Holding

The phrase "other legal proceeding" in Section 40(2) must be read ejusdem generis with "suit" and "prosecution", thereby excluding departmental show‑cause and adjudication proceedings from its ambit.

Summary

The Assistant Collector of Central Excise issued a show‑cause notice to Ramdev Tobacco Company in 1972 alleging unaccounted tobacco and later imposed a duty demand and penalty through adjudication proceedings. The company challenged the order, and the Andhra Pradesh High Court held that the proceedings were barred by the six‑month limitation in Section 40(2) of the Central Excises and Salt Act, 1944. On appeal, the Supreme Court examined whether a show‑cause notice and subsequent adjudication constitute "other legal proceeding" within the meaning of that provision. Applying the rule of ejusdem generis, the Court held that the phrase must be read with the preceding words "suit" and "prosecution", limiting it to court proceedings and excluding departmental actions. Consequently, the limitation did not apply to the excise proceedings, and the Supreme Court set aside the High Court’s order, restoring the adjudication order. The appeal was allowed.

Issues considered

Whether the issuance of a show‑cause notice and the ensuing adjudication and penalty proceedings fall within the expression "other legal proceeding" under Section 40(2) of the Central Excises and Salt Act, 1944.
Whether the rule of ejusdem generis applies to limit the scope of "other legal proceeding" to court‑initiated suits and prosecutions.

Legislation cited

Central Excises and Salt Act, 1944s. 40(2)

Subjects

limitation periodSection 40(2)other legal proceedingejusdem generisexcise dutyshow cause noticeadjudication proceedingsstatutory interpretation

Judgment

ASSISTANT COLLECTOR OF CENTRAL EXCISE, GUNflJR
A
v.
RAMDEV TOBACCO COMPANY

JANUARY 25, 1991

B [M.N. VENKATACHALIAH AND A.M. AHMADI, JJ.]

Central Excises and Salt Act, 1944/Central Excises and Salt Rules
1944: Section 40(2)/Rules 32, 151, 160-'0ther legal proceedings'-
Whether includes-Issuance of show cause notice and initiation of con-
sequential adjudication proceedings.
c The appellant issued a notice calling upon the respondent who was
a dealer in tobacco to show cause why duty should not be demanded
under Rule 160 of the Central Excise· Rules, 1944 on the tobacco
removed from his warehouse and not accounted for, and further to
show cause why penalty should not be imposed for infraction of the
D Rules. The respondent sent a detailed reply, and after hearing him the
appellant came to the conclusion that the respondent had evaded pay-
ment of duty. Thereupon the appellant issued a demand notice for the
duty payable and further imposed a penalty.

The respondent filed a writ petition in the High Court challenging
E the order of the appellant. The learned Single Judge allowed the peti-
tion taking the view that the appellant's action was time barred because
under section 40(2) of the Central Excises and Salt Act, 1944 no suit, >---
prosecution or other legal proceedings could be instituted for anything
done or ordered to be done under the law after the expiration of six
months from the accrual of the cause of action. The Division Bench
F dismissed the appellant's appeal.
....
Before this Court it was inter alia co~tended on behalf of the
appellant that the expression 'other legal ptoceeding' is preceded by
particular words of a certain genus, i.e., 'suit' and 'prosecution', indi-
cating reference to proceedings taken in courts only, and, therefore, the
G wide words must be limited to things ejusdem generis and must take
colour from the prece«}ing words and receive a limited meaning to
exclude proceedings of the type in question.

Allowing the app~l ot'the Revenue, this Court,

.H HELD: (1) Th~ rule of ejusdem generis is genera~ invoked where

126
ASSTI. COLLECTOR v. RAMDEV TOBACCO CO. 127

the scope and ambit of the general words which follow certain speeific
A
~ words (which have some common characteristic and constitute a genus)
- is required to be determined. [131G]

