Telangana High Court
M/S.V S Associates vs The Joint Commissioner St on 10 April, 2024
Author: P.Sam Koshy
Bench: P.Sam Koshy
THE HONOURABLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE JUSTICE SAMBASIVA RAO NAIDU
WRIT PETITION No.9114 OF 2024
ORDER:
(per Hon'ble Sri Justice P.SAM KOSHY) Heard Mr.Shaik Jeelani Basha, learned counsel for the petitioner, Mr.Swaroop Oorilla, learned Special Government Pleader for respondents. Perused the material available on record.
2. The Challenge in the present writ petition is to the impugned order annexure P-1, dated 28.02.2024, whereby the 1st respondent has passed the impugned order in a Suo Motu Revision Proceedings and have proposed levy of tax of Rs.11,69,25,878/-, treating the same as pertaining to interstate sales of unclassified goods falling under the V Schedule to the TVAT Act and a demand of Rs.1,69,54,252/- was confirmed.
3. The impugned order has been assailed primarily on the ground of the same being unreasoned and non- speaking order.
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PSK,J & SSRN,J W.P.No.9114 of 2024
4. Learned counsel for the petitioner drew the attention of the Court to the impugned order consisting of three pages, wherein except for the last paragraph i.e, the operational paragraph, the entire contents of the impugned order were factual matrix of the case and also reproduction of the reply that the petitioner has furnished to the show cause notices that was issued by the Department. Further, from the operative part of the order also all that is reflected is that except for the averment by the 1st respondent of having thoroughly verified with the documentary evidences and reply submitted by the petitioner, on the ground of there being insufficient documentary evidence on the part of the petitioner, the 1st respondent has proposed the levy of tax @14.5% and confirmed the demand of Rs.1,69,54,252/-.
5. In support of his contention, the learned counsel for the petitioner relied upon a Division Bench order of this Court, in the case of Refex Energy Limited v. Assistant Commissioner (ST) 1, decided on 21.09.2023, whereby 1 (2024) 123 GSTR 118 (Telangana).
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PSK,J & SSRN,J W.P.No.9114 of 2024 under similar set of factual backdrop, the Division Bench of this Court had allowed the writ petition holding the impugned order an unsigned and non-speaking order and remanded the matter back to the authorities concerned for passing fresh speaking order on due consideration of the reply and the material supplied by the petitioner.
6. On the contrary, the learned Special Government Pleader adverting to the impugned order submits that the reference made in the impugned order by itself would show that the Department had ensured that due compliance of the principles of natural justice is fully adhered to. Moreover, all the requisite formalities as per the provisions of the TVAT Act, as also under the CGST Act, have been duly complied with. Enough show cause notices and personal hearing notices were served upon the petitioner, who has also entered appearance and since the authority concerned did not find any substantial material which have been produce by the petitioner, the impugned order has been passed. Thus, the said order cannot be found fault with.
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7. However, upon due consideration of submissions made by the learned counsel appearing on either side and on perusal of the impugned order as has been held in the preceding paragraphs, except for the operative part there does not find to be any other discussions in respect of the responses and the reply that the petitioner have filed to the show cause notices and the notice for personal hearing issued and served upon the petitioner. In this context it would be relevant to take note of the two paragraphs of the impugned order which by itself would be self explanatroy:
We are enclosing summary of sales register as per our records and VAT returns for your kind reference. Assessment was also completed for the above mentioned year by Deputy Commercial Tax Officer, Vidyanagar Circle. Since, there is no unassessed turnover, we request your good office to kindly drop the proceedings.
The contentions of the assessee has been thoroughly verified along with documentary evidences and noticed that the assessee has reported the consignment sales turnover of Rs.12,78,71,595.00. The consignment sales are taxable at 14.5%. The assessee has not submitted sufficient documentary evidences with respect to the unassessed turnover of Rs.11,69,25,878.00. Therefore, the proposed levy of tax @14.5% on 5 PSK,J & SSRN,J W.P.No.9114 of 2024 Rs.11,69,25,878.00. same as pertaining to interstate sales of unclassified goods falling under the V Schedule to the TVAT Act read with Section 8(2) of the CST Act, is confirmed and a demand of Rs.1,69,54,252.00 is also confirmed.
8. If we look into the 1st paragraph reproduced earlier, it would clearly reflect that, in addition to the reply that the petitioners had furnished, they had also enclosed the summary sales register, as maintained by the petitioner/establishment and had also furnished the VAT returns before the authorities concerned.
