Santrogen Textiles Mills Limited vs Union Of India
2021 Latest Caselaw 15338 Guj

     C/SCA/5968/2020                                JUDGMENT DATED: 30/09/2021




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 5968 of 2020


FOR APPROVAL AND SIGNATURE:

HONOURABLE MS. JUSTICE SONIA GOKANI

and
HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN

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1     Whether Reporters of Local Papers may be allowed                  YES
      to see the judgment ?

2     To be referred to the Reporter or not ?                           YES

3     Whether their Lordships wish to see the fair copy                  NO
      of the judgment ?

4     Whether this case involves a substantial question                  NO
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

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                       SANTROGEN TEXTILES MILLS LIMITED
                                   Versus
                               UNION OF INDIA
==========================================================
Appearance:
MR DHAVAL SHAH(2354) for the Petitioner(s) No. 1
PRIYANK P LODHA(7852) for the Respondent(s) No. 2,3,4
UNSERVED WANT OF TIM(31) for the Respondent(s) No. 1
==========================================================
    CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI
          and
          HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN

                                Date : 30/09/2021

                      ORAL JUDGMENT

(PER : HONOURABLE MS. JUSTICE SONIA GOKANI)

1. This is a petition preferred by the company which is

100% Export Oriental Unit engaged in manufacturing of

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texturised yarn (hereinafter to be referred to as 'the firm').

2. The petitioner is challenging the legality and validity of

the communication dated 08.01.2020 rejecting the application

filed by the petitioner under Sabka Viswas (Legacy Dispute

Resolution) Scheme, 2019 (hereinafter referred to as 'SVLDR

Scheme') propounded in the Finance Act (No. 2), 2019 on the

ground that the demand against the petitioner also arises

under the Customs Act, 1962 and the issues covered under

the Customs Act is not covered by the Scheme.

3. The brief facts leading to the present petition are as

follows: -

3.1. On 18.07.2000, a team of Central Excise Preventive

Officers visited the premise of the said petitioner firm for

investigation which also recorded the statement of various

persons during the investigation and eventually, a show cause

notice came to be issued on 16.07.2003 calling upon the firm

as to why the central excise duty, the customs duty along with

other leviable dues be not recovered from it coupled with the

interest and penalty. Notice also proposed to impose penalty

upon Shri Vinod Kumar Deora and Mr. Manikchand Sharma.

3.2. It was alleged that the petitioner manufactured and

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cleared 85889.290 kgs. of polyester texturised yarn valued at

Rs. 64,25,197/- without payment of central excise duty

leviable thereon. The show cause notice demanded the duty of

excise and customs on the raw-material used in the

manufacture of texturised yarn allegedly manufactured and

removed by the petitioner.

3.3. Order-in-original (OIO for short) was passed by the

Commissioner of the Central Excise and Customs, Surat-II on

15.06.2005 which confirmed the demand of Central Excise

Duty to the tune of Rs. 54,82,011/- on the Polyester Texturised

Yarn and Customs Duty to the tune of Rs. 23,73,808/- on the

imported raw-material procured duty free and Central Excise

Duty of Rs. 21,270/- of the locally procured raw-material duty

free with the interest at the applicable rate.

3.4. Aggrieved by the OIO, the petitioner preferred an appeal

before the Customs, Excise and Service Tax Appellate

Tribunal (hereinafter referred to as 'the CESTAT'). The

appeals were also filed by Mr. Deora and Mr. Sharma against

the penalties imposed on them. The CESTAT on 18.12.2008 in

its final order set aside the OIO dated 15.06.2005 and allowed

the appeals of the petitioner and those of others.

3.5. The Commissioner of Central Excise and Customs

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preferred Tax Appeal No. 1410 of 2009 before this Court on

the substantial question of law involved therein. The Court,

however, on 14.07.2010 dismissed the said appeal and upheld

the order of the CESTAT.