(2) The cardinal rule of interpretation is to allow the general
words to take their natural wide meaning unless the language of the
statute gives a different indication or such meaning is likely to lead to B
absurd results in which case their meaning can be restricted by the
application of the rule of ejusdem generis and they may be required to
fall in line with the specific things designated by the preceding words.
But unless there is a genus which can be comprehended from the pre-
ceding words, there can be question of invoking this rule. Nor can this
rule have any application where the general words precede specific
words. [1328-C]
c
(3) The wide expression 'other legal proceeding' must be read
...... ,7' , ejusdem generis with the preced-ing words 'suit' and 'prosecution' as
they constitute a genus. [133H]
-n
(4) 'Suit' or 'prosecution' are those judicial or legal proceedings
which are lodged in a court of law and not before any executive autho-
rity, even if a statutory one. [132E-F]

(5) The penalty and adjudication proceedings in the instant case
did not fall within the expression 'other legal proceeding' employed in E
section 40(2) of the Act, as it stood prior to its amendment by Art. 22 of
the 1973, and therefore, the said proceediqgs were not subject to the
limitation prescribed by the said sub-section. [133H; 134A]

Public Prosecutor, Madras v. R. Raju &Anr. etc., [1973] S.C.R.
812; Universal Cables Ltd. v. Union of India, [1977] E.L.T. (J92); F
Amar Chandra v. Excise Collector, Tripura, A.I.R. 1972 S.C. 1863;
_, C. C. Industries & Ors. v. H.N. Ray & Anr., [1980] E.L.T. 442, refer-
red to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2341
of 1978. G

From the Judgment and Decree dated 16.11.1977 of the Andhra
-- ___.
Pradesh High Court in Writ Appeal No. 358of1976.

Altaf Ahmed, Additional Solicitor General, P. Panneshwaran
and Dilip Tandon for the Appellant. H
128 SUPREME COURT REPORTS [1991] 1 S.C.R.

A.S. Nambiar and B. Parthasarthy for the Respondent.
A
The Judgment of the Court was delivered by

AHMADI, J. This appeal, on certificate, is directed against the
decision of the High Court of Andhra Pradesh which has quashed the
imposition of duty and levy of penalty on the ground that the show
B
cause notice was issued after the expiry of the period of six months
from the accrual of the cause of action. The facts leading to this appeal
are as follows:

The respondent M/s. Ramdev Tobacco Company, a sole pro-
prietory concern, was at all material times a dealer in tobacco having a
c licenced warehouse at Guntur. The dealer was liable to pay duty on
the tobacco received at his warehouse and transported to another
dealer. On August 30, 1972 the appellant issued a notice calling upon
the respondent to show cause why duty should not be demanded under
Rule 160 of Central Excise Rules, 1944 ('the Rules' hereafter) on
64,444 kgs. of VFC Farmash Tobacco removed from his ·warehouse
D
and not accounted for in the warehouse register maintained under the
Rules. The respondent was also asked to show cause why penalty
should not be imposed for infraction of Rules 151 and 32(1) of the
Rules for illicit removal of the aforementioned quantity of tobacco.
This show cause notice was founded on the allegation that in 1970 the
E respondent obtained six transport permits (T.P. 2) dated January 13,
·1910, February 10, 1970, March 26, 1970, May 16, 1970, July 24, 1970
and August 5, 1970 and transp_orted under each permit more than the
quantity of tobacco allowed thereunder in contravention of the
aforementioned rules. The respondent sent a detailed reply to the said
show cause notice on November 4, 1972. After giving a personal hear-
-
ing to the respondent on September 18, 1973, the appellant came to
F
the conclusion that the respondent had evaded payment of duty on
1272 bags weighing 48,304 Kgs. of VFC Farmash tobacco and issued a
demand under Rule 160 in the sum of Rs.1,66,165.76 under adjudica-
ti'on order No. 173/74 dated April 9, 1974. In addition thereto the
appellant imposed a penalty of Rs. 100 for contravention of Rules 151
and 32( 1) of the Rules. Thereupon the respondent filed a writ petition
G
No. 2600 of 1974 under Article 226 of the Constitution challenging the
aforesaid order of the appellant. This writ petition was heard and
disposed of by a learned Single Judge of the High Court who took the >--
view that the appellant's action was time barred inasmuch as it was
initiated after the expiry of the period of six months from the accrual
H of the cause of action. According to the learned Judge under section
ASSTI. COLLECTOR v. RAMDEV TOBACCO CO. [AHMADI, J.] 129

