vil Appeal Nos 1403 to 1406 of 1974
From the Judgment and Order dated 2312
1971 of the Madras High Court in WP Nos
1053 54 4679  4715 of 1968
Anil Dev Singh Ms Indu Malhotra and CV Subba Rao for the Appellant
467 RP Bhat GL Sanghi MN Krishnamani Vineet Kumar R Mohan KC Dua and RA Perumal for the Respondents
The Judgment of the Court was delivered by SINGH J
These appeals are directed against the judg ment and order of a Division Bench of the High Court of Madras dated 28 1974 quashing the notices issued by the Deputy Commercial Tax Officer Madras
The respondents manufacture various medicinal prepara tions and in that process they use tincture containing alcohol
On the enforcement of the hereinafter referred to as the Act  the respondents became liable to pay dutyin accordance with Section 3 of the Act read with Schedule to the Act
They further became liable to obtain licence but they neither paid duty nor obtained licence
The Commercial Tax Officer issued notices to the respondents in exercise of his powers under Rule 12 of the Medicinal and Toilet Preparations Excise Duties Rules 1956 directing them to pay duty on all medicinal preparations manufactured by them after 161961
The notices were in the shape of notice of demand requiring the respondents to pay the duty which they had failed to pay in accordance with the Act and the Rules on the use of tincture in manufacturing medicinal preparations
The respondents filed writ petitions under Article 226 of the Constitution of India before the High Court of Madras challenging the notices and the proceedings initiated in pursuance thereof for the recovery of duty from them
A Division Bench of the High Court allowed the writ petitions on the sole ground that Rule 12 under which the impugned notices were issued was ultra vires the Act conse quently proceedings initiated in pursuance thereof were without jurisdiction
On these findings the writ petitions were allowed and the notices as well as the proceedings were quashed
The sole question which arises for consideration in these appeals relates to the validity of Rule 12 of the Medicinal and Toilet Preparations Excise Duties Rules 1956
The High Court has declared the Rule ultra vires on the ground that the Act was silent on the question of levy of duty on escaped turn over and hence Rule 12 which pro vides for the recovery of escaped duty was outside the purview and scope of the Act
The Act was enacted to provide for the levy and collection of 468 duty of excise on medicinal and toilet preparations contain ing alcohol opium Indian hemp or other narcotic drugs as the preamble states
Section 3 provides for levy and collec tion of duties
It reads as under 31
There shall be levied duties of excise at the rates specified in the Schedule on all dutiable goods manufactured in India
2 The duties aforesaid shall be leviable a where the dutiable goods are manufactured in bond in the State in which such goods are released from a bonded warehouse for home consumption whether such State is the State of manufacture or not b where the dutiable goods are not manufac tured in bond in the State in which such goods are manufactured
3 Subject to the other provisions contained in this Act the duties aforesaid shall be collected in such manner as may be prescribed
 Excise duty is imposed by Section 3 on the manufacture of dutiable goods at the rates specified in the Schedule
Sub section 2 indicates the stage at which the duty is to be levied
Section 33 provides for collection of duty lays down that it shall be collected in such manner as may be prescribed by Rules made under the Act
Section 3 there fore imposes duty on the manufacture of medicinal prepara tions and it lays down the rates and it also indicates the stage at which the duty is to be levied
So far as collec tion of duty is concerned the Act leaves the same to the rule making authority
Section 19 confers power on the Central Government to make rules to carry out the purposes of the Act
The relevant provision of Section 19 is as under 191
The Central Government may by notifi cation in the Official Gazette make rules to carry out the purposes of this Act
2 In particulars and without prejudice to the generality of the foregoing power such rules may i provide for the assessment and collection of duties levied under this Act the authori ties by whom functions 469 under this Act are to be discharged the issue of notices requiring payment the manner in which the duties shall be payable and the recovery of duty not paid
 Section 191 read with Section 33 confer wide powers on the Central Government to make rules which may be necessary for carrying out the purpose of the Act
Such rules may provide for the assessment and collection of duties and the manner in which the duty is to be paid as well as for the recovery of duty not paid at all
