Vinayak Int Udyog Katha Baghpat vs The Commissioner Commercial Tax ...
2014 Latest Caselaw 3817 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Court No. - 4
 
Case :- SALES/TRADE TAX REVISION No. - 497 of 2014
 
Applicant :- Vinayak Int Udyog Katha Baghpat
 
Opposite Party :- The Commissioner Commercial Tax U.P.Lko.
 
Counsel for Applicant :- Suyash Agarwal
 
With
 
Case :- SALES/TRADE TAX REVISION No. - 499 of 2014
 
Applicant :- Vinayak Int Udyog Katha Baghpat
 
Opposite Party :- The Commissioner Commercial Tax U.P.Lko.
 
Counsel for Applicant :- Suyash Agarwal
 
Hon'ble Surya Prakash Kesarwani,J.

1. Heard Sri Suyash Agarwal, learned counsel for the applicant and Sri B.K. Pandey, learned standing counsel for the respondent.

2. C.T.R. No. 497 of 2014 relates to assessment under the U.P.Value Added Tax Act, 2008 for the A.Y. 2008-09 and C.T.R. No. 499 of 2014 relates to assessment under the U.P. Tax on Entry of Goods into Local Areas Act, 2007 for the A.Y. 2008-09. The assessment of entry tax has been made on the quantity of coal determined in the assessment order passed under U.P. VAT Act and, as such, both the revisions are being heard together. Both the revisions are admitted on the question of law no. (i) as framed in Revision No. 497 of 2014 and question of law no. (i) as framed in Revision No. 499 of 2014. With the consent of the learned counsel for the parties both the revisions are finally heard.

3. Briefly stated the facts of the present case are that the assessee is engaged in manufacture and sale of bricks. It runs a brick kiln. For the assessment year 2008-09 the assessee disclosed firing period of 73 days in the first season from 1.4.2008 to 12.6.2008 and in the second season firing of 58 days from 17.12.2008 to 12.2.2009. Thus total firing period was disclosed 131 days. The assessing officer increased the firing period of the first season from 73 days to 76 days and of the second season from 58 days to 106 days. The first appellate authority reduced the firing period of second season to 74 days. The Tribunal, by the impugned order; has set aside the order of the first appellate authority and restored the firing period as determined by the assessing officer. The only dispute pressed by the learned counsel for the revisionist in this revision is with regard to determination of firing period in the second season at 106 days as against the disclosed firing period of 58 days and consequential determination of the production and sale of bricks and consumption of coal.

4. Learned counsel for the applicant submits that the assessing officer has not recorded any valid reason. He rejected the disclosed firing period merely on the basis of surmises and presumption and without any evidence on record for firing in the brick kiln beyond the period disclosed by the assessee. The first appellate authority has correctly reduced the firing period. The Tribunal passed the impugned order without recording any reason either for agreeing with the firing period determined by the assessing officer or for disagreement with the firing period determined by the first appellate authority. He, therefore, submits that since the Tribunal is the last fact finding authority and was bound to record its own finding with regard to the factual aspects of firing period and, as such, the failure of the Tribunal to record any finding with regard to the fixation of firing period, renders the order of the Tribunal to be illegal.

5. Sri B.K. Pandey, learned standing counsel submits that the Tribunal has observed that looking at the facts found at the time of survey the determination of firing period by the assessing officer is justified. He, therefore, submits that the impugned order of the Tribunal is wholly correct.

6. I have carefully considered the submissions of learned counsel for the parties.

7. It is undisputed that the assessee has not maintained cash-book and ledger but has only maintained Pathai, Bharai, Fukai and Nikasi registers. During the assessment year in question the departmental authorities conducted survey of the brick kiln of the assessee on 18.5.2008, 18.9.2008, 16.12.2008 and 29.1.2009. At the time of aforesaid surveys no books of accounts were found while the accountant of assessee was present. The assessing officer rejected the disclosed firing period of the second season on the ground that since at the time of survey on 29.1.2009 no such material was found which may give rise to the closure of Fukhai on 12.2.2009 as shown by the assessee. He rejected the disclosed Fukhi period of the second season of 58 days and determined it at 106 days. Accordingly, number of bricks manufactured and sold and consumption of coal were also determined. The first appellate authority reduced the firing period to 74 days restricting it upto 29th February, 2009. By the impugned order the Tribunal has restored the Fukai period as determined by the assessing officer merely observing as under:

