TMI Blog2019 (4) TMI 1931X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions have been enacted. It is not somebody's fundamental right to evade taxes as everyone is duty bound to pay taxes due under the Statute and the State is entitled to collect the same but in the process the State is not allowed to harass the honest tax payers. Due process of law is required to be followed - in the case in hand the manner provided in Rule 58, to check evasion of tax in the form of misuse of exemption, cannot be said to be ultra vires to the provisions of the Act. Jurisdiction of the Deputy Excise Commissioner, Lakhanpur - HELD THAT:- Section 8 talks about the offences for which fine can be levied. The same is permissible in case any person adopts any devise to evade payment of toll tax. Section 13 deals with the Officers who can exercise the powers under Section 8 of the Act. It provides that the Officer in-charge of the Toll Gate may impose fine on any person guilty of an offence under Section 8. Hence, to claim that the Officer at the Toll Post was not competent to levy fine as the same could be done only by the Officers in the office, is totally misconceived, hence, is rejected. Violation of Principles of natural Justice - HELD THAT:- In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the petitioners, were not served on the petitioners. They were not associated during the process of enquiry - Regarding the contents of the reply, only what was mentioned in the impugned demand notices was that the reply was considered and found lacking merit'. None of the issues raised by the petitioners in their replies were dealt with. Hence, orders were totally non-speaking, besides being in violation of principles of natural justice. Alternative Remedy - H ELD THAT:- As far argument of learned counsel for the respondents regarding alternative remedy of appeal available to the petitioners is concerned, the name needs to be noticed and rejected as vires of the provisions of the Rules is under challenge in the bunch of petitions and the appellate authority will not be competent to examine the same. Even otherwise the writ petitions were entertained by this Court against the demand notices issued more than 8 years back. The ground raised by the petitioners is that they were condemned unheard and there has been violation of principles of natural justice. Impugned demand notices are set aside with liberty to the competent authority to issue action oriented show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to why he should not be debarred from claiming toll tax exemption for a period of one year in terms of Rule 58 of the Jammu and Kashmir Levy of Toll Rules, 1995 (hereinafter referred to as the Rules'). The aforesaid notice was followed by final notice dated 08.11.2010, whereby the petitioner was directed to deposit the aforesaid amount and was further directed to explain his position within 15 days as to why he should not be debarred from claiming the toll tax exemption for a period of one year. Both the aforesaid notices have been challenged by the petitioner by filing the present writ petition. OWP No. 1423/2010 4. After demand of Excise Duty and toll tax with fine was raised against the petitioner vide Notice dated 07.10.2010, which is subject matter of OWP Nos. 1183/2010 and 1383/2010, the respondents issued notice dated 27.11.2010, debarring the petitioner from claiming toll tax exemption for a period of one year from 21.09.2010 and further demand of ₹ 29,556/- was raised as toll tax from 21.09.2010 till the date of notice. The petitioner has challenged the aforesaid notice dated 27.11.2010 in the present writ petition. OWP No. 1186/2010 5. As pleaded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the years 2008-09 and 2009-10, the petitioner exported Indian Made Foreign Liquor (for short IMFL' hereinafter) to other States against export permits issued by the Excise Department. The permits were got issued for export of IMFL to the importers in the State of Goa. Export of IMFL from the State of Jammu and Kashmir to any other State against due permission was exempted from payment of excise duty. The petitioner availed that exemption. Later on, the department found that the export was on the basis of some fake documents. Accordingly, demand notice dated 25.09.2010 was issued against the petitioner, directing the petitioner to remit an amount of ₹ 9,18,08,640/- as Excise Duty within a period of 15 days from the date of service of the notice failing which same was to be recovered as arrears of land revenue. Against the demand raised, the petitioner has filed the present writ petition. OWP No. 1443/2010 8. After raising the demand of Excise Duty, as above, respondents issued notice dated 08.11.2010 to the petitioner- New India Distillery for recovery of toll tax of ₹ 5,36,654/- and fine amounting to ₹ 53,66,540/-. The petitioner has challenged the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Import and export permits have been issued by different authorities situated in two different States. Rule 58 of the Rules does not envisage any such eventuality. Once exemption had been granted by the State, the Deputy Excise Commissioner at Toll Post, Lakhanpur exceeded its jurisdiction in issuing show cause notice and subsequently withdrawing the same. In