3.6. The Special Leave Petition Nos. 9268-9270 of 2012 were

preferred by the Commissioner, Central Excise and Customs

before the Apex Court raising the following question of law: -

"The issue involved is as to whether the demand of central

excise duty is sustainable on finished goods short paid during

verification under panchnama and accepted to be cleared

without payment of duty by the authorized signatory of an

assessee and also corroborated by shortage of principal raw

materials found in verification under panchmana?"

3.7. Vide order dated 27.02.2016, the Apex Court allowed the

appeals preferred by the Commissioner of Central Excise and

remanded the proceedings to the CESTAT holding that the

revenue ought to have been offered an opportunity to counter

the technical report filed by the assessee, by filing its

technical report. According to the Apex Court, the entire

controversy hinges upon the differential quantity and if there

is any differential quantity, the issue of removal would arise.

Thus, the appeals were allowed by way of remand, directing

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the adjudicating authority for quantification of the demand

and to decide other consequential issues.

3.8. Pending this issue of quantification, SVLDR Scheme

came to be notified vide Finance Act (No.2), 2019 providing

the option to the assessee to pay arrears of tax dues with

certain benefits. On 20.12.2019, the petitioner filed

declaration under the SVLDR Scheme in the Form SVLDR-1

on the online portal of Central Board of Indirect Taxes and

Customs (hereinafter referred to as 'the CBIC') and this

application was rejected by the authorized officer on behalf of

the CBIC who communicated to the petitioner that on the

ground that custom duty is involved in the case which is not

covered under SVLDR Scheme.

3.9. The petitioner on 24.12.2019 once again filed an

application on the online portal after setting out the facts

informed by the Superintendent (Tech.) and urged that the

pending demand relates to excise duty on the goods and

further requested that the opportunity of hearing before any

adverse decision is taken, be provided.

3.10. Pending the opportunity of hearing, the application

dated 24.12.2019 also was rejected on the very date.

Subsequently, the petitioner received communication dated

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08.01.2020 issued by the respondent no.3 stating that the

show cause notice involves demand of customs duty also and

is therefore, out of the purview of SVLDR Scheme as custom

duty is not covered under the scheme.

3.11. On the ground that this is ex-facie in violation of

principles of natural justice as no opportunity of hearing is

granted to the petitioner, the present petition is preferred

with the following reliefs: -

"(a) Your Lordships be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the petitioners' case and going through the same, quash and set aside the impugned communication dated 08.01.2020 issued by the respondent no.3;

(b) Your Lordships be pleased to issue a writ of mandamus, or a writ in the nature of mandamus, or any other appropriate writ, order or direction, directing the respondents to forthwith accept the declaration filed by the petitioner on 24.12.2019 under SVLDR Scheme and issue Form SVLDRS-3;

(c) that pending the hearing and final disposal of this petition, this Hon'ble Court be pleased to direct the respondents by themselves, their officers, subordinates, servants and agents be restrain from taking any further proceedings or steps in implementation or in furtherance of the Final Order No. 12584-12586 of 2017 dated 15.09.2017 passed by the Appellate Tribunal;

(d) An ex-parte ad-interim relief in terms of prayer (d) above may kindly be granted;

(e) Such other and further order or orders as

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may be deemed just and proper in the facts and circumstances of the present case may kindly be granted."

4. Affidavit-in-reply is not filed by the Union however, this

Court has heard extensively learned advocate Mr. Dhaval

Shah appearing for the petitioner and learned Standing

Counsel Mr. Priyank Lodha for the respondent nos. 2, 3 and 4.

5. It is emphatically urged by learned advocate Mr. Dhaval

Shah that not only this is a wrong interpretation of demand of

custom duty by the respondent, there is no opportunity of

hearing provided whereby the petitioner could have explained

that to the other side. Absence of any fair opportunity of

hearing should be construed as violation of principles of

natural justice.