^^losZ{k.kksa ds le; ik;s x;s rF;ksa ds vk/kkj ij dj fu/kkZj.k vf/kdkjh }kjk tks 182 fnu dh QqdkbZ vof/k fu/kkZfjr dh xbZ gS] og mfpr gSA izFke vihyh; vf/kdkjh us fu/kkZfjr QqdkbZ vof/k dks dedjds 150 fnu fu/kkZfjr fd;k gS] tks mfpr ugha gSA izFke vihyh; vf/kdkjh us 150 fnu dh QqdkbZ vof/k fu/kkZfjr fd;s tkus dk dksbZ mfpr vk/kkj ugha fn;k gSA ,slh n'kk esa dj fu/kkZj.k vf/kdkjh }kjk fu/kkZfjr 182 fnu dh QqdkbZ vof/k dk leFkZu fd;k tkrk gSA^^

8. Section 57 (8) of the U.P. VAT Act, 2008 and Rule 63 (5) of the U.P. VAT Rules 2008 mandates the manner in which Tribunal is required to pass judgments. Section 57 (8) of the Act provides that the Tribunal may, if it has not already dismissed the appeal under Sub Section (7), after calling for and examining the relevant records, and after giving the parties a reasonable opportunity of being heard or, as the case may be, after following the procedure prescribed under sub-section (5):

(a) confirm, cancel or vary such order;

(b) set aside the order and direct the assessing or appellate or revising authority or the Commissioner as the case may be, to pass a fresh order after such further enquiry, if any, as may be specified; or

(c) orders such amount of tax, fee or penalty or other money as may have been realized in excess of the due amount to be refunded according to the provisions of this Act.

9. The manner of passing judgment has been provided in Rule 63 (5) of the Rules which specifically requires the Tribunal to state in its judgment/order, the points for determination, the decision thereon and the reasons for such decision. Thus, the said rule embodied the basic principles of law and justice which are normally required to be followed in every decision.

10. In the impugned order the Tribunal has not recorded any reason for fixation of Fukai period of 182 days, whereas he assessee as well as the department have seriously disputed the Fukai period of the second season. While the first appellate authority has reduced to 74 days. No reason has been recorded by the Tribunal to come to its conclusion that firing period as fixed by the assessing officer is justified or that firing period as determined by the first appellate authority is not justified. Under the circumstances, the impugned order of the Tribunal cannot be sustained and, therefore, deserved to be set aside and the matter deserves to be remanded to the Tribunal for determination of Fukai period afresh and consequently determination of production of bricks, sale of bricks and consumption of coal etc.

11. In the case of M/s. Hindustan Steels Ltd. Rourkela Vs. A.K. Roy and others, (1969) 3 SCC 513, Hon'ble Supreme Court held in para 16 as under :

"12. On a consideration of all the circumstances, the present case, in our view, was one such case. The Tribunal exercised its discretion mechanically without weighing the circumstances of the case. That was no exercise of discretion at all. There is ample authority to the effect that if a statutory tribunal exercises its discretion on the basis of irrelevant considerations or without regard to relevant considerations, certiorari may properly issue to quash its order. [See S.A. de Smith, Judicial Review of Administrative Action, (2nd ed.) 324-325]. One such relevant consideration, the disregard of which would render its order amenable to interference, would be the well- settled principles laid down in decisions binding on the tribunal to whom the discretion is entrusted. The refusal by the High Court to interfere was equally mechanical and amounted to refusal to exercise, its jurisdiction. Its order, therefore, becomes liable to interference."

(Emphasis supplied by me)

12. In the case of Omar Salay Mohd. Sait Vs. 19 Commissioner of Income Tax, Madras, AIR 1959 SC 1238, Hon'ble Supreme Court held in para 42 as under :

"42. We are aware that the Income-tax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it this court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings, even though on questions of fact, will be liable to be set aside by this court."

13. In the case of Udhav Das Kewat Ram Vs. CIT 1967 (66) ITR 462, Hon'ble Supreme Court held that Tribunal must consider with due care all material facts and record its findings on all contentions raised before it and the relevant law.

