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2023 (6) TMI 640 - HC - VAT and Sales TaxScope of order of the tribunal - Levy of tax on self consumption of petrol - disallowance of shortages regarding evaporation loss - selling of downgraded HSD as LDO - use of the self-consumption - levy of penalty in terms of Section 5 of Jammu and Kashmir Motors Spirit Diesel Oil (Taxation of Sales) Act, 2005 - HELD THAT - It is settled proposition of law that failure to give reasons amounts to denial of justice. The reasons are live links between the minds of the decision maker to the controversy in question and the decision or the conclusion arrived at by the Tribunal or the Court. It goes without saying that the reasons substitute subjectivity by objectivity. Right to reason is an indispensable part of sound judicial system, which indicates the application of mind to the matter before the Court. Another rationale could be that the affected party can know why the decision has gone against him. One of the salutary requirement of natural justice is spelling out reasons for the orders made, in other words, a speaking order, but in the present case, the orders passed by the Tribunal are silent as no reasons have been spelled out with respect to all the questions of law raised in the applications - The non-recording of reasons could lead to dual infirmities. Firstly, it may cause grave prejudice to the affected party and secondly it hampers the proper administration of justice. These two cardinal principles are not only applicable to the administrative or executive actions, but they apply with equal force and in face with great degree of precision to judicial pronouncements. Reliance is being placed on the Judgment passed in case titled ASSISTANT COMMISSIONER, COMMERCIAL TAX DEPARTMENT, WORKS CONTRACT LEASING, KOTA VERSUS M/S SHUKLA BROTHERS 2010 (4) TMI 139 - SUPREME COURT , wherein the Hon ble Apex Court in similar facts and circumstances has remanded the matter back to the High Court with a request to hear the case de-novo and pass appropriate order in accordance with law. In the case of Principal Commissioner of Income Tax-1 vs. M/s. Bajaj Herbals Pvt. Ltd, 2022 (4) TMI 398 - SUPREME COURT , the Hon ble Supreme Court has held that unreasoned order should be remanded back to decide and dispose of the same afresh in accordance with law and on its own merits. The Tribunal has failed to record any reasons with respect to seven out of eight questions raised in the reference applications. It is well settled law laid down by the Hon ble Supreme Court in various and authoritative pronouncements mentioned supra that reasons must be recorded in a judicial order even when it relates to the non-reference of certain questions raised in the reference applications. The applicants had the right to know that what weighed with the Tribunal in not referring or even discussing the questions raised by the applicants in the applications. It is deemed appropriate to dispose of all the STR s and remand back matter to the Tribunal to decide and dispose of the reference applications afresh in accordance with law and on its own merits. If the Tribunal is of the opinion that proposed questions of law raised in the reference applications are not substantial questions of law and they are on factual aspects, it will be open for the Tribunal to consider the same in accordance with law. Revision disposed off.
Issues Involved:
1. Whether personal consumption of motor spirit and diesel oil by the petrol dealer falls within the definition of "sale" under Section 2(h) of the J&K Motor Spirit and Diesel Oil (Taxation of Sales) Act, 2005. 2. Whether the Tribunal was justified in holding that the assessment completed on a yearly basis was not liable to be quashed. 3. Whether the Tribunal was justified in its interpretation of "sale" affecting the results of the appeal. 4. Whether evaporation losses should be considered as deemed sales. 5. Whether Rule 18-A of the Rules of 2005 is beyond the rule-making power granted by the Act of 2005. 6. Whether the Tribunal was justified in upholding the order of the Assessing Authority in enhancing the sale value based on rates of other companies. 7. Whether the Tribunal was justified in demanding additional tax on downgraded HSD to LDO. 8. Whether the Tribunal could confirm the order demanding interest without a speaking order. Summary of Judgment: Issue 1: Personal Consumption as "Sale" The Tribunal referred a question of law to the Court regarding whether personal consumption of motor spirit and diesel oil by the petrol dealer falls within the definition of "sale" under Section 2(h) of the J&K Motor Spirit and Diesel Oil (Taxation of Sales) Act, 2005. The Court framed the question of law and noted an error in the previous order, clarifying it was to be read in STR No. 2/2009 and STR No. 3/2009. Issue 2: Yearly vs. Monthly Assessment The applicants questioned whether the Tribunal was justified in holding that the assessment completed on a yearly basis was not liable to be quashed. The Tribunal failed to address this question in its order. Issue 3: Interpretation of "Sale" The applicants argued that the Tribunal's interpretation of "sale" affected the results of the appeal, particularly concerning the addition of evaporated diesel oil and petrol as sales liable to tax. The Tribunal did not provide reasons for its decision on this issue. Issue 4: Evaporation Losses as Deemed Sales The applicants contended that evaporation losses should not be considered as deemed sales since there was no transfer of property in goods. The Tribunal did not address this question in its order. Issue 5: Rule 18-A's Validity The applicants challenged the validity of Rule 18-A of the Rules of 2005, arguing it was beyond the rule-making power granted by the Act of 2005. The Tribunal did not consider this question. Issue 6: Enhancement of Sale Value The applicants questioned the Tribunal's justification in upholding the Assessing Authority's order to enhance the sale value based on the rates of other companies. The Tribunal did not address this issue. Issue 7: Additional Tax on Downgraded HSD The applicants contended that the Tribunal was unjustified in demanding additional tax on downgraded HSD to LDO at a price lower than other companies when no such tax was collected. The Tribunal did not provide reasons for its decision on this issue. Issue 8: Interest Without Speaking Order The applicants argued that the Tribunal confirmed the order demanding interest without passing a speaking order. The Tribunal did not address this question. Legal Analysis and Discussion: The Court emphasized that failure to provide reasons amounts to denial of justice. Reasons are essential for transparency and allow higher courts to review decisions. The Tribunal's orders lacked reasoning for seven out of the eight questions raised, leading to potential prejudice against the applicants and hampering the administration of justice. Conclusion: The Court remanded the matters back to the Tribunal to decide and dispose of the reference applications afresh, in accordance with law and on their merits. The Tribunal is directed to provide a speaking and reasoned order, addressing all questions raised by the applicants. The orders impugned in the reference applications passed by the Tribunal are set aside.
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