The Central Government in exercise of its power under Section 19 of the Act has framed the Medicinal and Toilet Preparations Excise Duties Rules 1956 which were enforced on 9th March 1957
Chapter III of the Rules provide for levy and refund of and exemp tion from duty
Rules 6 to 17 relate to recovery exemption and refund of duty
Rule 6 requires every person who manu factures any dutiable goods or who stores such goods in a warehouse to pay the duty on such goods at such time and place as may be designated
Rule 9 prescribes time and manner of payment of duty
According to this Rule no dutia ble goods shall be removed from any place where they are manufactured either for consumption or for export outside such place until the excise duty leviable thereon is paid at such place and in such manner as prescribed in the Rules or as the Excise Commissioner may require
Rule 11 provides for recovery of duty or charges which may have been shortlevied through inadvertence error collusion or mis construction on the part of an Excise Officer and through mis statement on the part of the owner and it also provides for recovery of any refund erroneously made to the manufacturer owner of the goods on written demand made within six months from the date of payment of duty
Rule 12 confers residuary power for the recovery of sums due to the Government
Rule 12 reads as under 12
Residuary powers for recovery of sums due to Government Where these rules do not make any specific provision for the duty has for any reason been short levied or of any other sum of any kind payable to the collecting Government under the Act or these rules such duty deficiency in duty or sum shall on written demand made by the proper officer be paid to such person and at such time and place as the proper officer may specify
 470 As already noted Rules contained in Chapter III of the Rules particularly Rules 6 9 10 and 11 provide for payment and recovery of duty and also the time and manner of its payment
Rule 12 is designed to confer residuary power for recovery of duty if unpaid on account of short levy or deficiency or for any reason it remains unpaid
If recovery of duty or any amount of sum payable to the Government under the Act is not covered by any specific Rule additional supplementing provision is made for its recovery by Rule 12
Rule 12 provides for recovery of duty as well as any other sum payable to the collecting Government under the Act if the same is not paid on account of short levy or deficiency or for any reason
In substance Rule 12 contains additional safeguard for recovery of duty it does not create any additional charge or liability on the manufacturer for the payment of the duty
The liability to pay tax is created by the charging Section 3 and Rule 12 confers on the autho rised officer to recover duty if the same has not been paid on account of any short levy or deficiency or any other reason
Rule 12 is referable to section 192i of the Act
The Rule carries out the purposes of the Act as it seeks to provide for recovery of duty as contemplated by Section 33 of the Act
The High Court committed error in holding that the Rule provides for recovery of escaped duty although the Act is silent on the question of escaped assessment and therefore Rule 12 is ultra vires the Act
Learned counsel appearing for the respondents urged that Rule 12 is unreasonable and violative of Article 14 of the Constitution as it does not provide for any period of limitation for the recovery of duty
He urged that in the absence of any prescribed period for recovery of the duty as contemplated by Rule 12 the officer may act arbitrarily in recovering the amount after lapse of long period of time
we find no substance in the submission
While it is true that Rule 12 does not prescribe any period within which recovery of any duty as contemplated by the Rule is to be made but that by itself does not render the Rule unreasonable or violative of Article 14 of the Constitution
In the absence of any period of limitation it is settled that every author ity is to exercise the power within a reasonable period
What would be reasonable period would depend upon the facts of each case
Whenever a question regarding the inordinate delay in issuance of notice of demand is raised it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice or demand for recovery was made within reasona ble 471 period
No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case
In view of the above discussion we allow the appeals and set aside the judgment and order of the High Court of Madras dated 28
There will be no order as to costs
TNA Appeals allowed


Summary:
The Coke Act and the Coal Act divested the ownership rights in the mines from the owners to the Central Government
The Acts provided for payment in lieu of take over
The payment was to be made to the respective owners after discharging their liabilities