5.1. Reliance is place on Chapter-V of SVLDR Scheme, 2019.

According to learned advocate, the Scheme is brought to

bring an end to long standing disputes with an intent to buy

peace for the litigants and for collection of revenue. The CBIC

also has been directed to issue the instructions for proper

administration of the scheme and the Central Government

also by a notification in the official gazette was considering all

provisions of the scheme. The rejection, according to the

petitioner, does not fit in with the intent and object of the

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scheme. It is also further the say of learned advocate that the

stage after the CESTAT had upheld the appeal of the

petitioner, there was no demand of custom duty. The appeal

which has been preferred before this Court challenging the

substantial question of law was admitted and decided only in

relation to the levy of central excise duty therefore, by wrong

interpretation and without comprehension of the material in

its entirety, the order is passed which deserves interference.

5.2. Following are the authorities which he has relied upon: -

(i) Hitech Projects Private Limited vs. Union of India [2020 (7) TMI 419]

(ii) Union of India vs. Raj Pal and Another [rendered by Punjab & Haryana High Court at Chandigarh in CWP No. 19387/2011]

(iii) Union of India Secretary and Others vs. Union of India [rendered by the Apex Court in SLP(c) No.21803/2014]

(iv) Hasmukh B. Desai S/o Balbhai Desai vs. Director General and Another [rendered by this Court in SCA 4464/2016]

(v) Union of India and Others vs. All India CGHS Employees Association and Others [rendered by Delhi High Court in Writ Petition (Civil) No.8515/2014]

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(vi) Union of India and Others vs. M.V.Mohanan Nair [rendered by the Apex Court in Civil Appeal No.2016/2020]

6. Learned Standing Counsel Mr. Priyank Lodha has

vehemently resisted this application on the ground that the

show cause notice demands both the levy of central excise as

well as the payment of custom duty with penalty and delayed

payment of interest as well. He has urged however that once

the Hon'ble Supreme Court has remanded the matter to the

CESTAT, it is open for the CESTAT to then get the details

collected from the officer concerned and therefore also, the

custom duty is the part of demand. He has also further

admitted that this was an issue of unexplained shortage of

quantity of finished goods and the allegations were in respect

of the removal of the finished goods and quantity of the raw-

material. He does not dispute that before this Court, the

question of law that was raised only related to the central

excise duty. However, he insisted on this being a matter

where the question of demand of custom duty is also involved.

7. In rejoinder, it is insisted by learned advocate Mr.Dhaval

Shah that with the order of remand of the Apex Court, it is not

going to be an open ended remand as the issue which was

being addressed by the Apex Court is in relation to the

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Central Excise Duties and remand could be always on the

subject on which there was a challenge. It would not permit

the authority to sound it to be open ended, more particularly,

when the question raised before this Court was in relation to

the Central Excise Duty only. He has urged that let this aspect

be left to be decided by the authority concerned. What is

important right now is that no opportunity of hearing has

been given.

8. Upon hearing both the sides and also on due

consideration of the material, before adverting to the facts, it

is desirable to consider the law on the subject.

8.1. This Court in case of Hitech Projects Private Limited

vs. Union of India, reported in 2020 (7) TMI 419, was

considering the validity of declaration filed under Section 125

read with Rule 3 of the Sabka Vishwas (Legacy Dispute

Resolution) Scheme, 2019, the scheme was held to be not

maintainable on the premise that the case involves the

confiscation of goods and imposition of redemption fine and

Section 129 of the Finance Act (No.2), 2019 did not grant any

relief from the confiscation or redemption fine. This Court

held that the writ applicants could not be said to have got a

fair opportunity of hearing before the concerned respondent.

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The personal hearing appears to have been fixed during the

period of lockdown and therefore, the Court was of the view

that one opportunity should be given to the writ applicants to

put forward their case before the concerned respondent, in

person. The Court chose not to go into the merits of the

various issues raised as regards the claim to avail the benefit

under the Scheme and directed that all relevant aspects of the

matter be explained before the concerned respondent.

