HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 37 Case :- WRIT TAX No. - 771 of 2015 Petitioner :- M/S Rimjhim Ispat Limited And 3 Others Respondent :- Union Of India Thru. Finance Secy. And Anr. Counsel for Petitioner :- Ritvik Upadhya,V.K. Upadhya Counsel for Respondent :- Amit Mahajan,Ashok Mehta,B.K.S.Raghuvanshi,Prateek Chandra,Vinod Kant Hon'ble Tarun Agarwala,J.
Hon'ble Vinod Kumar Misra,J.
We have heard Shri V.K.Upadhya, the learned Senior Counsel assisted by Shri Ritvik Upadhya, the learned counsel for the petitioners and Shri Ashok Mehta, the learned senior counsel assisted by Shri B.K.S. Raghuvanshi, the learned counsel for the Excise Department.
The present writ petition has been filed for the quashing of the order in original dated 28.08.2015 passed by the Commissioner, Customs, Central Excise & Service Tax, 117/7, Sarvodaya Nagar, Kanpur. Normally the Court does not entertain the petition where an altenative remedy is available. A preliminary objection was raised at the time when the writ petition was filed but considering the facts and circumstances of the case, the Court entertained the writ petition and, by an order dated 29.9.2015 directed the Commissioner to appear before the Court and file a personal affidavit intimating the Court as to whether any notice or opportunity of hearing was provided to the petitioners pursuant to the order of the Tribunal dated 25.2.2013.
The background leading to the filing of the writ petition is, that an order in original was passed on 31.3.2011, whereby duties and penalties were imposed upon the Company and its Directors and other persons. Such order was challenged in an appeal before the Customs, Excise and Service Tax Appellate Tribunal, which was allowed and the order in original dated 31.03.2011 was set aside. The Tribunal vide its order 25.2.2013 remitted the matter again to the Commissioner to pass a fresh order. The operative portion of the Tribunal's order dated 25.2.2013 is extracted herein under:
" 6. As we have already observed that there are various decisions laying down that a joint demand and joint penalty cannot be confirmed against the appellants against two persons, we deem it fit to set aside the impugned order and remand the matter to the adjudicating authority for fresh decision for fixing the liability of each and every individual separately. We make it clear that we have not gone to the merits of the case and the Revenue as well as assessee are entitled to raise all the legal issues including the appreciation of evidence on record, including the appellants request for cross examination afresh in the denovo proceedings."
The Tribunal, while remitting the matter, permitted the assessee to raise all the legal issues including the appreciation of evidence on record, including the appellant's request for cross-examination. Pursuant to the order of the Tribunal, no further proceedings were initiated by the Commissioner and an exparte order dated 28.8.2015 was passed by the Commissioner imposing fresh duties and penalties. The petitioner filed the present writ petition contending that the order in original was passed ex parte without issuing notice and without giving an opportunity of hearing. Specific allegations were made in para 6, 18 and 19 of the writ petition.
The learned counsel for the petitioners pointed out paragraph no.107 of the impugned order in which it was indicated that an opporutnity was given to the petitioners at the time when the first order in original was passed and therefore, no fresh notice was required to be given. In para 109 of the impugned order, it was stated that the cross- examination is not a part of natural justice but only a procedure and therefore cross examination of a witness was not required to be given.
Pursuant to our order, the Commissioner appeared and filed an affidavit admitting in paragraph 3 that the impugned order was passed without serving any notice. The officer justified her action by holding that the parties were under an obligation to appear and raise the issue before the adjudicating authority. The Commissioner further contended that it incumbent upon the parties to approach the adjudicating authority for a decision afresh, which had not been done by the assessee and since a considerable period of two and half years had elapsed and the assessee had not approached the adjudicating authority, conseuqently an ex parte order was passed. For facility, para 3 of the affidavit of Commissioner, Kanpur is extracted hereinunder:
"3. That any shortfall in passing of the impugned order dated 28.08.2015 has been, due to inadvertence in interpreting the import of the order dated 25.02.2013 of the Tribunal, in asmuch as, the order passed by the CESTAT has been in two portions (1) Fresh decision for fixing liability severally; (2) "the assessees are entitled to raise all the legal issues including the appreciation of evidence on record, including the appellants request for cross-examination afresh in the de-novo proceeding."
In view of the above the deponent under a patent belief that in so far as the legal issues were concerned the party was under an obligation to raise the same before the adjudicating authority but since teh same was not done for a considerable period of time i.e. Almost two and a half years, therefore the deponent on a conclusion that the party had nothing to put forward in their defence, hence proceeded with the ajudication without service of any notice, since it was incumbent upon the party to have approached the adjudicating authority for decision afresh in their matter which was not done so by them."
On the basis of the affidavits filed before the Court, it has come on record that a sanction order dated 3.5.2013 was passed by the Director General to launch criminal proceedings against the petitioners.