9. Coming to the operative part of the impugned order, which again is reproduce herein above, would go to show that there is no discussion whatsoever in respect of any discrepancy or short comings that were detected on the sales register produced by the petitioner or in respect of the VAT returns filed along with the replies by the petitioner. The operative part also does not give any reasons as to why the authority concerned is disbelieving the records and the contentions which the petitioner had furnished. Except for one line that there is no sufficient documentary evidence as 6 PSK,J & SSRN,J W.P.No.9114 of 2024 would be clear from the operative part of the impugned order, there is no reasons or justification given by the 1st respondent in the course of passing the impugned order showing the grounds and materials which compelled him to proposed the levy of tax @14.5% and also in confirming the demand.
10. It is in this context that the earlier decision of the Division Bench of this court in the case of Refex Energy Limited v. Assistant Commissioner (ST) supra becomes relevant. The Division Bench of this Court in the case of Refex Energy Limited v. Assistant Commissioner (ST) in paragraph Nos.10 and 11 has held as under:
10. In the case of Kranti Associates (P) Limited vs. Masood Ahmed Khan 2 the Hon'ble Supreme Court held as under:
Summarizing the above discussion, this Court holds:
a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.2
(2010) 9 SCC 496 7 PSK,J & SSRN,J W.P.No.9114 of 2024 b. A quasi-judicial authority must record reasons in support of its conclusions.
c. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.
d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power.
e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations.
f. Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. g. Reasons facilitate the process of judicial review by superior Courts.
h. The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice.
i. Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining 8 PSK,J & SSRN,J W.P.No.9114 of 2024 the litigants' faith in the justice delivery system.
j. Insistence on reason is a requirement for both judicial accountability and transparency.
k. If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.
l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or `rubber-stamp reasons' is not to be equated with a valid decision making process.
m. It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-737).
n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent 9 PSK,J & SSRN,J W.P.No.9114 of 2024 reasons must be given for judicial decisions".
o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process".
11. In W.P.(s).No.3144 of 2011, the High Court of Chhattisgarh, Bilaspur, held as under:
In the case of East Coast Railway and Another Vs. Mahadev Appa Rao and Others with K. Surekha Vs. Mahadeo Appa Rao and Others (reported in 2010 (7) SCC 678), the Supreme Court in a very categorical terms has held that Arbitrariness in making of an order by an authority can manifest itself in different forms. Every order passed by a public authority must disclose due and proper application of mind by the person making the order. Application of mind is best demonstrated by disclosure of mind by the authority making the order and disclosure is best done by recording the reasons that led the authority to pass the order in question. Absence of reasons either in the order passed by the authority or in the record contemporaneously maintained is clearly suggestive of the order being arbitrary hence legally unsustainable. In the absence of reasons in support of the order it is difficult to assume that the authority had properly applied its mind before passing of the order.
9. Likewise, again in case of Assistant Commissioner, Commercial Tax Department, Works Contract and Leasing, 10 PSK,J & SSRN,J W.P.No.9114 of 2024 Kota Vs. Shukla and Brothers (reported in 2010 (4) SCC 785), the Supreme Court has held that "recording of reasons is an essential feature of dispensation of justice.
Reasons are the soul of orders. Non- recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighted with the authority in rejecting him claim and also causes impediments in his taking adequate and appropriate grounds before the higher court in the event of challenge to that order."
11. Keeping in view the decision of this Court in the case of Refex Energy Limited v. Assistant Commissioner (ST) and also the decisions referred to while deciding the said judgment which have been reproduced in the preceding paragraphs, when we look into the impugned order, we find that the said judgment squarely applies to the present case also.
12. The impugned order therefore on account of the same being an unreasoned and non-speaking order, deserves to be and is accordingly set aside. As a consequence, the matter stands remitted back to the 1st respondent for 11 PSK,J & SSRN,J W.P.No.9114 of 2024 reconsideration of the matter afresh. Let the petitioner enter appearance before the respondent authorities on 03.05.2024 for personal hearing and the 1st respondent thereafter shall proceed and pass appropriate orders strictly in accordance with law giving a reasoned order. It is made it clear that for the appearance of the petitioner there shall be no further necessity of issuance of any notice.
13. Accordingly, this Writ Petition Stands allowed.
Consequently, miscellaneous petitions pending, if any, shall stand closed. No order as to costs.
____________________ P.SAM KOSHY, J ____________________________ SAMBASIVA RAO NAIDU, J Date: 10.04.2024 AQS