Accordingly, the communication in Form SVLDRS-3 was

quashed and set aside and the matter was remanded to the

Designated Committee, Ahmedabad-South for fresh hearing

on the issues in question. Relevant paragraphs of this decision

would deserve reproduction: -

"17 According to Mr. Ankit Shah, there is nothing on record to indicate that the writ applicants have made the total deposit of Rs.8,92,195/- as asserted for the purpose of availing the benefit of the Scheme. He would submit that although an opportunity of personal hearing was given to the writ applicants, yet the same was not availed. The writ applicants failed to appear before the concerned authority.

18 The aforesaid stance of the respondents is rebutted by the writ applicants in the form of an affidavit in rejoinder. In para 9 of the affidavit in rejoinder, the following averments have been made:

"9 That the Petitioner was called for the personal hearing on 7.05.2020, which was the time, entire India was in complete lockdown situation and Petitioner's office was

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completely closed. Even the Respondent office must be closed during these days and therefore, there was no question of granting personal hearing on 7.05.2020. The Petitioner was conscious about the situation and therefore requested to grant personal / "ehearing". If the answering respondent wanted to complete the process in lockdown situation then fair opportunity of hearing should be granted to the Petitioner but they knew that no one will come for personal hearing and they can straight away decide the matter. If the answering respondent really wanted to decide fairly then they could have send email for the clarification that there is no facility available for the "ehearing" but they kept the petitioner in dark and directly issue Form SVLDRS3. When the Hon'ble Courts and many Government offices were working on Virtual Platform, why can't respondent office work on virtual platform and stick to personal hearing. As a matter of fact, instance of personal hearing is contrary to the direction issued by the Central Government during Lockdown period. This approach of the Respondent clearly shows how perverse attitude of the authorities just to frustrate the interest of the Petitioner."

19 Having heard the learned counsel appearing for the parties and having gone through the materials on record, we are of the view that the writ applicants could not be said to have got a fair opportunity of hearing before the concerned respondent. We are at one with Mr. Dhaval Shah, the learned counsel appearing for the writ applicants that the concerned respondent could not have fixed the personal hearing during the period of lockdown. We are of the view that one opportunity should be given to the writ applicants to put forward their case before the concerned respondent in person.

21.1 Let this entire exercise be undertaken at the earliest and shall be completed in any case within a

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period of six weeks from the date of the receipt of the writ of this order. We are conscious of the fact that the time period to make the deposit of the requisite amount for the purpose of availing the benefit under The Scheme came to an end on 30.06.2020. The stance of the writ applicants is that they have made the requisite payment towards deposit, whereas, the stance of the Department is that the amount has not been deposited. Ultimately, it is for the Department to verify from the records available with them as regards the amount deposited by the writ applicants way back in 2015-16. In the event ultimately if some amount has to be deposited, then despite the time limit having expired the Department shall accept the payment in view of the fact that this litigation was pending before this Court."

8.2. The Bombay High Court in case of Magnum

Management and Service Private Limited vs. Union of

India reported in 2021(3) TMI 136, was considering the

rejection of declaration under the SVLDR Scheme, the reason

for rejection was mentioned as being ineligible under Section

125(1)(f)(i) read with Section 121(m) of the Finance Act (No.

2), 2019. The Court held that for determining the eligibility, a

great deal of discretion is vested on the designated

committee, which has to decide eligibility on a case to case

basis. Needless to say, when a discretion is conferred upon an

authority to decide an issue which has civil consequences

upon the party concerned, the same has to be exercised in a

just, fair and reasonable manner complying with the

principles of natural justice. It is also expected that such

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designated committee would/should consider all relevant

materials and also hear the concerned declarant. There is no

express provision, according to the Bombay High Court, in the

scheme lying down requirement of hearing before rejection of

the declaration.

Section 127 has been employed, more particularly, sub-

sections (3) and (4) to hold that if the designated committee

upon verification, determined the amount payable by the

declarant to be higher than what is declared by the declarant,

the opportunity of hearing should be granted to the declarant.

