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TMI Blog2024 (5) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... n of natural justice, without reference to administrative realties and other factors of a given case can be exasperating. In Telstar Travels Private Limited v. Enforcement Directorate [ 2013 (2) TMI 396 - SUPREME COURT] the adjudication order was passed under the Foreign Exchange Regulation Act, 1973 and the challenge was also on the ground of violation of the principles of natural justice for not providing the opportunity of cross examination. It was argued in that case that the adjudicating authority had relied upon the statements and the reports which were inadmissible in evidence as the request for an opportunity to cross examine the witnesses had been declined and thereby violating the principles of natural justice. The Hon ble Apex Court observed that the rules of procedure do not apply to adjudication proceedings. But that does not mean that in a given situation, cross examination may not be permitted to test the veracity of a deposition sought to be issued against a party against whom action is proposed to be taken. The enquiry report is based on record, F-forms were not issued by the Tax Department to the petitioner s 5 alleged agents and those were doing business in goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utside the State and sales through non-resident agents. The assessing authority-Commercial Tax Officer (CTO) vide proceedings in GI No. 539/91-92 (CST), dated 29.02.1996 granted an exemption on a turnover of Rs. 1,64,15,660/-. The Deputy Commissioner (Commercial Tax), in his revised Order dated 18.03.1997 has brought a turnover of Rs. 1,52,12,755/- to tax as inter-state sales. The assessee/petitioner filed Tribunal Appeal No. 192 of 1997, which has been dismissed by the Appellate Tribunal by Order dated 31.12.2001. 4. The Deputy Commissioner (CT) in its Order has clearly observed that the Commercial Tax Officer examined the books of accounts of the dealers and a show cause notice dated 19.01.1993 was issued allowing exemption on the turnover of Rs. 1,66,70,771/- in addition to other exemption relying on sale patties and F-forms filed by the dealer. The Commercial Tax Officer subsequently issued another show cause notice dated 03.07.1993 proposing withdrawal of exemptions on turnover of Rs. 1,52,06,954/- In view of the verification of transactions and enquiries conducted by the Commercial Tax Officer, Tadepalligudem with the assistance of the Sales Tax officials at Bombay, which rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions of the following 5 alleged agents. Sl.No. Alleged Agent Turnover 1. M/s. Atlas Trade Links, Bombay 52,48,353.40 2. M/s. Shri Impex, Bombay 57,19,398.00 3. M/s. United Trade Co., Bombay 32,68,451.95 4. M/s. Heera Enterprises, Bombay 3,79,467.00 5. M/s. Ashok Enterprises, Bombay 5,97,085.37 Total Rs. 1,52,12,755,72 The Appellate Tribunal recorded that a copy of the letter of the Deputy Commissioner (Sales Tax) Enforcement, Bombay addressed to the Deputy Commissioner (CT), Eluru made it clear that the Sales Tax Department of Maharashtra had not supplied any F forms to any of the 5 dealers, as mentioned above. M/s. Atlas Trade Links and M/s. Shri Impex were dealers in iron and steel. The registration certificate of M/s. United Trading Company was cancelled with effect from 19.02.1991, when it was found that the dealer was issued Hawala bills. The registration certificate of M/s. Heera Enterprises was cancelled with effect from 01.02.1991. It was dealing in food grains in addition to iron and steel. M/s. Ashok Enterprises was a dealer in iron and steel, yarn and food grains. The Appellate Tribunal, therefore, concluded and affirmed that the Order of the Deputy Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be relied upon without affording an opportunity to the petitioner to cross-examine the Officers of Commercial Tax Department of the reports at Bombay? Analysis : 13. The Appellate Tribunal on the aforesaid point observed that when the Officers of the Government have issued a statement or sent an enquiry report on the basis of the records available, the question of cross-examining the Officers would not arise. It placed reliance in the case of State of Kerala v. Shaduli Yousuff 39 STC 478 wherein the Hon ble Apex Court held that the Tax Officers are not bound by any technical rules of law of evidence. It also referred to the case of Sri Venkateswara Rice Shop v. State of A.P. 9 APSTJ 87 to observe that strict rules of evidence embodied in the Evidence Act do not apply to the proceedings before the Assessing Authority and the only obligation of the Authorities is to observe the principles of natural justice. Case laws: 14. We would first consider the judgments cited as also other judgments on the rule of audi alteram partem, the