Telangana High Court
Likasan Traders vs Union Of India on 24 March, 2025
THE HONOURABLE THE ACTING CHIEF JUSTICE SUJOY PAUL
AND
THE HONOURABLE SMT. JUSTICE RENUKA YARA
WRIT PETITION Nos.135 and 168 of 2025
COMMON ORDER (Oral): (Per Hon'ble The Acting Chief Justice)
Sri J.C. Francis, learned counsel representing Sri Ravish
Kedia, learned counsel for the petitioners in both cases; Sri
Dominic Fernandes, learned Senior Standing Counsel for CBIC,
for respondent Nos.2 and 3 in both the cases and Sri B.
Mukherjee, learned counsel representing Sri Gadi Praveen Kumar,
learned Deputy Solicitor General of India, for respondent No.1 in
both the cases.
2. Regard being had to the similitude of the questions involved,
on the joint request, these matters are analogously heard and
decided by this common order.
3. The challenge is mounted in these petitions to the Appellate
Orders in appeal Nos.HYD-GST-HYC-APP1-118-24-25 and HYD-
GST-HYC-APP1-117-24-25, both dated 30.08.2024 passed by
respondent No.2 in both the cases. The facts are taken from
W.P.No.135 of 2025.
4. The principal contention of the learned counsel for the
petitioners is that the petitioners filed an elaborate appeal running
into almost 20 pages. By taking this Court to the appeal memos
(Annexure P-7), it is submitted that apart from giving factual
details of tax components etc., statement of facts are given in
paragraph Nos.1 to 6. Thereafter, 'grounds' were introduced
subject-wise such as: 1. "incompleteness of investigation";
2. "failure of 'due process' of disclosure of investigative material";
3. "adjudication sans disclosure of investigative material is
incomplete, presumptive and illegal"; 4. "Issue (A) Demand for
Penalty on 'Carousel Trading'"- 'Dropping of demand for reversal of
input tax credit entails acceptance of bona fide inward and outward
supplies', 'Adjudicating Authority 'acting under dictation' is illegal,
violative of principles of natural justice and results in non-
application of mind in adjudication proceedings', 'Appeal limited to
validity of Impugned Order and limitations in Impugned Order
incurable in appellate proceedings', 'Demand for penalty without
showing the ingredients is illegal'; 5. "Issue (B) Demand for
mismatch of input tax credit"- 'Interest not applicable when output
tax discharged stands appropriated' and 6. "Issue (C) Demand for
output tax on cash transactions"-'Interest not applicable when
output tax discharged stands appropriated', 'Demand for penalty
without showing the ingredients is illegal'.
5. Under every 'head', the petitioners raised facts and grounds
on the strength of which said 'heads' were highlighted. By taking
this court to the 'findings and discussion', learned counsel for the
petitioners submits that the findings are nothing, but ipse-dixit of
the learned Appellate Authority. Learned Appellate Authority is
under a statutory obligation and need to assign reasons for each
of his conclusions. He passed a cryptic order without dealing with
each of the discussions which were duly highlighted in the appeal
memos. The orders are cryptic and non-speaking in nature.
6. Sri Dominic Fernandes, learned Senior Standing Counsel for
CBIC, supported the impugned order and submitted that in case
the grounds on which the impugned order is passed are not found
to be satisfactory by this Court, the impugned order may be set
aside by reserving the liberty to the learned Appellate Authority to
pass a fresh order.
7. No other point is pressed.
8. As rightly pointed out, the appeal memos are running in
almost 20 pages and 'grounds' are taken under various 'heads'.
The 'discussion and findings' reads thus:
"Discussion & Findings:
8. I have carefully examined the impugned orders, the
grounds of appeals, and the submissions made by the
appellants. The core issue to be decided is whether M/s
Om Dhana Laxmi Traders have indulged in availing and
passing on irregular ITC as alleged.
9. I find that a detailed investigation have been
conducted covering all the parties involved in the
disputed transactions. Statements of the main
appellants i.e., Proprietors and Accountants clearly
establish that neither the appellants nor their suppliers
had executed any physical supply of goods and ITC
availed and passed on by them was irregular.
10. I observe that the appellants have failed to provide
any credible evidences to rebut the specific findings
recorded in the impugned orders regarding the non-
genuine nature of the transactions. The submissions
made are only general denials without any supporting
documents. No infirmity could be pointed out in the
investigations or adjudications.
