PETITIONER: THE COMMISSIONER OF INCOME-TAX, BANGALORE Vs. RESPONDENT: SHREE MAN JUNATHESWARE, PACKING PRODUCTS & CAMPHOR WORKS DATE OF JUDGMENT: 02/12/1997 BENCH: G.T. NANAVATI, M. JAGANNADHA RAO. ACT: HEADNOTE: JUDGMENT:

THE 2ND DAY OF DECEMBER, 1997 Present :

Hon'ble Mr. Justice <NAME> Hon'ble Mr. Justice <NAME>, Sr. Adv., <NAME>, and <NAME>, Advs. with him for the appellant Ms. <NAME>, Adv. for the Respondent J U D G M E N T The following Judgment of the Court was delivered: <NAME>, J.

Leave granted.

Heard learned counsel on both the sides.

This appeal arises out of the judgment and order passed by <ORG> on 6th Jun, 1995 in I.T.R.C. No. 26/93. The question that was referred to <ORG> was:

" Whether, on the facts and in the circumstances of the case, <ORG> i right in law in holding that the word 'record' used in Sec. 263 (1) of the Act would not mean the record as it stands at the time of examination by the Commissioner, but it means the record as it stands at the time the order in question was passed by the <ORG>?"

The respondent-firm, during the previous year relevant to the assessment year 1977-78, had constructed a cinema theatre and in the return filed by it had shown the cost of construction at Rs. 20,28, 498/- (Rs. 23,78, 242 less Rs. 3, 49, 644 being electric portion). The income-Tax Officer on 2nd February, 1980 wrote to the Departmental Valuation Officer to ascertain and report correct cost of construction of the theatre. The Valuation Officer expressed his inability to give his valuation report by 31st March, 1980 by which date the assessment was to be completed. The Income-Tax Officer, therefore, without waiting for his report, passed an order assessment accepting the valuation mentioned by the assessee in its return. The Valuation Officer submitted his report on 16th December, 1980. He determined the cost of construction at Rs. 34, 58, 600/- as against Rs. 20, 28, 498/- stated by the assessee. Therefore, the Commissioner of Income-Tax issued a notice under Section 263(1) of the Income-Tax Act to the assessee on the ground that investment not accounted for by the assessee-firm should have been brought to tax and the income-Tax officer having not done so, his order was erroneous and prejudicial to the interest of the <ORG>. Before the Commissioner, it was contended by the assessee that as the Valuation Report was not available to the Income-Tax officer at the time of passing the assessment order and did not form part of the record of the proceeding, it could not be a valid basis for initiating an action under Section 263 of the Act and, therefore, the proceeding deserved to be dropped. The decision of <ORG> in Ganga Properties V/s [(1979) 118 ITR 447] was relied upon in support of that contention. The Commissioner rejected it on the ground that the term 'record' would include all records available at the time of examination by him, set aside the assessment made by the Income-Tax Officer and directed him to pass a fresh assessment order in light of the observations made by him.

The assessee preferred an appeal to <ORG> against that order. The <ORG> upheld the contention of the assessee relying upon the judgment of <ORG> in <ORG> case (supra), allowed the appeal and set aside the order passed by the Commissioner.

At the instance of the <ORG>, the question stated above was referred to <ORG> of karnataka for its opinion. <ORG> after referring to the decisions of <ORG> in <ORG> case and C.I.T. V/s. <ORG> [(1991) 190 ITR 404], held that though the record contemplated by section 263 (1) does not mean only the order of assessment but it comprises all proceedings on which the assessment is based, yet if there was some record which was not available on the date of completion of assessment that record would not form part of the order of the assessment authorities. It, therefore, answered the question in affirmative, i.e., in favour of the assessee and against the <ORG>. The <ORG> has, therefore, filed this appeal.

Mr. <NAME>, learned counsel for the <ORG>, submitted that in view of the amendments made in Section 263 (1) by the Finance Act 1988 and the Finance Act of 1989, the term 'record' would mean all records relating to that proceeding available at the time of examination by the Commissioner. He further submitted that even though the Valuation Report submitted by the Departmental Valuation Officer was not available to the Income-Tax officer when he had passed the assessment order, it became a part of the record and, therefore, it was open to the Commissioner to consider the same while exercising his revisional power under that section. strongly opposing these submissions, Ms. <NAME>, learned counsel appearing for the assessee, submitted that as the Commissioner had passed the order on 3rd March, 1982, the amendments made in Section 263 (1), in 1988 and 1989, though with retrospective effect cannot have the effect of validating the order of the Commissioner which was illegal when passed. She submitted that when the order was passed by the Commissioner the correct position of law was that only that record which was available to the income- Tax Officer could be considered by the Commissioner for the purposes of exercising his power under Section 263 (1). She submitted that the legislature by adding the explanation and widening the definition of the term 'record' has now enabled the Commissioner to take into consideration all records relating to the proceeding. In her submission, the 1989 amendment had only limited retrospective effect. If an order passed by the Commissioner under Section 263 , after 1st June, 1988, was challenged on the ground that he had taken into consideration the material, which was not available to the Income-tax Officer, when he had passed the assessment order, then its validity had to be determined on the basis that not only all the record of that proceeding but the record relating to it was also available to the Commissioner. But an order passed before 1st June, 1988, if it was illegal for the reason that it had taken into consideration other material also, then the amendment of 1989 did not have the effect of making it legal.

