TMI Blog2013 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... of the opinion, for which a party, if wants to take a decision fairly, then he is supposed to give not only an opportunity of hearing to other party but also is required to show that the action of even initiation of proceedings is fair and without any predetermination of mind. The paragraphs running in several pages of SCN created an impression that one of the highest officers has been targeted, who himself in the earlier occasion made it clear to the Department that the person who is the competent officer and who is in know of the fact has already deposed before the authority. The purpose can be served by showing that the reasons indicated in the notice are only to make the assessee aware of the facts and the legal issues which he is required to answer. It is very unfortunate that the respondent-Department’s Officer-in-charge in reply affidavit went to the extent of stating that the contracts have been entered into by the petitioners not under free and genuine consent and have been entered into (due to or under) pressure/undue influence of the customers. It appears that the respondents, on facts, on point of law, on the basis of conduct of the company, on the basis of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the authority concerned has already made up mind and this notice has been issued only to project that opportunity of hearing is sought to be given to the petitioner before passing the same order for which decision has been taken by the authority and it has been communicated in the show cause notice itself. 3. Learned counsel for the petitioner submitted that in case of violation of principle of natural justice and in case of issuance of a show cause notice, issued after a decision has already been taken by the authority, the show cause notice can be challenged by filing the writ petition, for which counsel for the petitioner, Shri A.N.Hoskar, has relied upon the judgments delivered in the case of Siemens Ltd. Vs. State of Maharashtra Ors. [(2006) 12 SCC 33] and the case of Oryx Fisheries Private Limited Vs. Union of India Others [(2010) 13 SCC 427]. 4. Learned counsel for the respondent-Department, Shri Ratnesh Kumar, heavily relied upon the judgments delivered in the cases Titaghur Paper Mills Co. Ltd. Ano. Vs. State of Orissa Ano. (AIR 1983 SC 603) and Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. Ors. (AIR 1985 SC 330) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housand and for which amount the company was directed to furnish bank guarantee and upon furnishing bank guarantee, goods were directed to be released. The said order was challenged by the Assistant Collector, Central Excise, under clause 10 of letters patent. The Division Bench of the Calcutta High Court confirmed the said order and ultimately the matter reached to Hon'ble Supreme Court. Hon'ble Supreme Court deprecated the tendency of obtaining interim orders, particularly where effective alternative remedy is available. Hon'ble Supreme Court considered various earlier decisions and though deprecated such tendency of by-passing remedy under the Act and of obtaining interim order, Hon'ble Supreme Court observed that there may be cases where interim orders are required to be passed and in that situation, interim orders should be made in the interest of justice and in cases of gross violation of law and injustices are perpetuated or about to be perpetuated, then it is the bounden duty of the court to intervene and give appropriate interim relief. Be that as it may, substantially the said judgment pertains to grant of interim relief where other remedy is available to the parties, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 8. Against the above judgments, counsel for the petitioner relied upon the judgments rendered in the cases of Siemens Ltd. Vs. State of Maharashtra Ors. and Oryx Fisheries Private Limited Vs. Union of India Ors. In the case of Siemens Ltd., Hon ble Supreme Court held that, in a case where show cause notice has been issued, the Court can examine whether the jurisdictional fact existed for issuance of the said notice. So Hon ble Supreme Court, after taking note of the legal position that ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause, observed by making it clear that unless the same appears to have been without jurisdiction as has been held in the earlier decisions of the Supreme Court including the decisions rendered in the cases of State of U.P Vs. Brahm Datt Sharma [(1987) 2 SCC 179], Special Director Vs. Mohd. Ghulam Ghouse [(2004) 3 SCC 440] and Union of India Vs. Kunisetty Satyanarayana [(2006) 12 SCC 28]. Hon ble Supreme Court also observed that, when notice is issued with premeditation, a writ petition would be maintainable and also held that in such an event, even if the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nary writ jurisdiction would be justified only in exceptional circumstances and those situations in which Courts have interfered even when the statutes under which the proceedings are initiated provide for a complete machinery to challenge the orders passed are the cases, where the Constitutional vires of the very enactment under which the proceedings are initiated is under challenge; cases where the proceedings have been initiated or concluded in total violation