40(2) of the Central Excises and Salt Act, 1944 ('the Act' hereinafter)
A
no suit, prosecution or other legal proceeding could be instituted for
anything done or ordered to be done under the law after the expfration
of six months from the accrual of the cause of action. Since a period of
more than six months had indisputably expired from the dates on
which the excess tobacco was transported under the six transport
permits in question, the action was clearly time barred. In this view of B
the matter the writ petition was allowed and the demand made under
the impugned adjudication order both in respect of duty and penalty
was quashed. The present appellant questioned the correctness of this
view in appeal, Writ Appeal No. 358 of 1976, but in vain. The Division
Bench found the view taken by the learned Single Judge in accord with
its view in Writ Petition No. 2516 of 1974 decided on April 1, 1976. It,
therefore, dismissed the appeal but since it had granted a certificate to c
appeal in the case relied on, it also granted a similar certificate which
has given rise to this appeal.

Sub-section (2) of section 40 of the Act as it stood at the rele-
vant point of time before its amendment by Amendment Act 22 of D
1973 read as under:

"No suit, prosecution or other legal proceeding shall be
instituted for anything done or ordered to be done under
the Act after the expiration of six months from the accrual
of the cause of action or from the date .of the act or order .E
complained of."

Before we proceed to analyse this sub-section it would be advanta-
geous to bear in mind that sub-section (1) of this section bars the
institution of any suit, prosecution or other legal proceeding against
the Central Government or its officer in respect of any order passed in F
_, good faith or any ac~ in good faith done or ordered to be -done under
the Act. The second sub-section prescribes a period of limitation for
suits, prosecutions and other legal proceedings instituted, lodged or
taken for anything done or ordered to be done under the Act. That is
why in Public Prosecutor, Madras v. R. Raju & Anr., etc., [1973] SCR
812 it was urged on a con joint reading of the two sub-sections that G
sub-section (2) applied only to Government and could not come to the
rescue of a tax payer. Rejecting this contention this Court held:

"The two sub-sections operate in different fields. The first
sub-section contemplates bar of suits against the Central
Government or against the officers by protecting them in H
130 SUPREME COURT REPORTS [1991] 1 S.C.R.

respect of orders passed in goo~ faith or acts done in good
A
faith. It is manifest that the second sub-section does not, \.,; .
have any words of restriction or limitation of class of
persons unlike sub-section (1). Sub-section (2) does not
have any words Of qualification as to persons. Therefore,
sub-section (2) is applicable to any individual or person."

Thus the appellant's contention that sub-section (2) was confined only
to the Government officers was found to be unwarranted on the plain ;r--
words of the provision and was also repelled by reference to other
comparable statutes which went to show that whenever the legislature
intended to limit the application against the Government officers, the
Legislature had chosen appropriate wor9s of limitation to restrict the
c operation of the provision. It follows, therefore, that the application of
the sub-section extended to any person, not being a Government
Officer, against whom any suit, prosecution or other legal proceeding
was commenced for anything done or ordered to be done under the - .,.... -
Act.
D
The next contention convassed in that case by the learned
counsel for the appellant was that the words "anything done or
ordered to be done" employed in the sub-section would not include
anything done in violation of the Act. This Court after referring to the
definition of the word 'act' in the General Clauses Act, 1897, which >---
E extended to illegal omissions also, and the case law on the subject
observed at page 820 as under:

"These decisions in the light of the definition of the word
'act' in the General Clauses Act establish that non-com-
pliance with the provisions of the statute by omitting to do
-
F what the act enjoins will be anything done or ordered to be ~
done under the Act. The complaint against the respondents_
was that they wanted to evade payment of duty. Evasion
was by using and affixing cut and torn banderols. Books of
account were not correctly maintained. There. was
shorta.8.e of banderols in St().ck. Unbanderol!ed matches were
.G found. These are all infraction of the provisions in: respect
of things done or ordered to be done under the Act."