Earlier Section 263 (1) did not contain any explanation. It enables the Commissioner to call for and examine the record of any proceeding under the Act and pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment, if he considers that any order passed by the assessing officer is erroneous insofar as it is prejudicial to the interests of the <ORG>. By the Taxation Laws (Amendment) Act , 1984, an explanation was added to Section 263 (1) for removal of certain doubts but it is not necessary to refer to that explanation as it related to the meaning of the expression "order passed by the assessing officer" and, therefore, not relevant for the purpose of this case. By the Finance Act . 1988, the said explanation was substituted w.e.f. 1st June, 1988. The reason why the <ORG> had to make that amendment is stated in the Memorandum explaining the provisions in the Finance Bill of 1988. We will refer to only that part which is relevant for us. It was observed by the <ORG> that the provision as it stood then, had given rise to judicial controversy in respect of the following:

"48. x x x x x x x x x

(a) On the interpretation of the term 'record' . It has been held in some cases that the word 'record' in section 263 (1) could not mean the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time of examination by the Commissioner but it meant the record as it stood at the time when the order was passed by the Assessing Officer. Such an interpretation is against the legislative intent and defeats the very objective sought to be achieved by such provisions, since the purpose is to revise the order on the basis of the record as is available to the Commissioner at the time of examination.

x x x x x x x x x To eliminate litigation and to clarify the legislative intent in respect of the provisions in the three Direct tax Acts, it is proposed to clarify the legal position in this regard the Explanation to the relevant Sections. The proposed amendments are intended to make it clear that 'record' would include all records relating to any proceedings under the concerned direct tax laws available at the time of examination by the commissioner."

The relevant part of the explanation after its substitution read as follows:

"Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub- section,-

(a) ................

(b) "record" includes all records relating to any proceeding under this Act available at the time of examination by the Commissioner;

(b) ........................... "

Thus, by this amendment, definition of the term "record" for the purpose of Section 263 , was provided by the legislature. But a doubt regarding the meaning of the term 'record' still persisted and, therefore, a further amendment was made by the <ORG> while enacting Finance Act of 1989. The Memorandum explaining the provisions in the Finance Bill, 1989 makes that clear. Paragraph 28 of the said Memorandum reads as under:

"28. Under the existing provisions of Section 263 of the Income-tax Act and corresponding provisions of the Wealth-tax Act and the Gift-tax Act , the Commissioner of Income-tax is empowered to call for and examine the record of any proceeding and if he considers that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of <ORG>,, he may pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the same or directing a fresh assessment. By the Finance Act , 1988, an Explanation was substituted with effect from 1st June, 1988, to the relevant sections of the Income-tax Act , Wealth-tax Act and Gift-tax Act to clarify that the term "record" would include all records relating to any proceeding available at the time of examination by the Commissioner. Further, it was also clarified that the Commissioner is competent to revise an order of assessment passed by the Assessing Officer on all matters except those which have been considered and decided in an appeal. The above Explanation was incorporated in the Finance Act , 1988, to clarify this legal position to have have always been in existence. Some Appellate Authorities have, however, decided that the Explanation will apply only prospectively, i.e., only to those orders which are passed by the Commissioner after 1.6.1988.

Such an interpretation is against the legislative intent and it is, therefore, proposed to amend section 263 of the income tax Act, so as to clarify that the provisions of the explanation shall be deemed to have always been in existence.

Amendments on the above lines have been proposed in section 25 of the Wealth-tax Act and <CITATION> of the Gift-tax Act also."

After that amendment, the relevant part of the Explanation reads as under :

(a)...................

(b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination y the Commissioner".

After referring to the history of this provision, we will now refer to the decisions, which were relied upon by the learned counsel in support of the rival contentions with respect to the correct interpretation of the word "record". <ORG> in <CITATION> [(1979) 118 ITR 447], after observing that provision of section 263(1) of the Act has to be understood on its own language and in the context of the revisional jurisdiction of the Commissioner conferred by it and also the scheme of the Act, held as under:-

"Whereas s. 263(1) of the Act uses the words "is erroneous" and not the words "has become subsequently erroneous". Under this section, the Commissioner may call for and examine "the record" of the "proceeding" in order to consider in his revisional jurisdiction as to whether the order in question by the <ORG> "is erroneous" . Therefore, he is to call for the "record" of the "proceeding" which was before the <ORG> and examine it in order to consider whether on the basis of the material which were before the <ORG> and formed part of that record the order passed by the <ORG> is "erroneous" and prejudicial to the interests of the revenue. Therefore, the materials which were not in existence at the time the assessment was made but afterwards came into existence cannot form part of the record of the proceeding of the <ORG> at the time he passes the order and, accordingly, it cannot be taken into consideration by the Commissioner for the purposes of invoking his jurisdiction under this section, for he is not an appellate authority under this section and exercise only revisional jurisdiction and hence he can only take into consideration the record as it stood before the <ORG> and the materials in such record for the purposes of ascertaining whether the order in question was erroneous and prejudicial to the interests of the revenue.

