principle of res judicata cannot be applied.
5. In the case of Karnal Leather Karamchari v. Liberty Footwear Co. (1989), the petitioners referred to its judgment that once the tribunal has decided a case, no subsequent proceedings where the tribunal has given a contrary view will affect the former proceedings already decided or will not declare them as improper or invalid.
6. In the case of Union of India v. Madras Telephone, SC & ST Welfare Association (2006) was referred where the Court held that when the rights of the parties are already decided in a suit, no subsequent proceedings where a contrary view is observed would affect the position of the parties in the former case.
7. In the case of Bharat Sanchar Nigam Ltd v. Union of India (2006), the judgment was referred where it was held that, overruling by the Court would not cease to take away the binding nature of the decided case and the principle of res judicata will continue to operate for the former case.
8. The case of Sanchalakshri & Anr. v. Vijaykumar Raghuveer Prasad (1998) was referred to in the present case that here, the Court has not laid down any new law but has only interpreted what already existed.

Conclusion

While answering the question of whether a subsequent change in law will affect the position of the parties, the Court held that a subsequent change in law will not ipso facto reverse or alter the position of the parties in a case which has been already decided and the rights of the parties determined in finality. The principle of res judicata applies and the Department of Central Excise Duty has no authority to reopen or re-evaluate an order passed by the Court. 

Under Section 25 of the concerned Act, an appeal or review application can be filed, that is, it could be done through statutory or judicial remedies. The former judgment will operate as binding and conclusive and only the precedential value gets concluded. The case of M/S Topcem v. Union of India & Ors (2021) also laid down that where a show-cause notice is issued by the Department without jurisdiction, it would be dismissed and quashed, but where it is issued by authority wrongfully or there has been misuse of power, the aggrieved party can approach the Court.

References

1. https://www.livelaw.in/news-updates/subsequent-change-in-law-reverse-position-of-parties-viz-their-rights-the-earlier-order-gauhati-high-court-171501
2. https://taxguru.in/excise-duty/ec-shec-refunded-revoked-co-laterally-authorities-hc.html
3. https://www.lawyersclubindia.com/judiciary/m-s-topcem-india-v-union-of-india-ors-2021-subsequent-change-in-law-will-not-reverse-the-position-of-parties-to-a-case-5066.asp
4. https://itatonline.org/digest/verdicts/topcem-india-vs-union-of-india/ 

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