of the principle of natural justice and where the orders impugned are totally without jurisdiction or where private and public wrongs are so inextricably mixed up or where prevention of public injury and vindication of public justice demands that recourse to Article 226 of the Constitution be taken. In the case of Kirloskar Computer Service Ltd., various other judgments including the judgments rendered in the case of Titaghur Paper Mills Co. Ltd. and Dunlop India Ltd. were also considered. Therefore, in the light of the above, we have to examine whether the petitioner has made out a case of violation of principle of natural justice in issuing the notice impugned dated 15th October, 2012 and there is element of predetermine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .P (T) No.6556/2011, which was allowed by this Court. In the decision given in W.P (T) No.6556/2011, this Court observed as under:- 8. Keeping in mind all these principles, we have to examine whether it is a fit case for interference by this Court in the matter of summoning of the petitioner, who is the Managing Director of a limited company, who has been summoned under section 14 of the Act of 1944 only for the purpose of giving his statements and has not been summoned for producing documents. Therefore, the Officer has all the documents with him as may be needed by him at this stage. The contention of the company is that its all affairs relating to tax in question is handled by Ashim Roy, who is the General Manager (F A) and whatever he has stated company is accepting to be the statements on behalf of the company. The company also stated that the company does not want to state more than what Ashim Roy, General Manager (F A), has stated before the authority under section 14 of the Act of 1944. The company's stand also is to the effect that the said authorized officer has issued summon to the Managing Director of the company on the ground that Ashim Roy did not give proper reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 14 of the Act of 1944 should examine the relevant issue before summoning any person to give evidence because of the reason that every person of the company may not be a relevant person at all for the purpose of inquiry may he be holding highest position in the company because of the reason mentioned above. In that situation and to avoid unnecessary delay, it is always appropriate to first ask the company to send a duly authorized person well acquainted with the facts and issues involved in the inquiry so that thereafter the company may not take evasive stand and may not take false stand that the person who deposed was either not authorized or had no knowledge or had given statements without the knowledge of the company etc. This will advance the cause of justice and certainly rules out the delay that may be in the conduct of any inquiry. At the same time, it is not binding upon the Assessing Officer to accept that the person nominated by the company to be and as only witness who can be examined in the inquiry. The Enquiry Officer in the facts and circumstances of a particular case if is not satisfied with the statements on the ground of its being unreliable (prima fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmoning the persons in inquiry . (Emphasis supllied) 15. After the decision in W.P(T) No.6556/2011, the same person, Managing Director of the petitioner-company, Sudhir Deoras, was served with a letter dated 25 th September, 2012 again under section 14 of the Central Excise Act directing the said Managing Director to submit replies relating to the questionnaires duly filled with seal and signature within three days of the receipt of that letter. The said Sudhir Deoras along with the petitionercompany challenged the said letter dated 25th September, 2012 by filing writ petition, being W.P (T) No.6046/2012. In the said writ petition, this Court on 6th October, 2012, stayed the operation of the communication dated 25 th September, 2012. 16. It appears that during the pendency of the above proceedings and wherein notice for appearance of Managing Director of the petitioner company and notice to reply questionnaires have been quashed/stayed, and who is petitioner no.2 in this petition, the impugned notice dated 15th October, 2012 has been issued. 17. The entire show cause notice we cannot quote to make our judgment bulky because the show cause notice is running in 42 pages. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, learned counsel for the petitioner referred various paragraphs of the show cause notice. In a case where show cause notice is challenged on the ground of predetermined mind or on the ground of violation of principle of natural justice, in that situation reply to the writ petition justifying the reasons given in the notice, if not properly drafted, may also constitute to mean to support the apparent decision of the concerned authority mentioned in the show cause notice creating further apprehension in the mind of the assessee that the said authority has again reiterated and supported its decision taken in notice, in reply to the writ petition supported by affidavit. Reply affidavit to challenge to show cause notice is an art. Then the aggrieved person may presume, how the authority will take a decision contrary to the stand taken by the Department in the High Court and that too on oath! Such reason may be valid as well as, such impressions are also, if not well-founded, are liable to be rejected. 