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TMI Blog2014 (12) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in favor of assessee. Opportunity of hearing before passing of order under Section 60 (1) of the OVAT Act withholding claim of refund due to the dealer - Held that:- In the present case, admittedly petitioner was not afforded an opportunity of hearing before the impugned order withholding refund claimed by the petitioner was passed. - order for withholding refund claims made by the petitioner is hereby quashed. - Decided in favor of assessee. - W.P.(C) No. 13723 OF 2014 - - - Dated:- 26-9-2014 - MR. I.MAHANTY AND MR. B.N. MAHAPATRA, JJ. For the Appellant : M/s. A.N. Das, S.K. Raychoudhury S. Satpathy For the Respondent : Mr. R.P. Kar, Standing Counsel JUDGEMENT Per: B N Mahapatra: In the present writ petition, challenge has been made to the order dated 14.5.2014 passed under Annexure-3 by which opposite party no. 3-Sales Tax Officer, Bhubaneswar II Circle, Bhubaneswar informed the petitioner that as per provisions under Section 60 (1) of the OVAT Act, the Commissioner of Sales Tax, Odisha, Cuttack has been pleased to withhold the refund claim of ₹ 26,86,357/- for the period from 1.10.2008 to 30.6.2011 in case of the petitioner till disposal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner being a Private Limited Company substantiates movable and immovable properties in its name. Further, the petitioner is a regular tax payer under the OVAT Act and has been doing business in the State and filing periodical returns with the opposite party-Department. Hence, the action of the opposite parties in withholding the claim of refund is arbitrary or unreasonable. Even though the petitioner has succeeded before the First Appellate Authority, it is suffering for passing of the impugned order withholding the claim of refund legally due to it. Concluding his argument, Mr. Das prayed to quash the impugned order under Annexure-3. Mr. Das further submitted that no opportunity of hearing has been given to the petitioner before passing of the impugned order withholding the claim of refund due to the petitioner. Thus, action of opposite party is violative of principles of natural justice. 4. Mr. R.P. Kar, learned Standing Counsel for the Revenue submitted that there is no illegality in the impugned order passed under Annexure-3 withholding refund which flows from the first appellate order. It was further submitted that where any order giving rise to a refund is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r exercising power of withholding refund, the following three conditions are to be satisfied. (i) The order giving rise to the refund is the subject matter of an appeal or further proceeding; and (ii) The Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue; and (iii) It may not be possible to recover the amount later. 8. Thus, it is only upon subjective satisfaction of the aforesaid three conditions, an order withholding refund can be passed by the Commissioner. Fulfilment of all the above three conditions is sine qua non for passing the order under sub-section (1) of Section 60 of the OVAT Act withholding refund due to a dealer arising from an order. 9. Perusal of the impugned order reveals that the first condition is satisfied i.e. the order from which the refund flows is the subject mater of Second Appeal. The impugned order does not speak anything about the satisfaction of other two conditions. The said order also does not contain the basis for forming the opinion by the Commissioner that grant of refund would adversely affect the Revenue. 10. The use of expression 'may' as in Section 60 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted to the petitioner by 1st week of February, 2014 in terms of Section 57 of the OVAT Act, when no order withholding refund was in existence, which was passed only on 14.5.2014 under Annexure-3. 13. At this juncture, it may be relevant to refer to the Circular bearing No. 2211/CT dated 18.2.2014 issued by the Commissioner of Commercial Taxes, Odisha, Cuttack instructing strict compliance of Section 57 of the OVAT Act and disposal of refund claims within the prescribed period failing which appropriate action will be initiated against the erring officials, who will also be accountable for the interest borne on such refund. Nothing is brought to our notice by Mr. Kar appearing for the Department to show whether any action has been taken against the Assessing Officer, who apparently has not granted such refund in terms of Section 57 of the OVAT Act and the Circular of the Commissioner of Commercial Taxes dated 18.2.2014. 14. We are shocked that the learned Commissioner of Commercial Taxes instead of taking any action against the Assessing Officer for violating the mandate of Section 57 of the OVAT Act and not following/obeying instruction of the Commissioner for strict compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order under Section 60 (1) of the OVAT Act withholding claim of refund due to the dealer. 25. It may be relevant to note here that if an order has civil consequence and adversely affects the party; the affected party must be given an opportunity of hearing before such order is passed. The order passed in exercise of power vested under Section 60 (1) of the OVAT Act withholding refund due to the dealer is certainly detrimental to the interest of the dealer. Therefore, even though Section 60(1) of the OVAT Act does not say for providing an opportunity of hearing to the dealer before passing the order withholding refund, such opportunity of hearing should be afforded to the dealer in the interest of natural justice. 26. At this juncture, it would be beneficial to refer to the following decisions of the Hon'ble Supreme Court and this Court which are relevant for our purpose. 27. The Hon'ble Supreme Court in the case of Baldev Singh and others vs. State of Himachal Pradesh and others, (1987) 2 SCC 510 has held as under: ........but the settled position in law is that where exercise of a power results in civil consequences to citizens, unless the statute specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... checked by insisting on their being exercised in a manner which can be said to be procedurally fair. Rules of natural justice are, therefore, devised for ensuring fairness and promoting satisfactory decision-making. Where the statute is silent and a contrary intention cannot be implied the requirement of the applicability of the rule of natural justice is read into it to ensure fairness and to protect the action from the charge of arbitrariness. Natural justice has thus secured a foothold to supplement enacted law by operating as an implied mandatory requirement thereby protecting it from the vice of arbitrariness. Unless the expressly or by necessary implication excludes the application of the rule of natural justice, courts will read the said requirements in enactments that are silent and insist on its application even in cases of administrative action having civil consequences. 29. In Basudeo Tiwary v- Sido Kanhu University, (1998) 8 SCC 194, the Hon'ble Supreme Court held that in order to impose procedural safeguards, the Court has read the requirement of natural justice in many situations when the statute is silent on this point. The approach of the Hon'ble Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 189. Therein, Untwalia, J. (as he then was) speaking for the Court observed : . . . . THE order of the Central Government in exercise of the said power may be executive in character, as contended on its behalf by the learned Government pleader. Yet I am of the opinion that if the exercise of power under S. 5 (2) of the Act and the order made thereunder adversely affects or prejudices a person, the trend of the decisions of the Courts in India as also in England is that such a person must be given an opportunity to have his representation or say in regard to the matter which is going to affect him adversely. To put it briefly, the power may be executive, but it has to be exercised in accordance with the principles of natural justice which are generally applicable for the exercise of power in a judicial manner. Reference in this connection may be made to a recent decision of the Supreme Court in the Union of India v. M/s. Anglo Afghan Agencies, AIR 1968 SC 718. I do not mean to suggest that invariably in all cases, the power under S. 5 (2) of the Act has got to be exercised by the Central Government keeping in view the principles for the exercise of a judicial power. But by and la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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