In other words, any material which comes into existence later on cannot form part of the record of the <ORG> for the puposes of invoking the Commissioner's power under s. 263(1) of the Act. And it is only after the proceeding is lawfully initiated by the Commissioner on the basis of the record of the <ORG> that the Commissioner can take into account any material which may come into existence later on in view of the expression "after making or causing to be made such enquiry as he deems necessary" used in the second limb of this section." <ORG> interpreted the word "record"

under Section 263 (1) before it was amended by the Finance Act s of 1988 and 1989. Following that decision <ORG> in <CITATION> [(1992) 194 ITR 546], also took the same view. in that case attention of the <ORG> was drawn to the amendments made by Finance Act s of 1988 and 1989. <ORG>, however, did not consider the effect of the said amendments as it was of the view that there was no occasion for the <ORG> to consider the scope of the amended Section because it came into force only in 1988, much later than the order disposing, of the revision and , therefore no such question arose out of the order of the <ORG>. It was submitted by the learned counsel for the respondent that Section 263(1) as thus interpreted by the Calcutta and <ORG>s before it was amended in 1988 and 1989 and, therefore, that was the correct legal position till 1st June, 1988. The learned counsel also drew our attention to the decision of Allahabad High Court in <CITATION> ) [(1989) 177 ITR 34]. In that case, in the wealth-tax proceedings for the assessment years 1978-79 and 1979-80 the Assessing Officer had determined the fair market value of an immovable property at Rs.7,35,086/- as on the two valuation dates relevant for the years in dispute. After the completion of those assessments, the Commissioner of Wealth-tax, on coming to know that the property was sold by the assessee on August 18, 1983 for a consideration of Rs. 36 lakhs, initiated proceeding under <CITATION> of the Wealth-Tax Act and subsequently passed an order holding the impugned assessment orders erroneous and prejudicial to the interests of the revenue. On appeal by the assessee, the Income Tax Appellate <ORG> held that "the expression "record" in section 25(2) of the Act cannot mean the record as it stands at the time when the action under that section is taken but it means the record s it stands when the assessment order was passed by the assessing officer". In support of this view the <ORG> had relied upon the decision of the Calcutta High Court in Ganga Property's Case (supra). Against the order of the <ORG> the commissioner of Wealth Tax had preferred two applications under section 27(3) of the wealth- Tax Act but they were rejected by <ORG>. The view taken by <ORG> was that the question raised by the <ORG> was academic because the <ORG> had not passed its order entirely on the meaning of the expression "record" and the other reasoning on which the decision of the <ORG> was based was a factual one and was equally fatal to the cause of revenue. This decision is, therefore, of not any help at all.

She further submitted that in a matter arising under the Wealth-tax Act <ORG> had also taken the same view and the <ORG>'s special leave petitions Nos. 8511-13 of 1984 (Commissioner of Wealth-tax vs. <NAME>) [(1991) ITR Statutes p. 76] though were heard after the said two amendments, this Court dismissed them summarily and thus the view taken by the <ORG> was upheld. In that case the Wealth-tax Officer had assessed the assessee's property as per the approved valuer's report. The commissioner in suo motu revision directed valuation in accordance with the departmental valuer's report. The <ORG> allowed the assessee's appeal against the order passed by the Commissioner and also rejected the <ORG>'s reference application. <ORG> also rejected the reference application made by the <ORG> had filed the said special leave petitions in this Court. It is true that the said special leave petitions were dismissed summarily but that would not mean that this Court approved the view that was taken by <ORG>.

In a later decision in <CITATION> . [(1991) 190 404], <ORG> itself interpreted the word "record" differently. In that case the assessment was completed on February 1, 1983. The <ORG> Officer before he completed the assessment had referred the matter of plant and machinery and electrical installation to the Valuation Officer (P&M). His report was not received by the <ORG> Officer when the assessment was completed. It was received by him after the assessment proceeding was completed. The Commissioner of Income-Tax took into consideration the said Valuation Report and found the assessment order erroneous. In that context the question which had arisen for consideration was whether the Commissioner. in exercise of jurisdiction under Section 263 (1) o the Act could have relied upon the valuation report which had come into the possession of the Income-tax Officer subsequent to the completion of the assessment. The <ORG> held that "the record contemplated in section 263(1) does not mean only the order of assessment is based. The Commissioner is entitled, for the purpose of exercising his revisional jurisdiction, to look into the whole evidence. The expression "record" as used in section 263 of the Act is comprehensive enough to include the whole record of evidence on which the original assessment order was passed. The valuation proceeding is apart of the assessment proceeding. But once the valuation report was received by the <ORG> officer, although subsequent to the completion of the assessment, it forms part of the assessment year in question." It further held that "where any proceeding is initiated in the course of the assessment proceeding having a relevant and material bearing on the assessment to be made and the result of such proceeding was not available with the Income-tax officer before the completion of the assessment, but the result came subsequently, the revising authority is entitled to look into such material as it forms part of the assessment records of the particular assessment year". <ORG> took this view without referring to the definition of the word "record" contained in the explanation to Section 263(1) of the Act.

