2019 (5) TMI 500 - HC - VAT and Sales Tax

Principles of natural justice - case of revisionist is that Tribunal while deciding appeal of the revisionist has not considered any of the grounds raised by him in the appeal - Validity of assessment order - UPVAT Act, 2008 - imposition of penalty - HELD THAT - Perusal of the impugned order dated 12.09.2014, passed by the Tribunal while deciding appeal of the revisionist has not considered any of the grounds raised by him in the appeal. Perusal of the said order would indicate that the Tribunal has only reiterated the findings of the first Appellate Authority and concluded in paragraph 8 by saying that it agrees with the said findings of the first Appellate Authority and thereby it has rejected the appeal. An order without valid reasons cannot be sustained. To give reasons is the rule of natural justice - Providing of reasons in orders is of essence in judicial proceedings. Every litigant who approaches the Court with a prayer is entitled to know the reasons for acceptance or rejection of such request. Either of the parties to the lis has a right of appeal and, therefore, it is essential for them to know the considered opinion of the Court to make the remedy of appeal meaningful. It is the reasoning which ultimately culminates into final decision which may be subject to examination of the appellate or other higher Courts. It is a settled canon of legal jurisprudence that the Courts are vested with discretionary powers but such powers are to be exercised judiciously, equitably and in consonance with the settled principles of law. Whether or not, such judicial discretion has been exercised in accordance with the accepted norms, can only be reflected by the reasons recorded in the order impugned before the higher Court. Often it is said that absence of reasoning may ipso facto indicate whimsical exercise of judicial discretion. The Court cannot lose sight of the fact that a losing litigant has a cause to plead and a right to challenge the order if it is adverse to him - Whether an argument was rejected validly or otherwise, reasoning of the order alone can show. To evaluate the submissions is obligation of the Court and to know the reasons for rejection of its contention is a legitimate expectation on the part of the litigant. The matter is remanded back to the Commercial Tax Tribunal to decide the appeal of the revisionist in accordance with law, afresh, after giving opportunity of hearing by means of reasoned and speaking order - revision allowed by way of remand.

Issues Involved:
1. Legality of the penalty order passed by the Deputy Commissioner, Commercial Tax.
2. Validity of the order passed by the Commercial Tax Tribunal upholding the penalty.
3. Consideration of grounds raised by the revisionist in the appeal by the Tribunal.
4. Requirement of providing reasons in judicial orders.

Detailed Analysis:

1. Legality of the Penalty Order Passed by the Deputy Commissioner, Commercial Tax:
The revisionist, a dealer registered under the UPVAT Act, 2008, was engaged in trading iron and steel. The revisionist received a purchase order from U.P. Rajkiya Nirman Nigam Ltd. and placed an order with M/s Awasthi Iron and Steel Company. The goods were loaded from the factory of M/s United Steel, and a tax invoice was issued by M/s Awasthi. On 20.03.2013, the Mobile Squad of the Commercial Tax Department intercepted the goods and issued a show cause notice for seizure, alleging the tax invoice did not mention the number of bundles or weight of the goods. The revisionist admitted the weight was not mentioned and deposited security to release the goods. Subsequently, a penalty order was passed on 21.06.2013.

2. Validity of the Order Passed by the Commercial Tax Tribunal Upholding the Penalty:
The revisionist appealed against the penalty order, which was rejected by the Additional Commissioner (Grade-II) Appeals. A second appeal was filed before the Commercial Tax Tribunal, which was also rejected on 12.09.2014. The Tribunal merely reiterated the findings of the first Appellate Authority without independent reasoning, which led to the revisionist challenging the order before the High Court.

3. Consideration of Grounds Raised by the Revisionist in the Appeal by the Tribunal:
The revisionist contended that the Tribunal did not consider any grounds raised in the appeal and simply agreed with the first Appellate Authority's order without providing its own reasons. The High Court noted that the Tribunal's order lacked independent reasoning and application of mind, making it unsustainable.

4. Requirement of Providing Reasons in Judicial Orders:
The High Court emphasized that an order without valid reasons cannot be sustained as it violates the principles of natural justice. Citing several Supreme Court judgments, the High Court reiterated that both administrative and judicial orders must be supported by reasons to ensure transparency and fairness. The absence of reasons renders an order indefensible and unsustainable, particularly when subject to further challenge.

Conclusion:
The High Court set aside the Tribunal's order dated 12.09.2014, remanding the matter back to the Commercial Tax Tribunal to decide the appeal afresh. The Tribunal was directed to provide a reasoned and speaking order after giving an opportunity of hearing to the revisionist, within six months. The revision was allowed, and no order as to costs was made.

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