11. The adjudicating authority has examined the role and
culpability of each person based on the material evidence
on record. The impugned orders have elaborately dealt
with the submissions of the noticee. I find that the
allegations are based on cogent evidence gathered during
investigations and not on mere presumptions. The
impugned order has been passed taking into
consideration all the relevant facts and is a well-reasoned
one. The findings are neither going beyond the SCNs nor
suffering from any infirmities.
12. In view of the above, I hold that M/s Om Dhana
Laxmi Traders have availed and passed on ITC irregularly
without the underlying supplies. Thus, they are liable for
penal actions under relevant provisions.
In view of the above discussion and findings, I pass
the following order:
ORDER
The appeals filed by M/s Om Dhana Laxmi Traders
is disallowed and the impugned order is upheld."
(Emphasis supplied)
9. If the aforesaid part of findings is read in juxtaposition to the
'grounds' taken in the appeal memos, it will be clear like cloudless
sky that various 'grounds' taken by the petitioners elaborately
have not been touched upon at all. The order in our opinion is too
sketchy, too cryptic and too evasive. Learned Appellate Authority
was under a statutory obligation to assign reasons in support of
his conclusions. Even otherwise, it is minimum requirement of
the principles of natural justice to deal with the 'grounds' taken in
the appeal memos, otherwise the appeal proceedings will reduce
into hollow public relation exercise.
10. The Apex Court emphasized the need of assigning reasons in
administrative, quasi-judicial and judicial proceedings in the case
of Kranti Associates (P) Ltd. v. Masood Ahmed Khan 1. The
relevant portion reads as under:
"12. The necessity of giving reason by a body or authority in
support of its decision came up for consideration before this
Court in several cases. Initially this Court recognised a sort of
demarcation between administrative orders and quasi-judicial
orders but with the passage of time the distinction between the
(2010) 9 SCC 496
two got blurred and thinned out and virtually reached a
vanishing point in the judgment of this Court in A.K.
Kraipak v. Union of India [(1969) 2 SCC 262].
13...
14. The expression "speaking order" was first coined by Lord
Chancellor Earl Cairns in a rather strange context. The Lord
Chancellor, while explaining the ambit of the writ of certiorari,
referred to orders with errors on the face of the record and
pointed out that an order with errors on its face, is a speaking
order.
15. This Court always opined that the face of an order passed
by a quasi-judicial authority or even an administrative authority
affecting the rights of parties, must speak. It must not be like
the "inscrutable face of a sphinx".
47. Summarising 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.
(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 lifeblood
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 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 Harvard Law Review 731-37] .)
(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 Ruiz
Torija v. Spain [(1994) 19 EHRR 553] EHRR, at 562 para 29
and Anya v. University of Oxford [2001 EWCA Civ 405 (CA)] ,
wherein the Court referred to Article 6 of the European
Convention of Human Rights which requires, "adequate and
intelligent 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. If the impugned order is tested on the anvil of principles laid
down in Kranti Associates (supra), it will be clear like noon day
that the impugned order cannot sustain judicial scrutiny. The
same is cryptic and does not assign any reason in relation to
various grounds. It is crystal clear that the order of the learned
Appellate Authority is an example of non-application of mind.
Learned Appellate Authority has not dealt with each of the points
raised by the petitioners in the appeal memos. He passed an
order stating that the petitioners have failed to provide any
credible evidence to rebut the specific findings. He did not deal
with the defence of the petitioners on the aspect of right to cross-
examine the witness. Thereafter, at paragraph No.11, the learned
Appellate Authority opined that in view of the findings of the
adjudicating authority and material on record, since the impugned
order has elaborately dealt with the submissions of the noticee,
interference was declined. We wonder, when the Order-in-Original
was challenged under various 'grounds', how reliance can be
placed on the Order-in-Original to reject the contentions of the
petitioners. The proper course was to examine the findings of the
Order-in-Original on the anvil of grounds taken in the appeal
memos and then reach to an independent decision/conclusion.
Since in the order of the learned Appellate Authority he miserably
failed to apply mind and assign reasons, we are unable to
countenance the orders. Hence, both the impugned orders passed
in the appeals are hereby set aside. The petitioners are directed
to appear before the learned Appellate Authority on 02.04.2025 at
11:30 AM. The learned Appellate Authority shall provide them a
fresh opportunity of hearing and pass fresh orders in accordance
with law.
12. With the aforesaid and without expressing any opinion on
the merits, these Writ Petitions are disposed of. There shall be no
order as to costs. Miscellaneous applications, if any pending,
shall stand closed.
_______________________
SUJOY PAUL, ACJ
______________________
RENUKA YARA, J
Date: 24.03.2025
GVR