principles of natural justice of affording opportunity of hearing, in particular the right of cross examination on which only, arguments have been adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have a reasonable opportunity of presenting his case. 3. One of the rules which constitutes a part of the principles of natural justice is the rule of audi alteram partem which requires that no man should be condemned unheard. It is indeed a requirement of the duty to act fairly which lies on all quasi-judicial authorities and this duty has been extended also to the authorities holding administrative enquiries involving civil consequences or affecting rights of parties because as pointed out by this Court in A.K. Kraipak v. Union of India [(1969) 2 SCC 262 : (1970) 1 SCR 457] the aim of the rules of natural justice is to secure justice or to put it negatively, to prevent miscarriage of justice and justice, in a society which has accepted socialism as its article of faith in the Constitution is dispensed not only by judicial or quasi-judicial authorities but also by authorities discharging administrative functions. This rule which requires an opportunity to be heard to be given to a person likely to be affected by a decision is also, like the genus of which it is a species, not an inflexible rule having a fixed connotation. It has a variable content depending on the nature of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 393 (Lahore HC)] . This Court was of the opinion that the Taxing Authorities had violated certain fundamental rules of natural justice in that they did not disclose to the assessee the information supplied to it by the departmental representatives. This case was relied upon by this Court in a later decision in Raghubar Mandal Harihar Mandal case where it reiterated the decision of this Court in Dhakeswari Cotton Mills Ltd. case [AIR 1955 SC 154 : (1955) 1 SCR 941 : (1955) 27 ITR 126] , and while further endorsing the decision of the Lahore High Court in Seth Gurmukh Singh case [(1944) 12 ITR 393 (Lahore HC)] pointed out the rules laid down by the Lahore High Court for proceeding under sub-section (3) of Section 23 of the Income Tax Act and observed as follows: The rules laid down in that decision were these: (1) While proceeding under sub-section (3) of Section 23 of the Income Tax Act, the Income Tax Officer is not bound to rely on such evidence produced by the assessee as he considers to be false; (2) if he proposes to make an estimate in disregard of the evidence, oral or documentary, led by the assessee, he should in fairness disclose to the assessee the material on which he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formed the basis of best judgment assessment is conferred on the assessee either expressly or by necessary intendment. Section 17 (3) of the Act runs thus: If no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment: Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such return. An analysis of this provision would show that this sub-section contemplates two contingencies (1) where the assessee does not file his return at all; and (2) where the assessee files his return which, however, is found to be incorrect or incomplete by the assessing authority. The sub-section further enjoins on the assessing authority a duty to consider the necessary materials and make an enquiry before coming to its conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficient if such wholesale dealers are merely tendered by the Sale-Tax Authorities for cross-examination by the assessees for whatever worth it is. In view of the express provision of the second part of the proviso, we are fully satisfied that the respondents had the undoubted right to cross-examine the wholesale dealers on the basis of whose accounts the returns of the assessees were held to be incorrect and incomplete. We are fortified in our view by a decision of this Court in C. Vasantilal and Co. v. CIT [(1962) 45 ITR 206, 209] where this Court observed as follows: The Income Tax Officer is not hound by any technical rules of the law of evidence. It is open to him to collect materials to facilitate assessment even by private enquiry. But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it. It will be noticed that if the Sales tax authorites refused the prayer of the assessees to cross-examine the wholesale dealers, then such a refusal would not amount to an adequate opportunity of explaining the material collected by the assessing authority. 17. In K. T. Shaduli Grocery Dealer ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he adjudicating authority, is no doubt a facet of the principles of natural justice, however, natural justice is no unruly horse, no lurking landmine, nor a judicial cure-all. If fairness is shown by the decision maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice, without reference to administrative realties and other factors of a given case can be exasperating. It was further held that to sustain the allegation of violation of principles of natural justice one must establish that prejudice has been caused by non-observance thereof, more so, on the ground of absence of opportunity of cross-examination. 