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TMI Blog2024 (11) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... d and judicial decisions establish that it may suffer situational modifications. The core of it must, however, remain, namely, that the person affected must have a reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise.' Coming to the present writ petition in hand, three factors may be highlighted by this Court. Firstly, the impugned order merely copies the reply provided by the petitioner which leads to a conclusion that there was non application of mind by the respondent authority - Secondly, in the reply to the show cause notice, certain documents and reports were sought for by the assessee, which had been relied upon by the authorities. However, without providing the same to the assessee, the authorities proceeded to impose the tax liability and penalty - Thirdly, the explanation provided by the petitioner with regard to the use of the raw materials in the process of the manufacture by the petitioner supported with opinions of the experts were simply brushed aside by the respondent authority, who did not even examine whether the said raw materials had been used in manufacture of the final products which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2024. b. In response to the aforesaid show cause notice, the petitioner filed its reply on April 18, 2024 wherein it denied the allegations made against it mentioning that the show cause notice was not supported with any evidence or material. c. On June 4, 2024, another show cause notice under Section 74 of the Act was issued to the petitioner by which the amount of Tax and penalty was revised to Rs. 2,43,74,686/-. d. In response to the notice dated June 4, 2024, the petitioner again filed its reply supported with an affidavit wherein it again denied the allegation that the glycerin, fatty acid and perfumery compound are not used in its business and submitted that these materials are used as raw material by the company in manufacturing process and the ITC with respect to these materials has been legally availed by the petitioner. Explanation in respect of 115 e-way bills that were cancelled during the financial year 2021-22 was also furnished by the petitioner in his affidavit. e. In spite of the reply dated July 2, 2024 having been uploaded by the petitioner on the portal, the respondent no. 3 gave a reminder dated August 8, 2024 to the petitioner and asked it to appear for person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60;ाक्ष्य न तो नोटिस में संदर्भित है और न ही प्रदत्त किया गया है तथा न्यायहित में सम्पूर्ण जांच के अभिलेखों के निरीक्षण एवं परीक्षण करने हेतु समय दिये जाने का उल्लेख किया गया है। अतः उपरोक्त के सम्बन्ध में रि&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4;ोटिस में उल्लेख किया गया है। पूर्व में दाखिल स्पष्टीकरण में 28 बिन्दुओं का जवाब दाखिल किया गया है जिसमें बिन्दु सं 0-09, 11 व 23 को छोड़कर शेष बिन्दुओं करदाता का अपना मत प्रकट किया गया है जो नोटिस के बिन्दुओं से अलग से & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 360;रीन , फैटी एसिड एवं परफ्यूमरी कंपाउंड से बने फिनिशिंग कैमिकल / एस०एम०पी० लिक्विड ( एच०एस०एन० -3809) की खरीद प्रदर्शित की गयी है। जबकि इन वस्तुओं का कम्पनी के द्वारा निर्माण प्रक्रिया में कोई उपयोग नहीं है। खरीद&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice regarding the quashing of the e-way bill nor has it been provided and it is mentioned to provide time, in the interest of justice, for inspection and examination of records of the entire inquiry. Therefore, in relation to the above, by issuing notice to the taxpayer for inspection and examination of the records on 06-09-2024 by reference No.ZD090824054924X dated 07-08- 2024, it was expected that the taxpayer should appear and observe the point in question and submit explanation based on facts. In relation to the above, no one appeared for inspection of the file nor any factual explanation was submitted. It is to be noted that notice mentions that the tax liability has been determined only on 02 points. In the explanation filed earlier, reply has been filed on 28 points in which except for point Nos. 09, 11 23, the taxpayer has expressed his side on the remaining points; for the separate points- point nos. 09, 11 23, instead of replying to the notice, it has been mentioned that the authenticity of certain facts and inquiry report have not been received regarding which the said notice was issued to the taxpayer to appear and examine the file. But the taxpayer did not appear, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair hearing to the petitioner, fastening of such liability upon the petitioner is arbitrary and illegal and cannot be countenanced by this Court. 7. Counsel on behalf of the respondents has supported the show cause notice and the findings in the impugned order by submitting that the petitioner was not able to provide explanation on all points, and therefore, the order under Section 74 of the Act fastens liability on the points that were not answered by the petitioner. However, he had no explanation as to why the fabrics were not examined to check whether the petitioner had used the raw materials in the manufacture of the same. 8. Before dwelling into the present factual matrix, this Court is of the view that one needs to examine the scope of natural justice as has been explained by a catena of judgements of the Supreme Court and this Court. The Supreme Court, in State of Kerala v. K.T. Shaduli Grocery Dealer Etc. reported in (1977) 2 SCC 777 , while examining the provisions of the Kerala General Sales Tax Act, 1963, laid down the contours of the principles of natural justice. The relevant paragraphs of the said judgement read as under: 2. Now, the law is well settled that tax auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecure 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 inquiry, the framework of the law under which it is held, the constitution of the authority holding the inquiry, the nature and character of the rights affected and the consequences flowing from the decision. It is, therefore, not possible to say that in every case the rule of audi alteram partem requires that a particular specified procedure is to be followed. It may be that in a given case the rule of audi alteram partem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the inquiry should be permitted to be cross-examined by the party affected while in some other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the assessee, justice and fair-play demanded that the sources of information relied upon by the Income-tax Officer must be disclosed to the assessee so that he is in a position to rebut the same and an opportunity should be given to the assessee to meet the effect the aforesaid information. 