2010 (8) TMI 302 - HC - Central Excise

Refund - Impugned order - Breach of principles of natural justice for want of recording reasons in support of the order - In State of West Bengal Vs. Atul Krishna Shaw & Anr. AIR 1990 SC 2205, this Court observed that giving of reasons is an essential element of administration of justice - Therefore, the law on the issue can be summarized to the effect that, while deciding the case, Court is under an obligation to record reasons, however, brief, the same may be as it is a requirement of principles of natural justice Appeal is allowed

Summary

Issues:
Appeal against order of Customs, Excise & Service Tax Appellate Tribunal; substantial questions of law regarding central excise duty and reliance on previous tribunal decision; breach of natural justice in impugned order lacking reasons; request for setting aside impugned order and remanding the matter back to the Tribunal.

Analysis:
The High Court of Bombay heard an appeal against the order of the Customs, Excise & Service Tax Appellate Tribunal, Mumbai, which set aside the order of the Commissioner of Central Excise rejecting refund claims. The substantial questions of law raised in the appeal focused on the correctness of allowing the appeal by CESTAT concerning the recoverability of central excise duty on declared assessable value as per price lists under rule 173 C of the Central Excise Act 1944. The appellant contended that the impugned order breached principles of natural justice by not providing reasons for setting aside the orders of both authorities. The Court noted that the Tribunal's failure to provide reasons for its decision was a serious lapse, as reasoned orders are essential for judicial review. The Court cited various legal precedents emphasizing the importance of giving reasons in judicial decisions to ensure a fair and transparent process.

The Court referred to judgments such as State of West Bengal Vs. Atul Krishna Shaw & Anr., State of Uttaranchal & Anr. Vs. Sunil Kumar Singh Negi, and Raj Kishore Jha Vs. State of Bihar & Ors. to underscore the significance of providing reasons in judicial orders. It was emphasized that the right to reasons is fundamental for a sound judicial system, enabling parties to understand the basis for decisions made against them. The Court highlighted that reasons are vital in justifying conclusions and forming a rational nexus between facts and outcomes. Consequently, the Court concluded that the impugned order lacking reasons must be quashed and set aside, with the matter remanded back to the Tribunal for a fresh consideration following principles of natural justice and providing a reasoned order within three months.

In summary, the High Court allowed the appeal, leaving the questions of law open, and directed the Tribunal to reexamine the matter with proper reasons and adherence to natural justice principles. No costs were awarded in the judgment.