The Court also has gone into the decision of Thought Blurb Vs.

Union of India reported in 2020 SCC OnLine Bom 1909 where

it has been held that in a situation where the amount

estimated by the designated committee is in excess of the

amount declared by the declarant, an opportunity of hearing

is required to be given by the designated committee to the

declarant, then it would be in complete defiance of logic and

contrary to the very object of the scheme to outrightly reject a

declaration on the ground of being ineligible. Summary

rejection of a declaration without affording any opportunity of

hearing to the declarant would be in violation of the principles

of natural justice, breaching the need of the decision making

process thereby rendering the decision invalid in law.

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"15. At the outset, we may advert to certain provisions of the scheme as contained in the Finance (No. 2) Act, 2019 relating to making of declaration under the category of 'voluntary disclosure'.

16. Section 121(m) defines the expression "enquiry or investigation" under any of the indirect tax enactments to mean search of premises; issuance of summons; requiring the production of accounts, documents or other evidence and recording of statements.

16.1. Section 123 deals with tax dues as understood under the scheme. As per section 123(d), where the amount has been voluntarily disclosed by the declarant, then tax dues would mean the total amount of duty stated in the declaration.

16.2. Reliefs available under the scheme are dealt with in section 124. As per section 124(1)(e), subject to the conditions specified in sub-clause (2), where the tax dues are payable on account of a voluntarily disclosure by the declarant, then, no relief shall be available with respect to tax dues. Sub-section (2) says that relief calculated under sub-section (1) shall be subject to the condition that any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit shall be deducted when issuing the statement indicating the amount payable by the declarant. However, as per the proviso, if the amount of predeposit or deposit exceeds the amount payable by the declarant, the declarant would not be entitled to any refund.

16.3. Section 125 deals with eligibility to make declaration under the scheme. As per sub-section (1) of section 125, all persons shall be eligible to make a declaration under the scheme except those who are specifically excluded under clauses (a) to

(h). From the wordings of sub-section (1) of section 125, it is evident that under the scheme, eligibility is the norm and ineligibility is the exception. In so

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far voluntary disclosure is concerned, ineligibility is dealt with in clause (f)(i) which says that a person after being subjected to any enquiry or investigation or audit would be ineligible to make a voluntary disclosure.

16.4. Section 126 deals with verification of declaration by designated committee. Proviso to sub-section (1) clarifies that no such verification shall be made in a case where voluntary disclosure of an amount of duty has been made by the declarant.

16.5. Section 129 provides that every discharge certificate issued under section 126 with respect to the amount payable under the scheme shall be conclusive as to the matter and time period stated therein. Section 129(2)(c) says that notwithstanding anything contained in sub-section (1), in a case of voluntary disclosure where any material particular furnished in the declaration is subsequently found to be false within a period of one year of issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted.

16.6. Under section 131, for removal of doubts, it has been clarified that nothing contained in the scheme shall be construed as conferring any benefit, concession or immunity on the declarant in any proceedings other than those in relation to the matter and time period in which the declaration has been made.

17. We may also refer to circular dated 25.09.2019 issued by the Central Board of Direct Taxes and Customs (briefly "the Board" hereinafter). In clause

(vi) of paragraph 2, it is stated that in a case of filing declaration under the category of 'voluntary disclosure', whether benefit of the scheme would be available to a declarant in a case where documents like balance sheet, profit and loss account etc are called for by the department, Board has clarified that in such a case, the designated committee may take a view on merit, taking into

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account the facts and circumstances of the case as to whether provisions of section 125(1)(f) would be attracted or not.

18. Board has also prepared a set of Frequently Asked Questions (FAQs). Question No. 59 and the answer given thereon are as under:-

"Q. 59Although I have not been subjected to any search of my premises or investigation of any kind as per my knowledge I have recently received a letter from the department asking for some documents like balance sheets and Profit and loss accounts of certain years. I want to make a voluntary declaration with regard to the same period. Am I eligible?