10. The Apex Court in Mrs. Maneka Gandhi v. Union of India and another reported in (1978) 1 SCC 248 laid down the ratio in relation to the principles of audi alteram partem in the doctrine of natural justice. The relevant paragraph is delineated below: 14. ..But at the same time it must be remembered that this is a rule of vital importance in the field of administrative law and it must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands. It is a wholesome rule designed to secure the rule of law and the court should not be too ready to eschew it in its application to a given case. True it is that in questions of this kind a fanatical or doctrinaire approach should be avoided, but that does not mean that merely because the traditional methodology of a formalised hearing may have the effect of stultifying the exercise of the statutory power, the audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunals and enquiries. What the Courts in essence look for in every case where violation of the principles of natural justice is alleged is whether the affected party was given reasonable opportunity to present its case and whether the administrative authority had acted fairly, impartially and reasonably. The doctrine of audi alteram partem is thus aimed at striking at arbitrariness and want of fair play. Judicial pronouncements on the subject have, therefore, recognised that the demands of natural justice may be different in different situations depending upon not only the facts and circumstances of each case but also on the powers and composition of the Tribunal and the rules and regulations under which it functions. A Court examining a complaint based on violation of rules of natural justice is entitled to see whether the aggrieved party had indeed suffered any prejudice on account of such violation. To that extent there has been a shift from the earlier thought that even a technical infringement of the rules is sufficient to vitiate the action. Judicial pronouncements on the subject are a legion. We may refer to only some of the decisions on the subject which should in our opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied to suit the needs of the situation to such an extent that the core of the principle is abrogated because it is the core that infuses procedural reasonableness. The burden is on the applicant to prove that the procedure that was followed (or not followed) by the adjudicating authority, in effect, infringes upon the core of the right to a fair and reasonable hearing. 14. The judgement of the Supreme Court in State Bank of India and others v. Rajesh Agarwal and others reported in (2023) 6 SCC 1 further expanded the said principles, extract of which is provided below: 36. We need to bear in mind that the principles of natural justice are not mere legal formalities. They constitute substantive obligations that need to be followed by decision-making and adjudicating authorities. The principles of natural justice act as a guarantee against arbitrary action, both in terms of procedure and substance, by judicial, quasi-judicial, and administrative authorities. Two fundamental principles of natural justice are entrenched in Indian jurisprudence: (i) nemo judex in causa sua, which means that no person should be a judge in their own cause; and (ii) audi alteram partem, which means that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strative Law. The aforesaid doctrine applies with greater force to a judicial / adjudicatory body. Therefore, applying the aforesaid principle to the cases that come up before the NGT, if the NGT intends to rely upon an expert Committee report or any other relevant material that comes to its knowledge, it should disclose in advance to the party so as to give an opportunity for discussion and rebuttal. Thus, factual information which comes to the knowledge of NGT on the basis of the report of the Committee constituted by it, if to be relied upon by the NGT, then, the same must be disclosed to the parties for their response and a reasonable opportunity must be afforded to present their observations or comments on such a report to the Tribunal. 17. It is needless to observe that the experts opinion is only by way of assistance in arriving at a final conclusion. But we find that in the instant case the report of the expert Committee as well as the recommendations have been made the basis of the directions and such an approach is improper. 16. The Division Bench of this Court in S.R. Cold Storage v. Union of India and Others reported in 2022 SCC online (All) 550; {[2022] 448 ITR 37 (All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icularly the audi alteram partem rule, i. e., he who shall decide anything without the other side having been heard, although he may have said what is right, will not have been what is right or in other words, as it is now expressed, justice should not only be done but should manifestly be seen to be done . Natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience, to be ranked as fundamental. The purpose of following the principles of natural justice is the prevention of miscarriage of justice. 17. One may also refer to a judgement in M/s Eastern Machine Bricks and Tiles Industries v. State of U.P. and Others, Neutral Citation No.- 2024:AHC:3222 penned by one of us while sitting in Single Bench, wherein the Court, after examining the umpteen judgements in relations to the principles of natural justice, held as follows: 10. The common thread that runs across these judgments is that although the principle of audi alteram partem can evolve itself given the facts and circumstances of each case, its significance and applicability is universal. Audi alteram partem, which is a part of the doctrine of natural justice, finds its roots primarily in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these documents to the assessee would amount to violation of the principles of natural justice unless the authority can show that the documents were not necessary and did not form part of the order passed wherein the liability was fastened on the assessee. e) rules of natural justice, it is by now fairly well settled, are not rigid, immutable or embodied rules that may be capable of being put in straitjacket nor have the same been so evolved as to apply universally to all kind of domestic tribunals and enquiries. f) a court examining a complaint based on violation of rules of natural justice is entitled to see whether the aggrieved party had indeed suffered any prejudice on account of such violation. To that extent there has been a shift from the earlier thought that even a technical infringement of the rules is sufficient to vitiate the action. 19. Coming to the present writ petition in hand, three factors may be highlighted by this Court. Firstly, the impugned order merely copies the reply provided by the petitioner which leads to a conclusion that there was non application of mind by the respondent authority. Secondly, in the reply to the show cause notice, certain documents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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