It, therefore, cannot be said, as contended by the learned counsel for the respondent, that the correct and settled legal position, with respect to the meaning of the word "record" till 1st June, 1988, was that it meant the record which was available to the income Tax Officer at the time of passing of the assessment order. Further, we do not think that such a narrow interpretation of the word "record' was justified, in view of the object of the provision and the nature and scope of the power conferred upon the Commissioner. The revisional power conferred on the commissioner under Section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act. It empowers the commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by the assessing officer is erroneous insofar as it is prejudicial to the interests of the revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come in possession of new material and he would be entitled to take that new material into account. If the material, which was not available to the Income-Tax Officer when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration by him. Moreover, in view of the clear words used in clause (b) of the explanation to Section 263(1) , it has to he held that while calling for and examining the record of any proceeding under Section 263(1) it is and it was open to the Commissioner not only consider the record of that proceeding but also the record relating to that proceeding available to him at the time of examination.

The view that we are taking receives support from the two decisions of this Court, though the point which is raised before us was not specifically raised in those tow cases. In Tax Reference Case No. 11 of 1983 ( <CITATION> .) this Court after considering the effect of the amendment made in Section 263(1) of the Act by the Finance Act . 1989 whereby lause (c) of the explanation was also amended with retrospective effect from 1st June, 1988, held that "the consequence of the said amendment made with retrospective effect is that the powers under Section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid three items, the powers of the Commissioner under Section 263 shall extend and shall be deemed always to have extended to them because those items had not been considered and decided in the appeal filed by the assessee." In that case the assessment was completed o 31.3.1978 and the Income Tax Officer while computing loss and income of the assessee had accepted the claim of the assessee in respect of those three items. Obviously in the appeals filed by the assessee those items were not the subject-matter of the appeals as the decision in respect thereof was in its favour. In respect of those three items the Commissioner had exercised his power under Section 263 of he income- Tax Act and , therefore, the question which had arisen for consideration was "whether on the facts and in the circumstances of the case, the order of assessment passed by the <ORG> u/s 143(3) read with section 144B on 31.7.1978 had merged with that of the Commissioner (appeals) dated 15.10.1979 in respect of the three items in dispute so as to exclude the jurisdiction of the Commissioner of Income-Tax under sec 263?" Thus the amendment made in clause @ was held applicable to the orders passed before 1st June, 1988.

<CITATION> [1997 (9) SCC 728], the Commissioner in exercise of his power under Section 263 had withdrawn the development rebate granted for the years 1962- 63, 1963-64, 1967-68 and 1968-69 on the ground that since the partnership stood dissolved on 3.3.1968 on the death of one of the two partners, before the expiry of eight years the assessee firm was not entitled to the benefit of the development rebate under Section 33(1) (a) of the Act. The said order passed by the Commissioner was challenged before the Tribunal but the assessee's appeal had failed. At its instance the following question was referred to <ORG>

"Whether on the facts and circumstances of the case the revision of assessment under section 263 by the Commissioner for withdrawing the development rebate granted for Assessment years 1962-

63, 1963-64, 1967-68 and 1968-69 is proper and justified."

<ORG> also decided against the assessee. In the appeal filed by the assessee the order of Commissioner was challenged inter alia on the ground that the power under Section 263 could have been invoked on the basis of the record as it stood when the order was passed by the Income Tax Officer and that it was not open to the Commissioner to take into account dissolution of the assessee firm, which took place after passing of the assessment order because that circumstance was not disclosed by the record which was before the Income Tax Officer. Rejecting this contention this Court held "As regards his taking into consideration an event which had occurred subsequent to the passing of the order by the Income-Tax Officer, it may be stated that in Explanation (b) in Section 263 there is an express provision wherein it is prescribed that "record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at time of examination by the Commissioner". The death of one of the two partners resulting in the dissolution of the assessee firm on account of such death took place prior to the passing of the order by the commissioner and it could, therefore, be taken into consideration by him for the purpose of exercising his powers under Section 263 of the Act." In that case also the amendment was held applicable to an order passed before 1st June, 1988.

We, therefore, hold that it was open to the Commissioner to take into consideration all the records available at the time of examination by him and thus to consider the Valuation Report submitted by <ORG> subsequent to the passing of the assessment order and, so the order passed by him was legal. <ORG> was wrong in taking a contrary view. We, therefore, allow this appeal, set aside the judgment and order passed by <ORG> and answer the question referred to <ORG> in the negative i.e. in favour of the <ORG> and against the assessee. In view of the facts and circumstances of the case, there shall be no order as to costs.