fact, the goods are excisable, which were manufactured and dispatched from the factory of the petitioners under supervision of the Excise Officials. Action of the respondents is bad on account of doctrine of dictation. In fact, the official concerned did not apply his mind, as he was directed to proceed in certain manner. Opportunity of hearing was not afforded to the petitioners and even the order passed has not assigned any reason, whatsoever. The notice suggests that there had been certain inquiries conducted by the officials of the Department or Vigilance. Neither the petitioners were associated in that process nor were they confronted with the inquiry report. Mere allegation was that import permits on the basis of which export permits were issued, were fake. He further submitted that the petitioners had made a specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o deserves to be set aside. 15. On the other hand, learned counsel for the respondents submitted that the petitioners, were able to defraud the State of its large revenue by producing fake import permits before the authorities for getting export permits of IMFL issued in their favour. The State with a view to promote Industralization, had granted exemption from payment of toll tax and excise duty on export of IMFL manufactured in the State, to any other State. The sale of IMFL could be to a licensee only and not to any common person. The destination of IMFL for which, export permits had been issued was in the State of Goa. The State was within its power to check as to whether the goods had reached the destination for which the export permits were got issued by the petitioners. When, on receipt of a complaint, genuineness of the permits was checked, it was found that the entire transaction was originated on the basis of fake import permits purportedly issued by the authorities in the State of Goa. On the basis there of, no benefit can accrue to the petitioners. It was a clear case of evasion of tax. The petitioners availed of exemption to which they were not entitled to. The show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be created against the petitioners, including fine, once the officers of the department are at fault. Even the petitioners have been cheated in the process. 20. Heard learned counsel for the parties and pursued the paper book. DISCUSSIONS 21. The pleadings in the case in hand from both the sides are quite sketchy and so the documents placed on record. In none of the petitions comprehensively all the documents have been placed on record. Similar is the case with the respondents. 22. The facts in the bunch of petitions, which emerge from the pleadings and the contentions raised at the time of hearing, are that the petitioners had got certain export permits issued on the basis of import permits issued by the authorities in the State of Goa. These were for export of IMFL manufactured in the State of Jammu and Kashmir. Levy of tolls tax was exempted in case IMFL manufactured in the State is exported outside the State. 23. Section 5 of the Tolls Act enables the State Government to grant exemption from payment of toll tax. In exercise of powers there under, notifications were issued by the State bearing SRO 129 dated 30.03.2001 and SRO 117 dated 27.04.2002. Action was tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued on 27.11.2010 for depositing the aforesaid amount. RELEVANT PROVISIONS AND SCHEME OF THE TOLLS ACT AND THE RULES 26. Before considering the rival contentions raised by the learned counsel for the parties, it would be useful to refer to relevant provisions of the Levy of Tolls Act, Svt. 1995, which are extracted as under:- Section 3. Rate of Tolls to be levied:- (1) The government may from time to time prescribe, annual or alter rates of tolls to be levied upon any road, ferry or bridge in the state in respect of men, animals, vehicles, machinery, commodities and goods in any form whatsoever and may place the collection of such tolls under such management as may appear to it proper, and all persons employed in the management and collection of such tolls shall be liable to the same responsibilities as would belong to them if employed in the collection of the Excise Revenue under the Jammu and Kashmir Excise Act,1958. (2) The rates prescribed to be levied at the commencement of this Act, shall be the rates mentioned in the first schedule hereto annexed. The rates shall continue to be levied till they are annulled or altered in accordance with the provisions of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, animals or vehicles on the part of the owner, or when such toll or charges after having been levied has been owing to any such cause erroneously refunded, the person chargeable with toll, or the charge so short levied, or to whom such refund has erroneously been made, shall pay the deficiency or repay the amount paid to him in excess on demand being made within twelve months from the date of the first assessment or the making of the refund and Toll Officer may refuse to pass any goods, animals or vehicle(s) belonging to such person until the deficiency or excess be paid or repaid. (2) No toll or charges which have been paid and of which repayment, wholly or in part, is claimed in consequence of the same having been paid through