Ans. The letter may have been sent to you by the department as a result of a specific intelligence input as pert of an enquiry or investigation or it may be with the aim of making a preliminary assessment as to whether or not an enquiry or investigation is warranted. This would depend on the facts and circumstances of each case. You can make a declaration. However the eligibility will be decided on a case to case basis by the designated committee."

19. Thus, we find that for determining eligibility under the category of 'voluntary disclosure', a great deal of discretion is vested on the designated committee, who has to decide eligibility on a case to case basis. Needless to say, when a discretion is conferred upon an authority to decide an issue which has civil consequences upon the party concerned, such discretion has to be exercised in a just, fair and reasonable manner complying with the principles of natural justice. Thus, while deciding eligibility, the designated committee is required to consider all relevant materials and also hear the concerned declarant.

20. Having held so, let us deal with the contention of the petitioner that before a declaration is rejected, an opportunity of hearing should be granted to the declarant. Though we do not find

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any such express provision in the scheme laying down requirement of hearing before rejection of the declaration, we find from section 127 more particularly under sub-sections (3) and (4) thereof that if the designated committee upon verification, determines the amount payable by the declarant to be higher than what is declared by the declarant, then an opportunity of hearing should be granted to a declarant. This coupled with what we have discussed in paragraph 19 above, makes hearing before rejection obligatory.

21. This aspect of the matter was gone into by this Court in Thought Blurb Vs. Union of India1 . It has been held that in a situation where the amount estimated by the designated committee is in excess of the amount declared by the declarant, an opportunity of hearing is required to be given by the designated committee to the declarant, then it would be in complete defiance of logic and contrary to the very object of the scheme to outrightly reject a declaration on the ground of being ineligible. Summary rejection of a declaration without affording any opportunity of hearing to the declarant would be in violation of the principles of natural justice impeaching the decision making process thus rendering the decision invalid in law. It has been held in paragraph Nos. 51 and 52 as under:-

"51. We have already discussed that under sub sections (2) and (3) of section 127 in a case where the amount estimated by the Designated Committee exceeds the amount declared by the declarant, then an intimation has to be given to the declarant in the specified form about the estimate determined by the Designated Committee which is required to be paid by the declarant.

However, before insisting on payment of the excess amount or the higher amount the Designated Committee is required to give an opportunity of hearing to the declarant. In a situation when the amount estimated by the Designated Committee is in excess of the amount declared by the declarant an

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opportunity of hearing is required to be given by the Designated Committee to the declarant, then it would be in complete defiance of logic and contrary to the very object of the scheme to outrightly reject an application (declaration) on the ground of being ineligible without giving a chance to the declarant to explain as to why his application (declaration) should be accepted and relief under the scheme should be extended to him. Summary rejection of an application without affording any opportunity of hearing to the declarant would be in violation of the principles of natural justice. Rejection of application (declaration) will lead to adverse civil consequences for the declarant as he would have to face the consequences of enquiry or investigation or audit. As has been held by us in Capgemini Technology Services India Limited (supra) it is axiomatic that when a person is visited by adverse civil consequences, principles of natural justice like notice and hearing would have to be complied with. Non-compliance to the principles of natural justice would impeach the decision making process rendering the decision invalid in law.

52. We have one more reason to take such a view. As has rightly been declared by the Hon'ble Finance Minister and what is clearly deducible from the statement of object and reasons, the scheme is a one time measure for liquidation of past disputes of central excise and service tax as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration. The basic thrust of the scheme is to unload the baggage of pending litigations centering around service tax and excise duty. Therefore the focus is to unload this baggage of pre-GST regime and allow business to move ahead. We are thus in complete agreement with the views expressed by the Delhi High Court in Vaishali Sharma Vs. Union of India, WP(C) No. 4763 of 2020 decided on 05.08.2020 that a liberal interpretation has to

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be given to the scheme as its intent is to unload the baggage relating to legacy disputes under central excise and service tax and to allow the business to make a fresh beginning."