14. An order without valid reasons cannot be sustained. To give reasons is the rule of natural justice. Highlighting this rule, Hon'ble Supreme Court held in the case of The Secretary & Curator, Victoria Memorial v. Howrah Ganatantrik Nagrik Samity and ors., JT 2010(2)SC 566 para 31 to 33 as under :

"31. It is a settled legal proposition that not only an administrative but also judicial order must be supported by reasons, recorded in it. Thus, while deciding an issue, the Court is bound to give reasons for its conclusion. It is the duty and obligation on the part of the Court to record reasons while disposing of the case. The hallmark of an order and exercise of judicial power by a judicial forum is to disclose its reasons by itself and giving of reasons has always been insisted upon as one of the fundamentals of sound administration justice - delivery system, to make known that there had been proper and due application of mind to the issue before the Court and also as an essential requisite of principles of natural justice. The giving of reasons for a decision is an essential attribute of judicial and judicious disposal of a matter before Courts, and which is the only indication to know about the manner and quality of exercise undertaken, as also the fact that the Court concerned had really applied its mind. " [Vide State of Orissa Vs. Dhaniram Luhar (JT 2004(2) SC 172 and State of Rajasthan Vs. Sohan Lal & Ors. JT 2004 (5) SCC 338:2004 (5) SCC 573].

32. Reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, it becomes lifeless. Reasons substitute subjectivity by objectivity. Absence of reasons renders the order indefensible/unsustainable particularly when the order is subject to further challenge before a higher forum. [Vide Raj Kishore Jha Vs. State of Bihar & Ors. AIR 2003 SC 4664; Vishnu Dev Sharma Vs. State of Uttar Pradesh & Ors. (2008) 3 SCC 172; Steel Authority of India Ltd. Vs. Sales Tax Officer, Rourkela I Circle & Ors. (2008) 9 SCC 407; State of Uttaranchal & Anr. Vs. Sunil Kumar Singh Negi AIR 2008 SC 2026; U.P.S.R.T.C. Vs. Jagdish Prasad Gupta AIR 2009 SC 2328; Ram Phal Vs. State of Haryana & Ors. (2009) 3 SCC 258; Mohammed Yusuf Vs. Faij Mohammad & Ors. 21 (2009) 3 SCC 513; and State of Himachal Pradesh Vs. Sada Ram & Anr. (2009) 4 SCC 422]. 33. Thus, it is evident that the recording of reasons is principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person 23 who is adversely affected may know, as why his application has been rejected.

(Emphasis supplied by me)

15. Non recording of reasons, non consideration of admissible evidence or consideration of inadmissible evidence renders the order to be unsustainable. Hon'ble Supreme Court in the case of Chandana Impex Pvt. Ltd. Vs. Commissioner of Customs, New Delhi , 2011(269)E.L.T. 433 (S.C.)(para 8) held as under :

"8. Having bestowed our anxious consideration on the facts at hand, we are of the opinion that there is some merit in the submission of learned counsel for the appellant that while dealing with an appeal under Section 130 of the Act, the High Court should have examined each question formulated in the appeal with reference to the material taken into consideration by the Tribunal in support of its finding thereon and given its reasons for holding that question is not a substantial question of law. It needs to be emphasised that every litigant, who approaches the court for relief is entitled to know the reason for acceptance or rejection of his prayer, particularly when either of the parties to the lis has a right of further appeal. Unless the litigant is made aware of the reasons which weighed with the court in denying him the relief prayed for, the remedy of appeal will not be meaningful. It is that reasoning, which can be subjected to examination at the higher forums. In State of Orissa Vs. Dhaniram Luhar2 this Court, while 22 reiterating that reason is the heart beat of every conclusion and without the same, it becomes lifeless, observed thus :

"8.......Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made;......."

(Emphasis supplied by me)

16. In the case of Metal Extruders (India) Pvt. Ltd. Vs. CEGAT 1998 (97) E.L.T. 32 (S.C.) Hon'ble Supreme Court has held that order of the Tribunal must show that it really went into the question placed before it by recording its finding on facts.