It is, therefore, clear from the above observation that any omission or
i.nfraction of the statutory provision would also fall withip the ambit of
the provision. Non-payment of duty or dues which a dealer is under an
H _obligation to pay under the statute was, therefore, held to fall within
ASSTI. COLLECTOR v. RAMDEV TOBACCO CO. [AHMADI, J.) 131

the scope of the provision. In that case the complaint against the
.,._ respondents was that to evade the payment of duty they had used and A
affixed cut and torn banderols and had failed to maintafo the accounts
correctly resulting in shortage in stocks. The respondents were pro-
secuted for contravention of the Rules punishable under sections 9(b)
and 9(d) of the Act as also under section 420 read with section 511 and
-! 109, 1.P .C. The respondents pleaded the bar of section 40 of the Act as B
it then stood. The High Court upheld the contention that the prosecu-
tion was barred by the rule of limitation incorporated in section 40 as
the same was instituted after the expiry of six months from the date of
the commission of the alleged offences. This Court on the aforesaid
..., line of reasoning affirmed the High Court's decision.
J
_,,. c
But the question is whether the issuance of a show cause notice
and the initiation of the consequential adjudication proceedings can be
described as 'other legal proceedings' within the meaning of sub-
y section (2) of section 40 of the Act? If the said departmental .action
falls within the expression 'other legal proceeding' there can be no
doubt that the action would be barred as the same indisputably was D
initiated six months after the accrual of the cause of action. So the
crucial question is whether the issuance of the show cause notice dated
August 30, 1972 and the passing of the impugned order in adjudication
proceedings emanating therefrom constitutes 'other legal proceeding'
..... within the meaning of section 40(2) of the Act to fall within the mis-
chief of that sub-section which bars such proceedings if commenced E
after a period of six months from the accrual of the cause of action.

- The learned Additional Solicitor General submitted that the expres-
sion 'other legal proceeding' must be read ejusdem generis with the
preceding expressions 'suit' and 'prosecution' and if so read it becomes
crystal clear that the department's action cannot come within the
~· purview of 'other legal proceeding'. How valid is this contention is the F
. ~question which we are called upon to answer in the present appeal.

The rule of ejusdem generis is generally invoked where the scope
and ambit of the general words which follow certain specific words
(which have some common characteristic and constitute a genus) is
required to be determined. By the application of this rule the scope G
and ambit of the general words which follow certain specific words
constituting a genus is restricted to things ejusdem generis with those
preceding them, unless the context otherwise requires. General words
must ordinarily bear their natural and larger meaning and need not be
donfined ejusdem generis to things previously enumerated unless the
language of the statute spells out an intention to that effect. Courts H
132 SUPREME COURT REPORTS [1991] 1 S.C.R.

have also iimited the scope of the general words in cases where a larger
A
meaning is likely to lead to absurd and unforeseen results. To put it .:..-
differently, the general expression has to be read to comprehend
things of the same kind as those referred to by the preceding specific
things constituting a genus, unless of course from the language of the
statute it can be inferred that the general words were not intended to
B be so limited and no absurdity or unintended and unforeseen compli-
cation is likely to result if they are allowed to take their natural mean-
ing. The cardinal rule of interpretation is to allow the general words to 'r-
take their natural wide meaning unless the language of the statute
gives a different indication or such meaning is likely to lead to absurd
results in which case their meaning can be restricted by the application ~'
of this rule and they may be required to fall in line with the specific
c things designated by the preceding words. But unless there Is a genus
Which can be comprehended from the precediµg words, there can be
no question of invoking this rule. Nor can this rule have any applica-
tion where the.general words precede specific words.

D There can be little doubt that the words 'other legal proceeding'
are wide enough to include adjudication and penalty proceedings
under the Act. Even the learned Additional Solicitor General did not
contend to the contrary but what he said was that since this wide
expression is preceded by particular words of a certain genus, namely,
words indicating reference .to proceedings taken in courts only, the ;....-. ,
E wide words must be limited to things ejusdem generis and must take
colour from the preceding words and should, therefore, receive a
limited meaning to exclude proceedings of the type in question. There
can be no doubt that 'suit' or 'prosecution' are those judicial or legal
proceedings which are lodged in a court of law and not before any
executive authority, even if a statutory one. The use of the expression
-
F 'instituted' in section 40(2) strengthens this belief. Since this sub- ~ ---
section has been construed by this Court in Raju's case (supra) not t<L
be confined in its application to only Government servants but to
extend to others including the assessees and since the words 'for any-
thing done or ordered to be done under this Act' are found to be
comprehensive enough to include acts of non-compliance or omissions
G to do what the Act and the Rule enjoin, the limitation prescribed by
section 40(2) would undoubtedly hit the adjudication and penalty pro-
ceedings unless the expression 'other legal proceeding' is read ejusdem ;..._
ge_neris to limit its ambit to legal proceedings initiated in a court of law. '

