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TANUJ AGENCY PRIVATE LIMITED AND 1 Versus STATE OF GUJARAT AND 1

2016 (6) TMI 727 - GUJARAT HIGH COURT

Refund - process of pre-audit before granting refund to the petitioners - Held that:- On all counts, the procedure adopted by the department was wholly unauthorised and impermissible in law. To be bound by an order of higher authority in an administrative set up is entirely different from the discretion of a statutory authority being governed by an outside agency. - In effect the directions to pass the order in a particular manner came to be issued by an authority who was a party in the appe .....

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et signed by the competent authority would remain as a draft and ordinarily and for valid reasons it would always be open for the authority to pass another or different order before it is signed. However, in the present case, the order remained at a draft stage only on account of wholly unauthorised interference by the external authority. We therefore, direct the Joint Commissioner to proceed to pass the order in terms of the draft order dated 26.2.2010 latest by 10th July, 2016. We are informed .....

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the statute. - Decided in favor of petitioner. - SPECIAL CIVIL APPLICATION NO. 4984 of 2016 - Dated:- 8-6-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : M/S WADIAGHANDY & CO, ADVOCATE FOR THE RESPONDENT : ADVANCE COPY SERVED TO GP/PP ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) The petitioners have prayed for setting aside the process of pre-audit before granting refund to the petitioners. The petitioners have also prayed for a direction to refund a sum o .....

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unal decided the Revision petition of the petitioners by order dated 14.7.2009 in favour of the petitioners. The Tribunal placed the matter before Commissioner of Sales Tax, who was the appellate authority, in the following manner: The Tribunal has carefully perused the impugned common order/s 65 and u/s 67. It is based on the letter dated 19.7.04 from Additional Commissioner of (Excise) without ascertaining whether the goods purchased contained tobacco or not. No reasons are there in the order .....

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ve been considered to the Joint Commissioner of Commercial Tax before passing the impugned order although prima facie there is lot of force in the arguments of the appellant. Such orders cannot be based on some communication from a officer of the Central Excise and ignoring all the contentions of the appellant/applicant. ORDER 1. In view of and for the reasons stated above, the appeal and revisional application is allowed and the impugned order dated 31.1.2005 of the Joint Commissioner of Sales .....

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or not accepting any contention of the appellant. The appellant is also directed not to seek unnecessary adjournments and corporate in the proceedings. 2. The petitioners thereupon appeared before Joint Commissioner and claimed refund of tax already collected. It is the case of the petitioners to which the respondents have raised no serious dispute that the Joint Commissioner was convinced that refund of ₹ 75,73,923/- was payable to the petitioners. In fact, he passed a draft order dated 2 .....

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ceeds ₹ 5 lakhs, there would be a requirement of pre-audit. The said draft order dated 26.2.2010 alongwith communication dated 3.3.2010 are produced at Annexure F to the petition. 3. Since the petitioners did not receive any refund from the respondents, they made representations and it appears, also obtained documents from the official record through aid of Right to Information Act. 4. The respondents, instead of granting refund, issued notice dated 21.2.2016 conveying to the petitioners t .....

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n favour of the assessee and passed an order dated 26.2.2010 granting refund of ₹ 75,73,923/-. It was therefore, requested that the said order be implemented and refund be released. 5. The petitioners at that stage filed this petition and made the above noted prayers. 6. Learned counsel Mr. Tanvish Bhatt for the petitioners submitted that after the Tribunal decided the issue in favour of the petitioners and placed back the matter before Appellate Authority for fresh decision bearing in min .....

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ity. 7. Learned Assistant Government Pleader Ms. Jirga Zaveri however, opposed the petition contending that in order to safeguard interest of Revenue, through administrative instructions, pre-audit procedure is devised where the payable refund is in excess of ₹ 5 lakhs. The decision of the Joint Commissioner in draft order is palpably erroneous. He has neither considered the facts of the judgment of the Supreme Court in the case of M/s. Kothari Products Ltd. vs. Government of A.P reported .....

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oners were entitled to refund of a sum of ₹ 75,73,923/-. In fact, he passed a detailed speaking order on 26.2.2010. He however, termed his order as a draft order presumably because of internal directives of the Government for pre-audit in such cases in which refund amount exceeds ₹ 5 lakhs. He forwarded copy of the draft order to the higher authority i.e. Additional Commissioner alongwith his letter dated 3.3.2010. From the file, it further emerges that he was asked to supply Gujarat .....

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the Supreme Court in the case of Mafatlal Industries vs. Union of India and others and (3) On the basis of the observations of the Tribunal in the earlier orders, instead of granting refund to the dealer, amount to be utilised for the purpose of tobacco and smoking control. Above issues may be borne in mind and necessary modifications may be made in the draft order and copy thereof be forwarded. 9. The procedure adopted by the department does not flow from any statutory scheme of the Act. Chapt .....

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r mentioned in section 74, passed under this Act or the rules shall lie:- (a) If the order is made by an Assistant Commissioner or Commercial Tax Officer, or any other officer sub-ordinate thereto, to the Deputy Commissioner; (b) if the order is made by a Deputy Commissioner, to the Joint Commissioner; (c) if the order is made by a Joint Commissioner, additional Commissioner or Commissioner, to the Tribunal. (2) In the case of an order passed in appeal by a Deputy Commissioner or, as the case ma .....