The learned counsel submitted and tried to impress upon the Court that the said order granting sanction to launch criminal proceedings was based on half truths and incomplete facts which was sent by the Commissioner. It was contended that the appellate order dated 25.02.2013 was not brought to the knowledge of the sanctioning authority. In this regard, the learned Senior Counsel has placed the order of the sanctioning authority to show that the sanction was made on the basis of the adjudicating order dated 31.3.2011. The learned Senior Counsel submitted that the Commissioner deliberately did not place the appellate order before the sanctioning authority and, if this order had been placed before the sanctioning authority, the authority would have second thoughts before the passing the order for initiating criminal proceedings agianst the petitioner. It was also urged that even after the sanctioning order dated 3.05.2013 was passed the Additional Commissioner, Jhansi who was the nominated authority to file the complaint, wrote a letter dated 17.10.2013 to the Additional Commissioner (Legal) asking for necessary direction to file the complaint in the back drop of the appellate order setting aside the order in original. The Additional Commissioner on the basis of an approval granted by the Commissioner, Kanpur intimated the Assistant Commissioner by letter dated 17.10.2013 to go ahed and file a complaint. It was urged that inspite of having knowledge that order in original was set aside by an appellate order, the Commissioner still went ahead to launch prosecution against the petitioner. It was further urged that after the complaint was filed on 24.2.2014, the petitioners filed an application for discharge and on the date fixed for consideration of the said application, the impugned order in original dated 28.8.2015 was filed in the court concerned without even serving the same upon the petitioner. It was urged that this was done deliberately in order to scuttle the proceedings before the Criminal Court. On this basis, the leaned counsel contends that the speed and the manner in which the Commissioner moved to save the prosecution proceedings by passing the impugned order speaks volumes by itself coupled with the fact that the said order was an ex parte order and was not even served upon the petitioner and was only served much later. It was also contended that the impugned order imposes duties and penalty upon the Managing Director of the Company Shri Mukesh Agarwal who had already died which fact was known to the Commissioner inspite of which, the Commissioner chose to pass an ex parte order against a dead person.
In the light of these assertions, the learned senior counsel contended that the impugned ex parte order was passed deliberately to harass the petitioner for vested reasons. It was further urged that the conduct of the Commissioner shows that the petitioner will not get justice from the Commissioner and, consequently, submitted that while setting aside the ex parte order a direction should be issued for transfer of the case to another competent officer.
On this aspect, Shri Ashok Mehta, the learned Senior Counsel conceded that the department has no objection if the matter is transferred to another competent officer.
Without going into the assertions made by the learned Senior Counsel on the issue of launching of criminal prosecution against the petitioner as we are of the opinion that touching this aspect would influence the criminal proceedings, we find from the impugned order in original dated 28.8.2015 that it was passed in gross violation of the principles of natural justice. The Commissioner in her affidavit has admitted that the impugned order was passed without service of any notice thereby meaning no opportunity of hearing was granted to the petitioner. The tribunal directed the Commisioner to provide opportunity of cross examination of the witnesses, which has been denied by the Commissioner in paragraph no.107 of the impugned order. The justification given by the officer in paragraph no.3 of her affidavit is that the petitioners were under an obligation to appear before the authority concerned pursuant to the order of the tribunal and that it was incumbent upon the petitioner to approach the adjudicating authority for a decision afresh. This, by itself, indicates the mind set of the officer of lack of knowledge on the aspect of principles of natural justice as envisaged under Article 14 of the Constitution fo India. Adjudication proceedings is initiated on the basis of a show cause notice issued by the department and denovo proceedings has to be started, if any, by the department itself. Issuance of a fresh notice not only flows from Article 14 of the Constitution but also from the provisions of the Central Excise Act. In our opinion the stand adopted by the Commissioner is nothing else but an after thought in trying to justify her action in passing an ex parte order.
The Supreme Court in Ayaaubkhand Noorkhan Pathan Vs. State of Maharashtra and others, 2013(4) SCC 465 held:
"24. A Constitution Bench of this Court in State of M.P. Vs. Chintaman Sadashiva Waishampayan held that the rules of natural justice require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross-examine witnesses, would violate the principles of natural justice. ( See also Union of India Vs. T.R. Varma, AIR 1957 SC 882, Meenglas Tea Estate V. Workmen, AIR 1963 SC1719, Kesoram Cotton Mills Ltd. Vs. Gangadhar AIR 1964 SC 708 , New India Assurance Co. Ltd. Vs. Nusli Nevile Wadia, 2008 (3) SCC279: (2008)1 SCC(Civ)850: AIR 2008 SC 876, Rachpal Singh Vs. Gurmit Kaur, 2009 (15) SCC88: (2009)5 SCC(Civ)549: AIR 2009 SC 142, Biecco Lawrie Ltd. v. State of W.B., 2009 (10) SCC 32: (2009)2 SCC(L&S)729: AIR 2010 SC 142, and State of U.P. V. Saroj Kumar Sinha, 2010 (2) SCC772: (2010)1 SCC(L & S) 675: AIR 2010 SC 3131.
25. In Lakshman Exports Ltd. V. CCE, (2005)10 SCC 634, this Court, while dealing with a case under the Central Excise Act, 1944, considered a similar issue i.e.permission with respect to the cross-examination of a witness. In this said case, the assessee had specifically asked to be allowed to cross-examine the representative of the firms concerened, to establish that the goods in question had been accounted for in their books of accounts, and that excise duty had been paid. The Court held that such a request could not be turned down, as the denial of the right to cross-examine, would amunt to a denial of the right to be heard i.e. Audi alteram patern."
Without adverting to assertions made by the petitioner, we get an uncanny feeling that there was lack of fairness on the part of the Commissioner in dealing with the matter. We are of the firm view that this small whiff of unfairness is sufficient for us to transfer the case so that there is fairness and principles of natural justice is followed. We, consequently have no hesitation in holding that the impugned order was passed exparte without issuing any notice or without affording any opportunity of hearing to the petitioner and, consequnetly the impugned order is set aside. The writ petition is allowed.
Since we have held that the proceedings were not happily conducted by the Commissioner, Customs, Central Excise & Service Tax, Kanpur, respondent no.2, we direct that the adjudication proceedings in question be transferred to the Commissioner, Customs, Central Excise & Service Tax, Lucknow, who will decide the matter after giving an opportunity of hearing to the petitioner in terms of the order of the Tribunal.
Order Date :- 17.11.2015
SFH
( Vinod Kumar Misra, J.) ( Tarun Agarwala, J.)