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2014 (3) TMI 866 - SC - Indian LawsValidity of High Court & Arbitration Tribunal order - Quantification of claim - production of sales tax assessment order - Competence of the Arbitration court Seeking assistance of the court in taking evidence u/s 27 of the Arbitration and Conciliation Act - Hypothetical calculation versus actual Tax Assessments According to the first respondent, the appellant had obtained from the Sales Tax Department set-off/refund on the sales tax paid on packaging material, and such setoff/ refund operated to reduce the sales tax liability of the appellant, which was ultimately being borne by the respondent No.1. The respondent No.1 therefore, claimed that it was entitled to the benefit of the said set-off/refund, and accordingly debited the appellant for the amount of setoff/ refund. Held that - The documents sought were required to arrive at the decision on the claim of the respondent - Since, the quantification in support of the claim had been done by the respondent on a theoretical basis - A hypothetical calculation should not be resorted to when actual Assessments are available, which would show as to whether the quantum of set-off allowed and claimed was in fact justified - There is no substance in the order passed by the earlier Arbitrator dated 27.3.2007, and the subsequent enabling order passed by the Arbitral Tribunal dated 16.9.2011 permitting the respondent to apply under Section 27 could not have been passed. Confidentiality of assessment documents Held that - Judgment in Tulsiram Sanganaria and Another v. Srimati Anni Rai and Ors. 1971 (1) TMI 2 - SUPREME Court followed - Section 71 of the Maharashtra VAT Act and its pre-cursor Section 64 of the Bombay Sales Tax Act, clearly state that particulars contained in any return or statement made by a party, or document produced along therewith are confidential and no court shall pass any order requiring the Government or a Government servant to produce any such statement, document or return - The words used in a statute are to be read as they are used, to the extent possible, to ascertain the meaning thereof - Both these provisions contained a bar only against the Government officers from producing the documents mentioned therein - There is no bar therein against a party to produce any such document Therefore, if a claim is to be decided on the basis of an order of assessment, the claimant as well cannot be denied the right to seek a direction to the party concerned to produce the assessment order - It is this very prayer which has been allowed by the earlier order dated 27.3.2007 passed by the Arbitrator, and also by the subsequent order dated 16.9.2011 passed by the Tribunal and rightly so - There is no substance in this objection. Attitude of Respondent - When the first respondent made an application for production of the assessment orders, the defence taken by the appellant was that those documents were confidential documents, and could not be directed to be produced - It was not stated at that time that the said documents were not available - It is ten months thereafter, that when the second affidavit was filed in the High Court that the respondent for the first time contended that the said documents were not available - This was clearly an after thought and this attitude of the Respondent in a way justified the earlier order permitting an application u/s 27 passed by the Tribunal - The Single Judge rightly allowed the petition directing the appellant to produce the documents which were sought by the respondent no. 1 no merit in the appeal - Decided against appellant.
Issues Involved:
1. Scope of Section 27 of the Arbitration and Conciliation Act, 1996. 2. Confidentiality of documents under Section 71 of the Maharashtra Value Added Tax Act, 2002. Detailed Analysis: Scope of Section 27 of the Arbitration and Conciliation Act, 1996 Background: The appeal challenges a Bombay High Court judgment directing the appellant to produce documents before an Arbitral Tribunal under Section 27 of the Arbitration and Conciliation Act, 1996. This section allows the court to assist in taking evidence. Facts: The respondent, a company owning certain brands of Indian Made Foreign Liquor (IMFL), had disputes with the appellant, a distilling company, regarding outstanding payments and sales tax set-off/refund benefits. The respondent sought inspection and production of sales tax documents from the appellant, which the appellant refused, claiming confidentiality and later unavailability of documents. Legal Proceedings: The Arbitral Tribunal permitted the respondent to apply to the court under Section 27 for assistance. The Single Judge of the Bombay High Court allowed the petition, directing the appellant to produce the documents. Arguments: The appellant argued that Section 27 is analogous to Section 43 of the Arbitration Act, 1940, which applies only to calling witnesses, not for directing parties to produce documents. They also contended that the tribunal should draw an adverse inference against them under Order 21, Rule 11 of the CPC for non-production of documents. Judgment: The court held that Section 27 is an enabling provision allowing the Arbitral Tribunal to seek court assistance for evidence from any person, including parties to the arbitration. The substitution of "parties and witnesses" in Section 43 of the 1940 Act with "any person" in Section 27 of the 1996 Act does not limit the tribunal's power. The tribunal needs evidence to make a fair award, and Section 27 facilitates this process. Confidentiality of Documents under Section 71 of the Maharashtra Value Added Tax Act, 2002 Background: The appellant claimed that the sales tax assessment orders were confidential under Section 71 of the Maharashtra Value Added Tax Act, 2002, and could not be produced. Legal Provisions: Section 71 states that particulars in any statement, return, or document produced under the Act are confidential and cannot be required by any court to be produced by a government servant. Arguments: The appellant argued that the confidentiality provision barred the production of the documents sought by the respondent. Judgment: The court noted that Section 71 bars only government officers from producing such documents, not the parties themselves. The court referred to the Supreme Court's interpretation of a similar provision in the Income Tax Act, 1922, which allowed the assessee or their representative to produce assessment orders as evidence. Thus, the tribunal's order directing the appellant to produce the documents was valid. Conclusion The Supreme Court dismissed the appeal, upholding the Bombay High Court's judgment. The court affirmed that Section 27 of the Arbitration and Conciliation Act, 1996, allows tribunals to seek court assistance for evidence from any person, including parties. It also clarified that Section 71 of the Maharashtra Value Added Tax Act, 2002, does not prevent parties from producing confidential documents, only government officers. The appellant's objections were found to be without merit, and the tribunal's orders were justified.
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