22. Since we find that impugned rejection of the declaration of the petitioner is in violation of the principles of natural justice which has impacted the decision making process thus rendering the decision invalid, it may not be necessary for us to enter into the merits of the challenge as to whether the declaration of the petitioner was in fact valid or not under the category of 'voluntary disclosure'. This is a matter which should be best left to the designated committee to decide after granting opportunity of hearing to the petitioner.

23. Consequently we set aside the order dated 21.01.2020 and direct the designated committee to decide afresh the declaration of the petitioner dated 25.12.2019 in terms of the scheme under the category of 'voluntary disclosure' after giving due opportunity of hearing. The date, time and place of hearing shall be intimated to the petitioner. The entire exercise shall be carried out within a period of eight weeks from the date of receipt of a copy of this order."

9. To decide as to whether there is a need for the

exercising the discretion on the aspect of opportunity of

hearing, it would be apt to refer to the decision of the Apex

Court rendered in case of Chairman, All India Railway

Rec. Board and Another vs. K.S.Radhakrishnan [Civil

Appeal Nos. 5675-5677 of 2007, decided on 06.05.2010],

where the Court held thus: -

"16. Judicial review conventionally is concerned with

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the question of jurisdiction and natural justice and the Court is not much concerned with the merits of the decision but how the decision was reached. In Council of Civil Service Unions Vs. Minister of State for Civil Service (1984) 3 All ER 935 the (GCHQ Case) the House of Lords rationalized the grounds of judicial review and ruled that the basis of judicial review could be highlighted under three principal heads, namely, illegality, procedural impropriety and irrationality. Illegality as a ground of judicial review means that the decision maker must understand correctly the law that regulates his decision making powers and must give effect to it. Grounds such as acting ultra vires, errors of law and/or fact, onerous conditions, improper purpose, relevant and irrelevant factors, acting in bad faith, fettering discretion, unauthorized delegation, failure to act etc., fall under the heading "illegality". Procedural impropriety may be due to the failure to comply with the mandatory procedures such as breach of natural justice, such as audi alteram partem, absence of bias, the duty to act fairly, legitimate expectations, failure to give reasons etc. ".

9.1. In case of Poonam vs. State of U.P and Others [Civil

Appeal No. 6774 of 2015, decided on 29.10.2015], the

Court held thus:-

"20. In this context the authority in Sadananda Halo and Others v. Momtaz Ali Sheikh and Others is quite pertinent. The Division Bench referred to the decision in All India SC & ST Employees' Assn. v. A. Arthur Jeen wherein this court had addressed the necessity in joining the necessary candidates as parties. The Court referred to the principle of natural justice as enunciated in Canara Bank v. Debasis Das. We may profitably reproduce the same:-

"Natural justice has been variously defined. It is another name for common sense justice. Rules of natural justice are not codified canons. But they are principles ingrained into the conscience of man. Natural justice is the administration of justice in a

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common sense liberal way. Justice is based substantially on natural ideals and human values. The administration of justice is to be freed from the narrow and restricted considerations which are usually associated with a formulated law involving linguistic technicalities and grammatical niceties. It is the substance of justice which has to determine its form. Principles of natural justice are those rules which have been laid down by the courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice."

And again:-

"Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the facts and circumstances of that case, the framework of the statute under which the enquiry is held. The old distinction between a judicial act and an administrative act has withered away. The adherence to principles of natural justice as recognised by all civilised States is of supreme importance....""

10. As is quite apparent from the SVLDR Scheme, 2019 that

Section 121(m) provides for inquiry or investigation under any

of the indirect tax enactment and includes various actions

including of search, summons, production, recording of

statement etc.

Section 122 provides as to which of the enactments, the

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scheme would apply to.