inadvertence, error or misconstruction shall be refunded unless such claim is made within three months from the date of such payment. Section 8. Offences:- Whosever transships, abets or attempts the transshipment of goods from a carriage or animal on which the tolls is chargeable at a higher rate to a carriage or animal on which the toll is chargeable at a lower rate, or vive versa, or whosoever adopts any devise to evade payment of toll at a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24.04.2002 the words two years' were deleted from the notification dated 30.03.2001. Section 5-A deals with recovery and refund of toll short levied or erroneously paid. Section 8 deals with the offences under the Act. It provides that whosoever adopts any device to evade payment of toll, shall be liable to pay fine equal to ten times the amount of actual toll leviable or ₹ 1,000/-, whichever is higher. Section 13 provides for the officers, who are authorized to deal with the offences committed under Section 8. It authorizes the officer in-charge of the toll gate to impose fine, after affording an opportunity of being heard. The recovery thereof can be made through the Magistrate having jurisdiction in the area. Any order passed under Section 13 of the Act is appealable by any person aggrieved against that. It also authorizes the Excise Commissioner to exercise suo-moto revisional powers. Section 15 provides that notwithstanding the intention of the person aggrieved to appeal against the order passed against him, he is liable to deposit the amount of demand raised against him. Section 17 of the Act authorizes the State Government to make rules for the purpose of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sub-rule(ii). (v) Where an industrial unit has availed exemption on import of raw material or export of finished goods and such raw material or finished goods have been rejected by the consignee, such consignment shall be liable to double the amount of toll leviable on such goods while crossing the toll post. 29. Rule 58(ii) provides that if the goods are found to have been unloaded or being unloaded at a place other than the declared destination, the same are liable to be seized by the officer concerned. He shall proceed against the defaulter as if the offence was committed at the toll post. In case the exempted unit is found guilty, he shall not be entitled to claim exemption for a period of one year from the date of such violation. Rule 58(iii) authorizes the officers mentioned therein to even enter and inspect any industrial unit claiming toll exemption to verify as to whether exemption is being claimed genuinely. In case it is found that the unit is misusing the exemption or has claimed exemption fraudulently, such a unit can be debarred from claiming any further exemption of toll. RE. VIRES OF RULE 58 OF THE RULES 30. Vires of Rule 58 is sought to be challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese Rules form part of Chapter 4 in the Rules dealing with exemptions. 34. In the case of the petitioners exemption was claimed by the petitioners and had been granted from payment of toll on IMFL/Beer manufactured in the State for being exported against permits, to the State of Goa. Liquor is a commodity in which each and every individual cannot trade as it has to be permitted against licenses. Any Unit, which gets exemption from payment of toll tax, claiming that the goods are meant for a particular destination but in fact the statement is found to be incorrect, can certainly be charged with evasion of toll tax as the documents, on the basis of which exemption was claimed, were not genuine. Once power to check evasion of tax has been given under Section 8 of the Act in general terms without any limitation, there is nothing wrong in Rule 58(i), which authorizes the officers concerned to watch movement of goods and in case need be, to follow the same even up to the declared destination. The Officers at the check post may not have ways and means to check the genuineness of all the documents furnished at the time of export of goods from the State, however, in case subsequently th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abad regarding evasion of toll tax and excise duty. The matter was enquired into by the department at different levels. In the process the petitioners were not associated. First notice served upon the petitioners under the Tolls Act was dated 07.10.2010. It refers to the fact that a complaint was received from one Romesh Kumar resident of Faridabad and on enquiry it was found that permits issued by Goa authorities, on the basis of which export permits were issued by the authorities at Jammu, were fake. On the basis of the report, the Administrative Department vide communication dated 30.03.2010 directed for taking action in the matter. The notice dated 07.10.2010 further mentions that during enquiry it was found that the goods, for which export permits were issued, never reached the destination. It was further added therein that there was no Unit registered in the name of the importer with the Excise Department of Goa State. The brand names of the IMFL/Beer manufactured and exported by the Units in the State of J K were not even registered for sale in Goa. Even at the check post for entry of goods in the State of Goa, there was no entry regarding import of the goods. As per the lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er therein was debarred from claiming exemption from payment of toll tax for a period of one year w.e.f. 21.09.2010 and amount of toll tax exemption claimed by the petitioner therein from 21.09.2010 till issuance of the order dated 08.11.2010 was also worked out, for deposit of which a separate notice was issued. 