PETITIONER: <NAME> Vs. RESPONDENT: STATE OF WEST BENGAL DATE OF JUDGMENT03/05/1972 BENCH: <NAME>, HANS RAJ BENCH: <NAME>, HANS RAJ SHELAT, J.M. CITATION: 1972 AIR 1656 1973 SCR (1) 546 1972 SCC (3) 831 CITATOR INFO : R 1973 SC 295 (7) R 1974 SC1214 (3) RF 1975 SC 953 (4,5) R 1987 SC 998 (6) R 1987 SC2332 (12) R 1990 SC 220 (7) R 1990 SC1086 (18) RF 1992 SC 979 (10) ACT: Maintenance of Internal Security Act (26 of 1971), s. 3- Maintenance of public order,' scope of. HEADNOTE: The petitioner and his associates attacked a husband and wife with open knives in the third class compartment of a running train and robbed them of valuable property by putting them in fear of death on one occasion, and on another occasion, attacked a police party on the platform of a railway station with bombs. dagger$, knives and iron rods and exploded bombs with a view to kill the police party. The petitioner was detained by an order under s. 3 of the Maintenance of Internal Security Act 1971 with a view to preventing him from acting in any manner Prejudicial to the maintenance of public order, and the 'grounds of detention were that the two incidents created terror and panic among passengers and disturbed public order. The, petitioner challenged the order of detention in this Court. Dismissing the petition. HELD : Both the incidents referred to in the order affected public order and not merely law and order. [550 E-F] The question whether a man only committed a breach of law and order or has act-ad in a manner likely to cause disturbance of the public order, is a question of degree and the extent of the reach of the act upon the society. The test to be adopted in determining whether an act affects law and order or public order is : Does it lead to disturbance of the current of life of the community so as to amount to a ,disturbance of the public order or does it affect merely an individual leaving the tranquillity of the society undisturbed ? When two passengers are robbed at the point of knives while travelling in a third class compartment of a running train the act affects riot only the passengers who are deprived of their valuables but also the other passengers who are watching in fear as helpless spectators. Likewise, the attack against the police party on the platform of a railway station by exploding bombs is bound to create panic and confusion among the passengers at the railway station. Consequently, there is bound to be terror and panic amongst the travelling public. Therefore, the acts in question, in the very nature of things, would adversely affect the even tempo of life of the community and cause a general disturbance of public tranquillity. [550 A- F] Tapan Kumar Mukherjee and ors. v. State of West Bengal, A.I.R. 1972 S.C. 840. followed. <CITATION> ,  1 S.C.R. 709, . <CITATION> ,  3 S.C.R. 288, <CITATION> ,  1 S.C.C. 498, Nandlal Roy @ Nonda Dulal Roy @ Pagla v. State of West Bengal, W.P. No. 15 of 1972, decided on March 11, 1972. <CITATION> .,  3 S.C.R. 360 and <NAME> v. State of West Bengal, W.P. 35 of 1967 decided on May 2, 1972, referred to. 547 JUDGMENT:

ORIGINAL JURISDICTION: Writ Petition No. 46 of 1972. S, <NAME>, for the, petitioner.

<NAME> and <NAME>, for the respondent.

The Judgment of the Court was delivered by <NAME>, J. This is a petition through jail under article 32 of the Constitution for issuing a writ of habeas cot-pus by <NAME>, who has been ordered by the District Magistrate 24Parganas to be detained under section 3 of the Maintenance of Internal Security Act, 1971 (Act 26 of 1971) "with a view to preventing him from acting in any manner prejudicial to the maintenance of public order."

The order of detention was made by the District Magistrate on November 13, 1971. The petitioner was arrested in pursuance of the detention order on November 14, 1971 and was served the same day with the order as well as the grounds of detention together with vernacular translation thereof. On November 18,1971 the District Magistrate sent report to <ORG> about the passing of the detention order along with the grounds of detention and other necessary particulars. <ORG> considered the matter and approved the detention order on November 24, 1971. Necessary report was also sent on that day by <ORG> to <ORG>. On December 13, 1971 <ORG> placed the case of the petitioner before <ORG>. In the meanwhile, on December 12, 1971 <ORG> received a representation of the petitioner. The representation was considered by <ORG> and was rejected on January 11, 1972. The representation was thereafter forwarded to <ORG>. The <ORG>, after considering the, material placed before it, including the petitioner's representation, and after hearing the petitioner in person, sent its report to <ORG> on January 14, 1972. Opinion was expressed, by the <ORG> that there was sufficient cause for the detention of the petitioner. On February 2, 1972 <ORG> confirmed the order for the detention of the petitioner. Communication about the confirmation of the order was thereafter sent to the petitioner. Affidavit of <NAME>, District Magistrate of 24- Parganas, who passed the impugned order, has been filed in opposition to the Petition. Mr. <NAME> has argued the case amicus curiae on behalf of the petitioner, while the <ORG> has been represented by Mr. <NAME>.

