2015 (5) TMI 500 - SUPREME COURT

Recovery of excise duty without issuance of show cause notice - useless formality theory - Scope of section 11A - area based exemption was Nullified with retrospective effect - In the case of R.C. Tobacco Private Ltd. & Anr. v. Union of India & Anr. [2005 (9) TMI 80 - SUPREME COURT OF INDIA] Apex Court has upheld the withdrawal of retrospective exemption - general theory of fair treatment - Violation of principle of natural justice - Held that:- It, cannot be denied that principles of natural justice are grounded in procedural fairness which ensures taking of correct decision and procedural fairness is fundamentally an instrumental good, in the sense that procedure should be designed to ensure accurate or appropriate outcomes. In fact, procedural fairness is valuable in both instrumental and non-instrumental terms.

Courts have consistently insisted that such procedural fairness has to be adhered to before a decision is made and infraction thereof has led to the quashing of decisions taken. In many statutes, provisions are made ensuring that a notice is given to a person against whom an order is likely to be passed before a decision is made, but there may be instances where though an authority is vested with the powers to pass such orders, which affect the liberty or property of an individual but the statute may not contain a provision for prior hearing. But what is important to be noted is that the applicability of principles of natural justice is not dependent upon any statutory provision.

Appellant was accorded certain benefits under Notification dated July 08, 1999. This Notification stands nullified by Section 154 of the Act of 2003, which has been given retrospective effect. The legal consequence of the aforesaid statutory provision is that the amount with which the appellant was benefitted under the aforesaid Notification becomes refundable. Even after the notice is issued, the appellant cannot take any plea to retain the said amount on any ground whatsoever as it is bound by the dicta in R.C. Tobacco (2005 (9) TMI 80 - SUPREME COURT OF INDIA).

It is important to note that as far as quantification of the amount is concerned, it is not disputed at all. In such a situation, issuance of notice would be an empty formality and we are of the firm opinion that the case stands covered by 'useless formality theory'.

Non-issuance of notice before sending communication dated June 23, 2003 has not resulted in any prejudice to the appellant and it may not be feasible to direct the respondents to take fresh action after issuing notice as that would be a mere formality. - Section 154(4) specifically and expressly allows amounts to be recovered within a period of thirty days from the day Finance Bill, 2003 received the assent of the President. It cannot but be held therefore that the period of six months provided under Section 11-A would not apply.

When the Court was conscious of the principle laid down in J.K. Cotton [1987 (10) TMI 51 - SUPREME COURT OF INDIA] and explained the same in a particular manner while deciding the appeal in R.C. Tobacco [2005 (9) TMI 80 - SUPREME COURT OF INDIA], it cannot be argued that the judgment in R.C. Tobacco (supra) runs contrary to J.K. Cotton [1987 (10) TMI 51 - SUPREME COURT OF INDIA] - Decided against assessee.