1993 (1) TMI 258 - HC - VAT and Sales Tax

Issues Involved:
1. Justification of the Tribunal's decision regarding the requirement for reasons in the rejection of tax remission applications under Section 55 of the Gujarat Sales Tax Act, 1969, read with Rule 49 of the Gujarat Sales Tax Rules, 1970.
2. Appealability of the Sales Tax Commissioner's order under Section 55(2) of the Gujarat Sales Tax Act.
3. Nature of the Sales Tax Commissioner's powers under Section 55(2) as quasi-judicial.

Issue-Wise Detailed Analysis:

1. Justification of the Tribunal's Decision:
The main issue was whether the Tribunal was justified in law in upholding the contention that Section 55 of the Gujarat Sales Tax Act, 1969, read with Rule 49 of the Gujarat Sales Tax Rules, 1970, requires reasons to be given while disposing of an application for remission of tax. The Tribunal's decision was based on the fact that the applications for remission of sales tax filed by the opponents were rejected by the Commissioner of Sales Tax without recording any reasons. The High Court examined Section 55 and Rule 49, concluding that the Sales Tax Commissioner was required to assign reasons before rejecting the application under Section 55(2). This requirement is supported by the following points:
- Rule 49(1) empowers the Commissioner to remit tax if a registered dealer has suffered financially due to riot or natural calamity.
- Rule 49(2) mandates that the application must detail the riot or calamity, the exact amount of loss, the extent of relief prayed for, and the reasons therefor.
- Rule 49(3) explicitly states that the Commissioner must record reasons for remitting the tax.
- Rule 49(4) requires the Commissioner to obtain the State Government's sanction for remission exceeding ten thousand rupees, necessitating a report with reasons.

2. Appealability of the Sales Tax Commissioner's Order:
The Tribunal held that the order passed by the Sales Tax Commissioner under Section 55(2) was appealable. Section 65 of the Sales Tax Act provides that an appeal lies from every original order, except those mentioned in Section 66. At the relevant time, Section 66 did not list orders under Section 55 as non-appealable. The High Court affirmed this interpretation, noting that the amendment adding clause (5) to Section 66, which made orders of remission non-appealable, was not in effect at the relevant time. Therefore, the Commissioner was required to assign reasons for rejecting the application to enable the aggrieved party to challenge the decision effectively.

3. Nature of the Sales Tax Commissioner's Powers:
The High Court emphasized that the Sales Tax Commissioner was exercising quasi-judicial functions under Section 55 of the Act. It is well-settled law that quasi-judicial orders must be supported by reasons to prevent miscarriage of justice, minimize arbitrariness, and ensure conformity with principles of natural justice. The Court cited several precedents (e.g., Woolcombers of India Ltd. v. Woolcombers Workers' Union, Siemens Engineering and Manufacturing Co. of India Ltd. v. Union of India, and Mukherjee v. Union of India) to support this requirement. Additionally, even administrative orders affecting parties' rights must record reasons unless expressly or impliedly excluded by statute.

Conclusion:
The High Court answered the reference in the negative, i.e., against the Revenue and in favor of the assessees, confirming that the Tribunal was justified in its decision. The judgment underscores the necessity for the Sales Tax Commissioner to provide reasons when rejecting applications for tax remission under Section 55(2) of the Gujarat Sales Tax Act, 1969, read with Rule 49 of the Gujarat Sales Tax Rules, 1970, to uphold principles of natural justice and ensure transparency and fairness in decision-making.

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