It has been argued on behalf of the petitioner that the particular acts on account of which the order for the detention of the petitioner has been made were not germane to the maintenance of public order and, as such, the order for his detention could not be validly made for preventing him from acting in a manner prejudicial to the maintenance of public order. In this respect we find that according to the grounds of detention, the order for the petitioner s detention was made on the ground that he had been acting in a manner prejudicial to the maintenance of public order as evidenced by the particulars given below; taken separately or collectively "That on 26-9-71 at about 18.30 hours while <NAME> of Champapukur, P.S. Basirhat, District 24- Parganas along with his wife were travelling ill a 3rd class compartment of <ORG> local train from Barasat, You along with your associates attacked him and his wife with open knives between <ORG> and <ORG> and robbed them of Wrist Watch, Gold Ornaments, Cash valued at Rs. 725//- by putting them in fear of death. By your such activities you created terror and panic among the travelling passengers and public order was disturbed thereby. On 4-11-71. at about 21.40 hours, you and your associates armed with bombs, daggers, knives and iron rods etc. attacked police on the platform at Beliagliata railway station with a view to take their lives and to intimidate the public you charged two bombs which exploded with terrible sound endangering the on-duty police. Your such action was so violent that it created panic and confusion among the passengers there then. YOU have thus action in a manner prejudicial to the maintenance of public order."

It would appear from the above that the petitioner and his associates attacked a husband and wife with open knives in the, third class compartment of a running train and robbed them of valuable property, including wrist watch, gold ornaments and cash by putting them in fear of death. The grounds of detention further show that the above act of the petitioner and his associates created terror and panic among the travelling passengers and thereby disturbed public order. The second incident which took place at 9.40 p.m. on November 4, 1971 related to the attack by the petitioner and his associates on a police party on the platform of Belighata railway station with a view to kill them. The petitioner and his associates are stated to have been then armed with bombs. daggers, knives and iron rods and they exploded two bombs with terrible sound. It is further stated that the above act of the petitioner and his associates created panic and confusion among the passengers and thus disturbed public order. Each one of the above two incidents of September 26, 1971 and November 4, 1971, in our opinion, affected public order and not merely law and order.

The distinction between the concept of public order and that of law and order has been adverted to by this <ORG> in a number of cases. In the case of <CITATION> (1), <NAME> (as he then was) said that any contravention of law always affected order, but before it could be said to affect public order, it must affect the community at large. He considered three concepts, law and order, public order and the security of the <ORG>, and observed that to appreciate the scope and extent of each one of them, one should imagine the concentric circles. The largest of them represented law and order, next represented public order and the smallest represented the security order, just asan act might affect public order but not the security of the <ORG>.In the subsequent case of <CITATION> 2 the <ORG> dealt with the matter in the following words: "Public order is the even tempo of the life of the community taking the country as a whole or even a specified locality. Disturbance of public order is to be distinguished from acts directed against individuals which do not disturb the society to the extent of causing a general disturbance, of public tranquility. It is the degree of disturbance and its effect upon the life of the community in a locality which determines whether thedisturbance amounts only to a breach of law and order. Take for instance, a man stabs another. People may be shocked and even disturbed, but the life of the community keeps moving at an even tempo, however much one may dislike the act. Take another case of a town where there is communal tension. A man stabs a member of' the other community. This is an act of a very different sort. Its implications are deeper and it affects the even tempo of life and public order is jeopardized because the repercussions of the act embrace large sections of the community and incite them to make further breaches of the law and order and to subvert the public order. An Act by itself is not determinant of its own gravity. In its quality it may not differ from another but in its poten- tiality it may be very different."

(1)[1966] 1 S.C.R. 709.

(2) [1970] 3 S.C.R. 288 The question where a man has only committed a breach of law and order or has acted in a manner likely to cause a disturbance ,of the public order, according to the dictum laid down in the above case is a question of degree and the extent of the reach of the act upon the society. Public order is what the French call "order publique" and is something more than ordinary maintenance of law and order. The test to be adopted in determining whether an act affects law and order or public order, as laid down in the above ,,case, is : Does it lead to disturbance of the current of life of the community so as to amount to a disturbance of the public order ,or does it affect merely an individual leaving the tranquility of the society undisturbed ? The principle enunciated above has been followed by this Court in the case of <CITATION> (1) and <NAME>, <NAME> @ Pagla v. State of West Bengal (WP No. 15 of 1972, decided on March II, 1972.) In the light of what has been observed above, we have no doubt that each one of the incidents of September 26, 1971 and November 4, 1971 was prejudicial to the maintenance of public order. When two passengers are robbed at the point of knife while travelling in a third class compartment of a running train, the act of the miscreants affects not only the passengers who are deprived ,of their valuables but also the other passengers who watch tile whole thing in fear as helpless spectators. There is bound to be- consequent terror and panic amongst the travelling public. Like wise, attack directed against a police party on the platform of railway station by exploring bombs is bound to create panic an. confusion among the passengers at the railway station. The act' in question in the very nature of things would adversely affect the even tempo of life of the community and cause a general disturbance of public tranquility.

Reference has been made on behalf of the petitioner to the ,case of <CITATION> nr. (2). The petitioner in that case along with others committed various acts on three occasions. On the first occasion lie attached the people of a locality with a knife and by hurling bottles at them.' On the other two.occasions he attacked the people of another locality by hurling bombs at them.. It was held that the incidents were not interlinked and could not have prejudiced tile- maintenance of public order.