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pellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order- (a) without payment of tax with penalty (if any) or, as the case may be, of the penalty, or (b) on proof of payment of such smaller sum as it may be consider reasonable, or (c) on the appellant furnishing in the prescribed manner, security for such amount as the appellate authority may direct] (5) The Commissioner, on receipt of notice that an appeal against the order passed in .....

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llate authority may pass such order on appeal as it deems just and proper. (7) Every order passed in appeal under this section shall, subject to the provision of sections 75, 78 and 70 be final. 11. Section 75 pertains to revision. As per sub-section (1) of section 75, the Commissioner and the Tribunal would have power to revise orders specified thereunder. Section 78 provides for appeal to High Court. As per sub-section(1) of section 78, appeal would lie to the High Court from every order passe .....

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ht to appeal in terms of sub-section (1) of section 73, in all cases other than those which are termed as non-appealable orders specified in section 74. Under sub-section (2) of section 73, under certain circumstances, a second appeal would be available to the Tribunal against the order of the appellate authority. Against the order of the Tribunal, an appeal would be available to the High Court on substantial question of law. Section 75 grants power of revision to the Commissioner as well as to .....

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tage and sent for what is referred to as a pre-audit. The Additional Commissioner, thereupon inquired into various details and directed him to verify three aspects and to amend his order and pass a fresh order. In the above noted communication dated 16.7.2013, he in fact, conveyed to the Joint Commissioner that after making such changes, he is permitted to pass the order. He was also asked to forward a copy of such order to the Additional Commissioner. 14. Under no circumstances, procedure adopt .....

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agency or authority can direct him to act in a particular manner. Merely because the Additional Commissioner happens to be placed higher in rank as per administrative hierarchy or set up, would not give him any authority to govern the discretion of the Joint Commissioner vested in him as per statute while exercising appellate powers. 15. In the case of Mahadayal Premchandra vs. Commercial Tax Officer, reported in A.I.R. 1958 SC 667, the Constitution Bench of the Supreme Court considered the case .....

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t with the matter of this assessment. It is clear that he did not exercise his own judgment in the matter and faithfully followed the instructions conveyed to him by the Assistant Commissioner (C.S.) without giving the appellant an opportunity to meet the points urged against them. The whole procedure was contrary to the principles of natural justice. The procedure adopted was, to say the least, unfair and was calculated to undermine the confidence of the public in the impartial and fair adminis .....

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st record his reasons for formation of a belief that income chargeable to tax has escaped assessment. It is the opinion of the Income-tax Officer alone which in this context would prevail. It is in this background the Supreme Court in the case of Indian and Eastern Newspaper Society vs. Commissioner of Income Tax, New Delhi 119 ITR 996 opined that the opinion of the internal audit party cannot be regarded as opinion within the meaning of section1 47 of the Income Tax Act, 1961. 17. In the case o .....

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Was it because he was reluctant to exercise jurisdiction vested in him by the provision of Section 20-A(1)? This is a case of power conferred upon one authority being really exercised by another. If a statutory authority has been vested with jurisdiction, he has to exercise it according to its own discretion. If the discretion is exercised under the direction or in compliance with some higher authority's instructions, then it will be a case of failure to exercise discretion altogether. In o .....

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was stated that the Commissioner was bound to bear his own independent and unfettered judgment and decide the matter for himself, instead of forwarding an order which another authority had purported to pass. 18. In the case of Commissioner of Income Tax, Shimla vs. Greenworld Corporation, Parwanoo reported in 2009(7) SCC 69, Supreme Court observed as under: 53. We may now consider the effect of noting . The noting of the assessing officer was specific. It was stated so in the proceeding sheet at .....

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cer shall be bound by the statutory circulars issued by CBDT but it is another thing to say that the assessing authority exercising quasi-judicial function keeping in view the scheme contained in the Act, would lose its independence to pass an independent order of assessment. 55. When a statute provides for different hierarchies providing for forums in relation to passing of an order as also appellate or original order, by no stretch of imagination a higher authority can interfere with the indep .....

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a decision whether or not information regarding commission of an offence under T.A.D.A. Should be recorded can be taken. Exercise of the power granting or refusing approval under Section 20A(1) in its very nature casts a duty upon the officer concerned to evaluate the information and determine having regard to all attendant circumstances whether or not a case for invoking the provisions of T.A.D.A. is made out. Exercise of that power by anyone other than the designated authority viz. The Distri .....

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entire structure of appeal and revision would break down if superior officer in the Government set up is allowed to control the statutory powers of the competent authority, be it the assessing officer or an appellate authority. In the present case, Additional Commissioner insisted that Joint Commissioner who was in charge of the appeal as the appellate authority modifies his order and only thereafter he would have permission to pass the order. On all counts, the procedure adopted by the departme .....

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l, the appropriate proceedings before the Joint Commissioner were between the petitioner as an assessee and the respondent as tax collector or revenue as is popularly referred. Thus the directions issued by the Assistant Commissioner were in essnece by the department who was the litigating party before the Joint Commissioner. In effect therefore, the directions to pass the order in a particular manner came to be issued by an authority who was a party in the appeal and therefore was a person inte .....

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