The scope of section 40(2) as it stood before its amendment
H pti!suant to Raju's case came up for consideration before a Division
ASSTI. COLLECTOR v. RAMDEV TOBACCO CO. [AHMADI, J.] 133

Bench of the Madhya Pradesh High Court in Universal Cables Ltd. v.
A
Onion of India, [1977] ELT (192) wherein the question raised for
determination was whether penalty proceedings taken under Rule
1730 for the infraction of Rule 173C with a view to evading payment
of duty fell within the expression 'other legal proceeding' used in the ·
said sub-section. The High Court conceded that the expression when
read in isolation is wide enough to include any proceeding taken in B
accordance with law, whether so taken in a court of law or before any
authority or tribunal but when read with the preceding words 'suit' oi
'prosecution' it must be given a restricted meaning. This is how the
High Court expressed itself at page J 106:

"Now the language of section 40(2) is: 'no suit, procesuc-
tion or other legal proceeding shall be instituted'. 'Suit' and c
'prosecution' which precede the expression 'other legal
proceeding' can be taken only in a Court of Law".

After stating the expanse of the ejusdem generis rule, as explained in
Amar Chandra v. Excise Collector, Tripura, AIR. 1972 SC 1863 at D
1868 (Sutherland, Volume 2 pages 399-400) the High Court observed
that there was no indication in the said sub-section or elsewhere in the
Act that the said general words were intended to receive their wide
meaning and were not to be construed in a limited sense with the aid of
the ejusdem generis rule. A departmental proceeding like penalty pro-
ceedings were, therefore, placed outside the scope of the said sub- E
section. This view was quoted with approval by a learned Single Judge
of the Bombay High Court in C.C. Industries & Others v. H.N. Ray &
.... Another, [1980] ELT 442 at 453. These two cases; therefore, clearly
support the view canvassed before us by the learned Additional
Solicitor General.
-.....,,, F
We have given our careful consideration to the submission made
..-/ on beha]f of the appellant, reinforced by the view expressed in the
aforesaid two decisions. In considering the scope of the expression
'other legal proceeding' we have confined ourselves to the language of
sub-section (2) of section 40 of the Act before its amendment by Act 22
of 1973 and should not be understood to express any view on the G
amended provision. On careful consideration we are in respectful
agreement with the view expressed in the aforesaid decisions that the
wide expression 'other legal proceeding' must be read ejusdem generis
with the preceding words 'suit' and 'prosecution' as they constitute a
genus. In this view of the matter we must uphold the contention of the
l@arned Additional Solicitor General that the penalty and adjudication H
134 SUPREME COURT· REPORTS L1991] 1 S.C.R.

A proceedings in question did not fall within the expression 'other legal
proceeding' employed in section 40(2) of the Act as it stood prior to its
amendment by Act 22 of 1973 and therefore, the said proceedings
were not subject to the limitation prescribed by the said sub-section.

Mr. N ambiar, the learned counsel for the respondents strongly
B
argued that we should not entertain the submission based on the
ejusdem generis rule since it was not raised before the High Court.
That indeed is true but being a pure question of law we have thought it
fit to entertain the same. We, therefore, do not entertain this
objection.

c In the result we allow this appeal and set aside the order passed
by the learned Single Judge as we11 as the Division -Bench which
affirmed it and dismiss the respondent's wr-it petition itself. We also set
...
aside the order by which tbe appellant was directed to pay costs. We
restore the adjudication order dated April 4, 1974 and all consequen-
tial orders, if any, passed thereunder. Interim stay granted on August
D
16, 1979 is vacated and the appellaµt will be entitled to recover the
dues from the security furnished pursuant to that order. The appeal is
allowed accordingly with no order as to costs.

R.S.S. Appeal allowed.

-
,.._..._

)-.