As against the above solitary decision, Mr. <NAME> on behalf of the respondent-State has referred to the principle laid down in the case of <CITATION> (supra) as well as in the case of <CITATION> (supra). Apart from those two cases, we find that in the (2)  3 S.C.R. 360.

(1) [1972] I S.C.R. 498.

<NAME>

case of <NAME> and <NAME>. v. State of West Bengal(1) the allegation against the detenu was that he along with other associates committed robbery in respect of a fat, and a watch at the point of dagger in a running train, and this created disturbance of public order. Contention was raised that the act of the detenu and his associates related only to law and order and not to public order. This contention was repelled and it was observed that the innocent passengers would be terror stricken by the acts of the detenu and his associates. Another incident which was referred to in that case related to throwing of bombs on a shop. The bombs exploded and as a result of the panic so caused in the locality, all the shops and houses around the place were closed. The above round was held by this Court to be germane to the disturbance of public order. In case of <NAME> (supra), the ground of detention recited that the detenu and his associates while committing theft of rice from a wagon threw bombs upon the members of <ORG>. One member of <ORG> was injured. The explosion of the bombs was stated to have created panic in the station, area and the adjoining locality. It was held that the activity of the petitioner created not merely a question of the maintenance of law and order but created a disturbance which would be comprehended by the, expression " order publique". The detention order was consequently upheld. <CITATION> . 35 of 1972 decided on May 2, 1972) the allegation against the detenu was that he and his associates while removing railway material charged bombs and ballast upon R.P.F. party as a consequence of which the members of R.P.F. party fired in self-defence. The activity of the petitioner was considered to be prejudicial to the maintenance of public order and the detention order was upheld.

The facts of the present case are much more akin to those of <NAME> and <NAME>. v. State of West Bengal (supra). The past activities of the petitioner as revealed in the grounds of detention, in our opinion, showed a propensity to disturb public order. The authority concerned, in the circumstances, could have validly made the order for the detention of the petitioner to prevent him from acting in a manner prejudicial to the maintenance of public order.

The petition consequently fails and is dismissed. V.P.S.

Petition dismissed.

(1) A I.R. 1972 S. C. 840.


PETITIONER: <ORG> Vs. RESPONDENT: COLLECTOR OF CENTRAL EXCISE, BELGAUM DATE OF JUDGMENT17/02/1987 BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH PATHAK, R.S. (CJ) CITATION: 1987 AIR 1161 1987 SCR (2) 309 1987 SCC (2) 93 JT 1987 (1) 469 1987 SCALE (1)361 CITATOR INFO : R 1988 SC1236 (5) ACT: Central Excises and Salt Act , 1944 section 11A and Explanation thereto, scope of--Limitation of six months' period--No order of the court staying the service of notice--Whether a show cause notice issued beyond the limi- tation, period specified under section 11A is valid. HEADNOTE: A show cause notice dated 29.1.1976 issued by the re- spondent to the appellant calling upon him to explain as to why excise duty treating his product as "fabric" and not as "yarn" may not be levied, was challenged in <ORG> in Writ Petition No. 2632/ 1976. Pending final disposal of the writ petition, an interim order staying the collection of excise duty as a "fabric" for the period 1.4.1975 to 18.8.75 alone was passed with a specific direc- tion that the appellant should continue to pay excise duty as "yarn". Finally the writ petition was dismissed on 16.2.1981. On 20th May, 1982, another notice No. 913 to show cause was issued to the appellant simultaneously seeking to raise a demand for the period from 20.6.1976 to 28.2.1981 apart from for the period between 1.4.1975 to 18.8.1975 challenged in the earlier writ petition. <ORG> having rejected the plea of bar of limitation under section 11A of the Central Excises and Salt Act , 1944 raised in the writ petition challenging the said second show cause notice and demand, the appellant has come in appeal by way of special leave. Allowing the appeal, the Court, HELD: 1.1 Section 3 of the Act which contains the charg- ing provision clearly shows that levy and collection are two distinct and separate steps. [312H] 1.2 The provision of section 11A(1) and (2) of the Central Excises and Salt Act , 1944 make it clear that the statutory scheme is that in the situations covered by the sub-section(1), a notice of show cause has to be issued and sub-section(2) requires that the cause shown by way of representation has to be considered by the prescribed au- thority and then 310 only the amount has to be determined. The scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made, before making the order thereof. Notice is thus a condition prece- dent to a demand under sub-section(2). In the instant case, compliance with this statutory requirement has not been made, and, therefore, the demand is In contravention of the statutory provision. [313E-G] 2. Explanation to section 11A of the Central Excises and Salt Act , 1944, which incorporates a well known principle of law, in clear terms refers to 'stay of service of notice'. The <ORG> order did not at all refer to service of notice. The <ORG> having directed stay of collection of duty as 'fabric' has not issued any interim direction in the matter of issue of notice of levy of the duty. Therefore, the benefit of Explanation to section 11A of the Act is not available to the Respondent. [313C- <CITATION> .,  SCR 1287; and <NAME> As- sistant Collector of <ORG>. v. <ORG>,  3 SCR 506, 514 referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 161 Of 1986.