17. In the case of Standard Radiators Pvt. Ltd. Vs. Commissioner of Central Excise 2002 (143) E.L.T. 24 (S.C.) Hon'ble Supreme Court held that Tribunal, being the last fact finding body, is expected to discuss the facts in detail and not cursorily and come to briefly stated conclusions on that basis.

18. In the case of Commissioner of Customs, Kolkata Vs. Peerless Consultancy Services Pvt. Ltd. 2007 (213) E.L.T. 481 (S.C.) Hon'ble Supreme Court held that argument noted and thereafter abrupt conclusion arrived at by the Tribunal without discussing in detail as to how conclusions of Commissioner was erroneous, shall render the order of the Tribunal to be vulnerable. In this case the Hon'ble Supreme Court set aside the order of the Tribunal and remanded the matter.

19. In the case of State of Haryana Vs. Hem Lata Gupta and others JT 2010 (I) SC Para 22, Hon'ble Supreme Court has held as under:

"Before concluding, we consider it necessary to observe that while deciding the writ petitions filed by the respondents, the High Court neither adverted to the reasons assigned by the Director for rejecting the respondents' claim for advance increments nor any fault was found with order dated 30.7.1998. The High Court also failed to notice that the writ petitions were filed not only by the Masters/Mistress, but also by other categories of teachers i.e., Lecturers, Language Teachers, Physical Training Instructors etc. who could not, by any stretch of imagination, lay claim for advance increments in terms of Memo dated 1.9.1960 issued by the Government of Punjab which was confined to the Masters only. Therefore, on this ground also the direction given by the High Court for grant of advance increments to the respondents cannot be sustained."

20. In the case of Assistant Commissioner, Commercial Tax Department Vs. Shukla & Brothers 2010 (254) E.L.T. 6 (S.C.) the Hon'ble Supreme Court held that reasons can never be dispensed with in judicial review. Recording of reasons is must.

21. In the case of Commissioner of Central Excise, Coimbatore Vs. Kwality Fun Foods & Restaurant Pvt. Ltd. 2010 (259) E.L.T. 641 (S.C.) in para 3 Hon'ble Suprme Court has held as under:

"3. The tribunal without even adverting to the basic facts and without making any independent analysis of the agreement between the parties but only relying on the earlier decision in Kwality Ice Cream Co. V. Commissioner of Central Excise, Chandigarh-2002 (145) E.L.T. 584 (T) allowed the appeal filed by the assessee. It is no doubt true that the Tribunal hascopiously referred to the findings in the said Judgment but without saying anything as to how those findings are applicable to the facts at hand. The Tribunal disposed of the appeal with the observation that the findings in the earlier case are clearly applicable to the facts of the present case. It is needless to restate that the question whether they are related persons within the meaning of Section 4 (4) (e) of the Act is to be considered with reference to the facts in each case. The Tribunal failed to advert even to the basic facts and disposed of the appeals in a summary manner interfering with the order passed by the authority. We find it difficult to sustain the order passed by the Tribunal."

(Emphasis supplied by me)

22. I find that if the impugned order of the Tribunal is tested on the principles embodied in Section 57 (8) of the Act and Rule 63 (5) of the Rules and the law laid down by Hon'ble Supreme Court in the aforenoted judgments, the impugned order of the Tribunal restoring the firing period as determined by the assessing officer for the second season, without recording any reasons, cannot be sustained. The Tribunal should have recorded its findings of fact on the question of firing period in the second season in the brick kiln in question and accordingly it should have made determination of manufacture and sale of bricks and consumption of coal etc.

23. The firing period for the first season has not been disputed by the applicant before this Court. Therefore the firing period of the first season is upheld.

24.In view of the above discussions, the impugned order of the Tribunal dated 17th April, 2014 is hereby set aside. The second appeals are restored to its original number. Matter is remitted back to the Tribunal to decide afresh the disputed firing period of second season and thereafter determine the production and sale of bricks and consumption of coal etc. The Tribunal shall also determine the liability of entry tax of the applicant in accordance with law, in respect of coal.

25. In result revision succeeds and is hereby allowed. Matter is remanded to the Tribunal for deciding second appeals afresh in accordance with law, in the light of the directions given above, as expeditiously as possible preferably within a period of three months from the date of a certified copy of this order is filed.

Order Date :- 31.7.2014

MT**