Section 123 for the purposes of the scheme explains the

tax dues. Section 123(b) provides that where a show cause

notice is received by the declarant on or before 30.06.2019,

then the amount of duty stated to be payable by the declarant

in the said notice.

Section 124 provides for the relief available under the

Scheme. It is quite clear from the said provisions that relief

calculated under sub-section (1) shall be subject to the

condition that the amount paid as pre-deposit at any stage of

the appellate proceedings under the indirect tax enactment or

as deposit during enquiry, investigation or audit, shall be

deducted while issuing the statement indicating the amount

payable by the declarant and the declarant shall not be

entitled to any refund provided that the amount of pre-deposit

or deposit already paid by the declarant exceeds the amount

payable by the declarant as indicated in the statement of the

designated committee.

To make declaration under the Scheme, eligibility is

provided under Section 125 where the exclusion is also

provided under sub-sections (a) to (h) and except the

specifically excluded persons, all persons are made eligible to

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make declaration under the scheme.

The verification is to be done of the declaration by the

designated authority under Section 126 except where amount

of duty is voluntarily disclosed.

The issuance of the statement of the designated

authority of the amount estimated to be payable by the

declarant is provided under Section 127.

Section 129 provides the issuance of discharge

certificate under Section 126 that would conclude the amount/

matter and time period provided therein. Voluntary disclosure

places an onus upon the declarant to be truthful and any

falsehood detected within one year would attract stringent

penal proceedings alongwith declaration to be set at naught.

To ascertain the restrain provided under Section 130,

Section 131 declares that as otherwise expressly provided

under sub-section(1) of Section 124, nothing contained in this

Scheme shall be construed as conferring any benefit,

concession or immunity on the declarant in any proceedings

other than those in relation to the matter and time period to

which the declaration has been made.

The Central Board of Indirect Taxes and Customs (CBIC)

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also has powers to issue orders, instructions and directions

periodically under Section 133 and no suit or proceeding or

any legal action is permissible against any officers of the

Central Government for anything which is done or intended to

be done in good faith, in pursuance of this Scheme or any rule

made thereunder, as per Section 135.

This being essentially laudable attempt to bring an end

to protracted litigation of pre-GST regime, the authority needs

to approach this scheme with pragmatic approach.

11. For deciding the eligibility of the declarant since the

designated authority has enormous discretion and as it is

expected to decide the same on case to case basis, the

designated authority since has permitted the verification of

the declaration by the declarant and even otherwise, while

exercising the powers, various situations would arise for

estimating the amount, even in absence of any expressed

provision under the Scheme, it is always desirable that an

opportunity of personal hearing be afforded. As could be

noticed that twice the opportunity of hearing was sought for

by the petitioner and the same had not been granted and

instead, orders have been passed straightway by the

authority, we are of the firm opinion that there ought to have

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been an opportunity of hearing, as orders passed violates

basic principle of natural justice. We set aside both the orders

dated 24.12.2019 and 08.01.2020 to direct the designated

committee to decide afresh the declaration of the petitioner in

terms of the scheme. It shall also decide as to whether the

scheme would be applicable in case of the applicant in whose

case the challenge made before this Court to the order of

CESTAT dated 15.09.2017 was on a substantial question of

law where only question raised was of imposing of the excise

duty alone without any challenge to the custom duty.

12. Without opining on the question of merit, by examining

chronological events which have taken place culminating into

the order of remand by the Apex Court and whether the same

could be considered as open ended remand, we direct the

respondent authority to avail an opportunity of hearing to the

petitioner and complete the entire exercise at the earliest,

preferably within a period of six (6) weeks from the date of

receipt of writ of this order.

13. The writ applicant since has already made requisite

payment towards deposits, despite the time limit having

expired, the department shall accept the payment, if there is

any due left out in wake of the pendency of the pending

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litigation, the same also be decided.

14. None of the findings and observations shall come in the

way of the either side.

(SONIA GOKANI, J)

(RAJENDRA M. SAREEN,J) Bhoomi