The Acts also provided for accrual of interest on the amount payable for the procedural period
Some of the owners filed writ petitions before the High Court claiming that the interest accrued exclusively be longed to owners and the same was not available for dis bursement to the claimants of the owners
The High Court allowed the writ petitions and held that the interest accrued under the Coal Act Cannot be made available to the Commissioner for meeting the claims of the creditors of the mine owners and it is to be exclusively given to the mine owners
The present appeals by special leave challenge the said decision of the High Court
Allowing the appeals HELD 1
It is clear from the scheme and plain reading of the various provisions of the Coal Act that the interest amount has to be made available to the Commissioner to meet the debts and liabilities
The Commissioner has to adjudi cate the claims of creditors of the mine owners in accord ance with the priorities
The claim accepted by the Commis sioner are to be satisfied out of the amount payable to the mine owners and the balance left after meeting the claims of all the 456 secured and unsecured creditors is to be paid to the owners of the coal mines
462A B 21
The High Court s conclusions are primarily based on the interpretation of Section 185 of the Coal Act
The High Court has quoted the meaning of the words enure and benefit from various dictionaries
No dictionary or any outside assistance is needed to understand the meaning of these simple words in the context and scheme of the Coal Act
The interest has to enure to the benefit of the owners of the coal mines
The claims before the Commissioner under the Coal Act are from the creditors of the owners and the liabilities sought to be discharged are also of the owners of the coal mines
When the debts are paid and the liabili ties discharged it is only the owners of coal mines who are benefited
Taking away the interest amount by the owners without discharging their debts and liabilities would be unreasonable
They have only to adopt delaying tactics to postpone the disbursement of claims and consequently earn more interest
Due to such delay the owner would get huge amount of interest though ultimately he may not get a penny out of principal amount on the final settlement of claims
It would amount to conferring unjust benefit on the owners which can never be the intention of the Parliament
462D E F 22
Section 24A of the Coal Act provided that interest shall be paid at such rate not exceeding the rate of inter est accruing on any amount deposited by the Commissioner under Section 18
Had the Parliament intended to give inter est to the owners there would have been no necessity for fixing the maximum limit of interest payable to the claimant with reference to the rate of interest accruing to the scheduled amount
1464B 31
A plain reading of Section 26 read with Section 185 of the Coal Act makes it clear that moneys paid to the Commissioner in relation to a coal mine are to be used for satisfying the debts and liabilities
Interest amount ac crued under the Coal Act is undoubtedly money in relation to coal mine and as such it squarely comes within the ambit of Section 26 of the Coal Act
463E 32
The amended Section 185 of the Coal Act which escaped the notice of the High Court provides that the amount of interest accruing on the amounts standing to the credit of the deposit account is also payable to the Commis sioner
Section 223 of the Coal Act makes the assets in the hands of Commissioner available for satisfying the debts in order of priorities
The assets of the erstwhile owner lying in the 457 hands of the Commissioner of payment would include the interest which has been paid to the Commissioner under Section 185Similarly Section 24 of the Coal Act says that unsecured creditors will be paid out of the money credited to the account of coal mine
Moneys credited to the account of coal mine also include interest
463F G 33
Under Section 185 of the Coal Act the interest accruing on the amount standing to the credit of the depos it account shall also be payable to the Commissioner in addition to the sum referred to in sub section 1 of Sec tion 18
It cannot be disputed that the interest paid to the Commissioner under Section 185 is money paid to him in relation to a coal mine and as such it has to be utilised in meeting the claims of the creditors of the mine owners and their other liabilities
Even otherwise interest amount in the present context has no separate entity
As the lamb belongs to the owner of the sheep the interest goes with the principal
The interest accrued under the Coal Act is thus part of the kitty out of which the claims and liabili ties are to be met
463A D 4
The Coal Act and the Coke Act being identical this decision in the Coal Act is equally applicable to the Coking Act
464C