From the Judgment and Order dated 17.9.85 of <ORG>, New Delhi in Appeal No. ED(SB) (T) 463/84-D.

<NAME>, <NAME>, <NAME>, <NAME> and <NAME> for the Appellant.

<NAME>, Additional Solicitor General, Mrs. <NAME> and Ms. <NAME> for the Respondent. The Judgment of the Court was delivered by <NAME>, J. The fate of this appeal under sec- tion 35(L) of the Central Excises and Salt Act , 1944, de- pends upon the meaning and scope of the Explanation appear- ing in section 11A of the Act.

<ORG> by its order dated 4.6.1976 in Writ Petition No. 2632 of 1976 gave the following direc- tion:

"Pending disposal of the aforesaid writ Peti- tion, it is ordered by this Court that collec- tion of excise duty as a fabric be and the same is hereby stayed. It is further ordered that the petitioner shall however continue to pay exercise duty as yarn and shall further maintain an account in square metres for future clearance."

The said Writ Petition was ultimately dismissed by <ORG> on 16.2. 1981. The operative part of the <ORG>'s final order ran thus:

"For the reasons aforesaid, we make the fol- lowing order:-

(i) Rule discharged;

(ii) We decline to interfere at this stage leaving open to the petitioner to urge all the contentions in reply to the show cause notices."

On 20th May, 1982, a notice to show cause was issued to the appellant by the Assistant Collector, being Notice No. 913, and with this the Collector sought to raise a demand for the period from 20th June, 1976 to 28th February, 1981 apart from for the period between 1.4. 1975 to 18.8.1975 in respect of which an earlier show cause notice dated 29.1. 1976 had already been issued.

It is not disputed by the <ORG> that the appropriate period of limitation to apply to the facts of the case is six months as provided in section 11A of the Act and that the Notice issued on 20th of May, 1982 was beyond that period. Reliance was placed on the Explanation for obtaining extension of that period. The Explanation reads thus:

"Where the service of the notice is stayed by an order of a <ORG>, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be."

The provision in the Explanation incorporates a well-known principle of law. Section 15 of the Limitation Act of 1908 (also of Section 15 of the Limitation Act of 1963) incorpo- rates the same principle. This <ORG> in <CITATION> ,  SCR 1287 dealt with the effect of an order of injuc- tion in the matter of computation of limitation. At page 1302 of the Reports, <NAME>, J. as he then was, spoke for the <ORG> thus.

"It is plain that, for excluding the time under this section, it must be shown that the institution of the suit in question had been stayed by an injunction or order; in other words, the section requires an order or an injunction which stays the institution of the suit. And so in cases falling under Section 15 , the party instituting the suit would by such institution be in contempt of court. But in our opinion, there would be no justifi- cation for extending the application of s. 15 on the ground that the institution of the subsequent suit would be inconsistent with the spirit or substance of the order passed in the previous litigation ........ "

In the instant case, the order of stay passed by <ORG> had only stayed the collection of the excise duty, which is a stage following levy under the scheme of the Act. Obviously there was no interim direction of <ORG> in the matter of issue of notice for the purpose of levy of duty. The relevant portion of Section 11A provid- ed.

"(1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erro- neously been made, requiring him to show cause why he should not pay the amount specified in the notice:

(2) The Assistant Collector of Central Excise shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of duty of.excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. ' ' Reference to Section 3 of the Act which contains the charg- ing provision clearly shows that levy and collection are two distinct and separate steps. This Court in <CITATION> .,  3 SCR 506, at page 514 stat- ed:

" .... The charging provision section 3(i) specifically says "there shall be levied and collected in such a manner as may be pre- scribed the duty of excise ..... "It is to be noted that sub-section (i) uses both the expressions "levied and collected" and that clearly shows that the expression "levy" has not been used in the Act or the Rules as meaning actual collection."

<ORG> having directed stay of collection had, therefore, not given any interim direction in the matter of issue of notice or levy of the duty. The Explanation in clear terms refers to stay of service of notice. The order of <ORG> did not at all refer to service of notice. Therefore, there is force in the submission of the appellant that the benefit of the Explanation is not available in the facts of the case.

No notice seems to have been issued in this case in regard to the period in question. Instead thereof an out- right demand had been served. The provisions of Section 11A (1) and (2) make it clear that the statutory scheme is that in the situations covered by the sub-section (1), a notice of show cause has to be issued and sub-section (2) requires that the cause shown by way of representation has to be considered by the prescribed authority and then only the mount has to be determined. The scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made, before making the order thereof. Notice is thus a condition precedent to demand under sub-section (2). In the instant case, compliance with this statutory requirement has not been made, and, there- fore, the demand is in contravention of the statutory provi- sion. Certain other authorities have been cited at the hearing by counsel for both sides. Reference to them, we consider, is not necessary.

The appeal has to be allowed and the demand raised for the period 19.8.1975 to 23.2.1981 has to be set aside. There shall be no order for costs. The tax paid, if any, shall be refunded to the appellant.

S.R. Appeal al- lowed.