20. Keeping in mind the above legal position, we are examining, whether the observations made in the notice were only the reasons disclosed by the assessing authority to the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of the Finance Committee in its meeting, which has been held for three times in this financial year and no cognizance has been taken by the members of the Finance Committee of TRF of which Sri Sudhir L. Deoras is a member. Then in paragraph 15.3, it has been observed that it can be well assumed that the matter must have been placed before the Committee and deliberated upon among the members of the committee, with the concerned officials of TRF. It shows, that by this, some assumption has been drawn with respect to the affairs of the financial decision of the company, wherein one of the members is the Managing Director, Shri Sudhir Deoras and for the reason best known to the Commissioner, no presumption has been drawn against other members of the finance committee. Paragraph 15.4 is also relevant, which is as under:- 15.4 It is further observed that at Para 11 of Corporate Governance Report for the year 2011-12 (appearing on Page 21) of 49th Annual Report of TRF for the Financial Year 2011-12, it is mentioned that The Managing Director and Controller of Accounts, who heads the Finance function, have submitted the required Certificate to the Board at its meeting held on M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made applicable to the FA, and being the MD of TRF is responsible for the conduct of TRF in as much as policy, plan and decision taken by him which was implemented by his subordinate officials. 15.8 The role played by Shri Sudhir L. Deoras, Managing Director, TRF, is abundantly reflective of his mens-rea with intent to evade service tax payable by the noticee, and therefore, liable for penalty under the provisions of Section 77 of the Finance Act, 1994 . 24. These paragraphs running in several pages created an impression that one of the highest officers has been targeted, who himself in the earlier occasion made it clear to the Department that the person who is the competent officer and who is in know of the fact has already deposed before the authority. This Court already in earlier round of litigation observed that the person holding the position either in the Government or in the company should not make it a prestige issue and particularly when there are quashi-judicial proceedings initiated by the officers in exercise of statutory power having vast jurisdiction and power, more care is required. That vast jurisdiction and power may not be misunderstood to have been exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice is a consequence of predetermined mind, tried to fully justify the decision indicated in the show cause notice and confirmed the apprehension of the petitioner that the Department, in place of giving opportunity of hearing to the petitioner to any of the fact or question of law, has already worked out on the subject and formed the opinion at the back of the petitioner by drawing inference from the various judgments mentioned in the show cause notice. 25. In addition to the above, justifying the reasons for which yet reply is to be taken from the petitioner, in reply to the affidavit, the evidence already recorded has also been relied upon only to substantiate that the grounds mentioned in the notice are correct. It will be very difficult for us to quote in detail what has been said in the reply affidavit because of the reason that it will make our judgment more bulky and therefore, we have referred a few lines from a detailed affidavit filed by the respondent- Department running in 42 pages. It appears that the respondents, on facts, on point of law, on the basis of conduct of the company, on the basis of the conduct of its officers and on the interpretation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issues are decided by the same authority, that will make only the assessee understand that it was nothing but a predetermined decision being taken by the authority. 28. Hon ble Supreme Court in the case of Siemens Ltd. even after observing that ordinarily writ court may not exercise discretion in entertaining the writ petition questioning the notice of show cause held, that in certain circumstance, writ petition can be entertained and one of the situations may be of premeditation and the writ petition is maintainable. In view of the above reasons, we are of the considered opinion that the impugned show cause notice is liable to be quashed and hence, show cause notice dated 15th October, 2012 is set aside. However, since the show cause notice is set aside based on the above grounds, we hereby give permission to the authority to issue a fresh show cause notice to the petitioner and the authority may proceed to decide the matter without influenced by the reasons given in the show cause notice dated 15th October, 2012 or given in the reply counter affidavit. We are also making it clear that even subsequent notice may contain reasons for the satisfaction of the authority but may b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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