42. From the aforesaid communications, it is evident on the face of it that in the cases in hand, the petitioners were not confronted with the material which was collected by the respondents, on the basis of which it was found that export of IMFL/Beer from the State was on the basis of fake documents. The stand taken by the petitioners was that, in case opportunity was afforded to the petitioners, they could have proved that the documents, on the basis of which export permits were issued, were not fake. 43. The principles of law laid down by Hon'ble the Supreme Court in ORYX Fisheries Private Limited v. Union of India and others, (2010) 13 SCC 427, would be relevant in the present case. In the aforesaid case Hon'ble the Supreme Court opined on the issue regarding the contents of a show cause notice and held that before an opportunity of hearing is afforded to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable opportunity of defence. 32. Therefore, while issuing a show-cause notice, the authorities must take care to manifestly keep an open mind as they are to act fairly in adjudging the guilt or otherwise of the person proceeded against and specially when he has the power to take a punitive step against the person after giving him a show cause notice. 33. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi judicial proceeding if such a proceeding has to inspire confidence in the mind of those who are subject to it. 44. If we consider the provisions of Section 8, which enables the authority to levy fine and Section 13 which prescribes the Officers who can take action under Section 8, especially sub Section (2) thereof, it clearly provides that before passing an order under Sub Section (1) thereof, such an officer shall give the person in default an opportunity to being heard. The same has been totally denied in the case in hand. The language of the first notice itself shows that it was a dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Mahindra Ltd. v. The Employees Provident Fund Appellate Tribunal and another, decided on 24.7.2012, where the Employees Provident Fund Appellate Tribunal, which has its principal seat at New Delhi, heard some cases by holding Camp Court at Chandigarh. However, proper intimation about the date of hearing was not given to the party concerned. The order was set aside and the matter was remitted back. This Court had also made certain suggestions regarding conduct of proceedings, requirement of mentioning of name and designation of the Presiding Officer in all the interim and final orders and service of notice by use of technology. The same are extracted below: 25. Before parting with the order, this court would like to comment on the manner in which the proceedings have been conducted. As has already been noticed above, the case was not being taken up date- wise i.e. on a date fixed for hearing. There are two different orders passed on one date fixing two different dates of hearing. The Tribunal is discharging important quasi judicial function. The cases cannot be dealt with in the manner in which the same has been dealt with in the present case. In some of the zimni orders even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PEAKING 46. Impugned order also deserves to be set aside on the ground of its being totally non-speaking. No reasons have been assigned in any of the orders for taking action against the petitioners and raising huge demand of toll and fine against them. Considering the issue regarding requirement of an order being speaking, Hon'ble the Supreme Court in Kranti Associates (P) Ltd. V. Masood Ahmed Khan, (2010) 9 SCC 496, formulated certain principles, which are extracted below:- (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of Due Process . 47. In the case in hand a perusal of the impugned order shows that the same is totally non-speaking and lacking in reasons, hence, the same deserves to be set aside on this score as well. REGARDING EXCISE DUTY 48. With reference to the raising the demand for excise duty, a perusal of the notice dated 29.07.2010 shows that reference has been made to certain enquiry conducted regarding genuineness of the Import and Export permits, on the basis of which the petitioner claimed exemption from payment of excise duty under the Jammu and Kashmir Excise Act, Svt. 1958. There is no dispute about the fact that the material, which was produced before the Enquiry officer and the report of enquiry, on the basis of which show cause notices were issued to the petitioners, were not served on the petitioners. They were not associated during the process of enquiry. The petitioners had filed detailed reply to the aforesaid show cause notices, specifically stating that they were not aware of any complaint filed as neither the copy of the compla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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