19. Paragraphs 9 and 10 in Shalini Steels Pvt. Ltd. (supra) read as under: 9. Cross-examination of a witness, on whose statement reliance is placed by the adjudicating authority, is no doubt a facet of the principles of natural justice. It is, however, well to remember that natural justice is no unruly horse, no lurking landmine, nor a judicial cure-all. If fairness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nath Sarangi v. State of Orissa {(1969) 3 SCC 392}; K.L. Tripathi {(1984) 1 SCC 43}. All that the Courts haveto see is whether the non-observance of any of these principles, in a given case, is likely to have resulted in deflecting the course of justice. ( State of U.P. vs. Om Prakash Gupta {AIR 1970 SC 679} . Where, on the admitted and indisputable facts, only one view is possible no prejudice can be said to have been caused. ( S.L. Kapoor v. Jagmohan {(1980) 4 SCC 379}; Aligarh Muslim University (2000) 7 SCC 529; Dr.Gurjeewan Garewal v. Dr. Sumitra Dash {(2004) 5 SCC 263}. Where the facts are not in dispute, an inquiry would be an empty formality. ( Anil Bajaj (Dr) v. Postgraduate Institute of Medical Education Research {AIR 2002 SC 2414}. Violation of principles of natural justice may not,by itself, necessitate interference by this Court under Article 226 of the Constitution of India, in all cases. Interference would be justified only where manifest injustice would otherwise ensue or where larger public interest would so require. 20. In Telstar Travels Private Limited v. Enforcement Directorate (2013) 9 SCC 549 the adjudication order was passed under the Foreign Exchange Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants therein and the documents seized in the course of the search of their premises. Apart from that, the adjudicating authority had also placed reliance upon the documents produced by two witnesses. Those documents were disclosed to the appellants therein who were permitted to inspect the same. The Hon ble Apex Court observed that production of documents duly confronted to the appellants was in the nature of production in terms of Section 139 of the Evidence Act, where the witness producing the documents are not subjected to cross examination. Suchbeing the case, the refusal of the adjudicating authority to permit cross examination of the witness producing the documents could not even on the principles of the Evidence Act be found fault with. The Hon ble Apex Court in clear terms observed that at any rate, the disclosure of the documents to the appellants therein and the opportunity given to them to rebut and explain the same was a substantial compliance with the principles of natural justice. 22. Paragraphs-27 and 28 of Telstar Travels Private Limited (supra) are reproduced as under: 27. In appeal before this Court, one of the four arguments advanced on behalf of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be no prejudice to the appellants nor was any demonstrated by the appellants before us or before the courts below. The third limb of the case of the appellants also in that view fails and is rejected. 23. In State of Uttar Pradesh v. Sudhir Kumar Singh (2021) 19 SCC 706 the Hon ble Apex Court on an analysis of various judgments observed and held as under in paragraph-42: 42. An analysis of the aforesaid judgments thus reveals: 42.1. Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused. 42.2. Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest. 42.3. No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 458]. 25. The Hon ble Apex Court referred inter alia to its earlier judgment in Canara Bank v. V. K. Awasthy {(2005) 6 SCC 321} in which it was held inter alia that what particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the fact and circumstances of that case, the framework of the statute under which the enquiry is held. Paragraph-45 of Rajesh Agarwal (supra) is as under: 45. In Canara Bank v. V.K. Awasthy [Canara Bank v. V.K. Awasthy, (2005) 6 SCC 321 : 2005 SCC (L S) 833] , a two-Judge Bench of this Court succinctly summarised the history, scope, and application of the principles of natural justice to administrative actions involving civil consequences in the following terms : (SCC pp. 331-32, para 14) 14. Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context should be in a given case must depend to a gre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuations where an investigation report is required to be furnished to the party concerned to make an effective representation about the proposed action : (SCC p. 393, para 21) 21. In our opinion it is not possible to lay down any general principle on the question as to whether the report of an investigating body or of an inspector appointed by an administrative authority should be made available to the persons concerned in any given case before the authority takes a decision upon that report. The answer to this question also must always depend on the facts and circumstances of the case. It is not at all unlikely that there may be certain cases where unless the report is given the party concerned cannot make any effective representation about the action that Government takes or proposes to take on the basis of that report. Whether the report should be furnished or not must therefore depend in every individual case on the merits of that case. We have no doubt that in the instant case non-disclosure of the report of the Investigating Committee has not caused any prejudice whatsoever to the appellants. (emphasis supplied) 27. The Hon ble Apex Court in Rajesh Agarwal (supra) held that A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or rebut them. The data on which an authority is acting must be apprised to the party against whom the data is to be used as such a party would then have an opportunity not only to refute it but also supplement, explain or give a different perspective to the facts upon which the authority relies. The Hon ble Apex Court observed that the said doctrine applies with greater force to a judicial/adjudicatory body. 29. In Singrauli Super Thermal Power Station (supra) the factual information came to the knowledge of NGT on the basis of the report of the Committee constituted by it. Consequently it was held that if the same was to be relied upon by the NGT, the same must be disclosed to the parties for their response and a reasonable opportunity must be accorded to present their observations or comments on such a report to the Tribunal. It was found that the respondents therein were not given an opportunity to file objections to the recommendations made by the Committee constituted by the NGT and the final order was passed based on such report. The Hon ble Apex Court held that there was non-compliance with the principles of natural justice. 30. Paragraphs-21 to 25 of Singrauli Super Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report of the Expert Committee as well as the recommendations have been made the basis of the directions and such an approach is improper. 25. We have perused the impugned order [ Ashwani Kumar Dubey v. Union of India, 2022 SCC OnLine NGT 120] of the NGT and particularly para 16 which has been extracted above. It is apparent that the appellant(s) herein who were respondents before the NGT were not given an opportunity to file their objections to the recommendations made by the Committee constituted by the NGT which is apparent by the fact that the recommendations were uploaded on 15-1-2022 and the final order [ Ashwani Kumar Dubey v. Union of India, 2022 SCC OnLine NGT 120] of the NGT was passed three days later on i.e. 18-1-2022. Thus, this is a clear case of there being non-compliance with the principles of natural justice. On the said ground alone the impugned order [ Ashwani Kumar Dubey v. Union of India, 2022 SCC OnLine NGT 120] is set aside, the matter is remanded to the NGT for re-consideration from the stage of the recommendations filed by the Expert Committee constituted by the NGT. The appellant(s) herein are permitted to file their objections, if they are so advised. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of cross examination cannot be denied. 32. We now proceed to consider if in the facts and circumstances of the present case, the petitioner had a right to cross examine the officials of Tax Department of Bombay on their report, and for denial of such opportunity if there was non-compliance with the principles of natural justice so much so as to interfere with the order under challenge on such ground. 33. The Deputy Commissioner (CT) has recorded in his order that a show cause dated 03.07.1993 proposing to withdraw the exemptions on turnover of Rs. 1,52,06,954/- was issued and pursuant to the report of further enquiries made subsequently at Bombay in January, 1997 by the Assistant Commercial Tax Officer of the Intelligence Wing with the help of Bombay Sales Tax Authorities, a further show cause dated 30.01.1997 was issued and served to the petitioner on 03.02.1997 disclosing the enquiry contents. The enquiry report was also permitted to be inspected and gone through. The petitioner filed objections on 12.02.1997. He was also afforded personal submissions opportunity on 25.01.1997 and 05.03.1997. The said facts have not been disputed. 34. The enquiry report is based on record, F-fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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