TMI Blog2021 (9) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in the electronic credit ledger has been fraudulently availed or is ineligible, may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under section 49 or for claim of any refund of any unutilised amount. The invocation of Rule 86A of the Rules for the purpose of blocking the input tax credit may be justified, if the concerned authority or any other authority, empowered in law, is of the prima facie opinion based on some cogent materials that the ITC is sought to be availed based on fraudulent transactions like fake/bogus invoices etc. The power conferred upon the authority under Rule 86A of the Rules for blocking the ITC could be termed as a very drastic and farreaching power. Such power should be used sparingly and only on subjective weighty grounds and reasons. The power under Rule 86A of the Rules should neither be used as a tool to harass the assessee nor should it be used in a manner, which may have an irreversible detrimental effect on the business of the assessee. The aspect of availing the credit and utilization of credit are two different stages. The utilization o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hra,Tanmay Sadh For the Respondent : C.S.C. ORDER HON'BLE MAHESH CHANDRA TRIPATHI, J. 1. Heard Shri Navin Sinha, learned Senior Advocate assisted by Shri Nishant Mishra and Shri Rahul Agarwal for the petitioner company and Shri Bipin Kumar Pandey, learned Additional Chief Standing Counsel for the respondents. 2. This writ petition has been filed by M/s North End Food Marketing Pvt. Ltd. against the order dated 26.3.2021 passed by the respondent no.3/Commissioner, Commercial Tax, U.P. Lucknow by which he has accepted the proposal for revision submitted by the Additional Commissioner, Grade-1, Commercial Tax, Moradabad Zone, Moradabad and stayed the effect and operation of the order dated 10.3.2021 passed by the Additional Commissioner, Grade-II (Appeal)-1st, Commercial Tax, Moradabad, wherein, the appeal filed by the assessee/petitioner company was allowed and decision of the respondent no.5/Deputy Commissioner, Sector-1, State Tax, Chandausi, Sambhal (Assessing Officer), communicated to the petitioner vide e-mails dated 23.7.2020 06.8.2020 for blocking of credit, was set aside. 3. The petitioner is a company incorporated under the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 5 of Integrated Goods and Service Tax Act (13 of 2017); or (d) the tax payable under the provision of sub-sections (3) (4) of Section 9 of Central Goods and Services Tax Act, 2017 but does not include tax paid under the composition levy; Sec. 2( 63) Input Tax Credit mean the credit of input tax; Sec.2 (82) output tax in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis. 6. Section 16 (1) provides that every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in Section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him, which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. Sub-section (2) provides that no registered person shall be entitled to take input tax credit unless he is in possession of a tax invoice, debit note or any other prescribed duty paying documents and he has receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts where Mentha oil is extracted. Then such farmers sell this oil to different registered dealers, who in turn supply the same to the petitioner company after issuing the tax invoice and E-way bill. The Mentha oil is an agricultural produce as defined under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 and hence, exit of specified agricultural produce from market area requires issuance of gate pass in Form V-A by the Market Committee under Rule 50A of U.P. Krishi Utpadan Mandi Niyamawali, 1965 as well as issuance of bill in Form IXR by the seller to the purchaser. Thus, the supply of Mentha oil is permissible only after issuance of gate pass by the Market Committee in Form V-A and bill in Form-9R by the supplier. 9. The petitioner company purchased Mentha oil from various suppliers on the strength of tax invoice issued by such suppliers. Since the petitioner is using warehousing services provided by SCMPL at different locations, hence e-way bills were also generated for movement of goods from the supplier's place to the warehouses operated by SCMPL. Such supply was also supported with gate pass in Form V-A issued by the Market Committee and bill in Form 9R by the supplier. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents should have been returned to the petitioner within 30 days as per provision of sub-section (3) of Section 67 of the SGST Act. Except a few electronic devices, which were returned in July 2020, no other documents have been returned to the petitioner despite repeated requests. Out of the seized documents, a regular book in the Form of 9R (Exhibit No.2) was seized which reflected all the regular and daily inward supplies of the petitioner. Stock register of warehouse (Exhibit No.3) was seized, wherein details of stock was recorded. After investigation, no discrepancy was found by the concerned officer. All the entries were verified from the arrival stock register of Mandi Samiti and nothing adverse has been communicated to the petitioner. The department was informed on 05.9.2019 that 133 drums of Mentha oil of the petitioner were lying at the Chandausi warehouse and as such, the said stock was not suppressed and the same was seized on 13.9.2019 treating it as out of books or undisclosed. 12. The warehouse of SCMPL at Barabanki informed to the Commercial Tax Department at Ayodhya on 05.9.2019 that 161 drums of the petitioner were lying at the warehouse and despite this dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. At the very outset, Shri Manish Goyal, learned Additional Advocate General appearing on behalf of the State has placed before us the judgment and order dated 22nd November, 2019 passed by the Hon'ble Apex Court in the Case of The State of Uttar Pradesh Others Versus M/S Kay Pan Fragrance Pvt. Ltd in Civil Appeal No. 8941 of 2019 wherein the Apex Court has interalia observed as follows:- There is no reason why any other indulgence need be shown to the assessees, who happen to be the owners of the seized goods. They must take recourse to the mechanism already provided for in the Act and the Rules for release, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum (even upto the total value of goods involved), respectively, as may be prescribed or on payment of applicable taxes, interest and penalty payable, as the case may be, as predicated in Section 67 (6) of the Act. In the interim orders passed by the High Court which are subject matter of assail before this Court, the High Court has erroneously extricated the assessees concerned from paying the applicable tax amount in cash, which is contrary to the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter which is perishable in nature but the concerned authority has not yet exercised its power under Section 67 of the Act (in short the Act, 2017 ). While rebutting the contention made by the learned counsel for the petitioners, learned Standing Counsel has stated that Mentha Oil is not perishable in nature and it has not been included in the schedule contained in the Notification dated 13th June, 2018 issued by Government of India. Considering the facts and circumstances of the case, without expressing any opinion on the merits of the case, this writ petition is finally disposed of with a direction to the petitioners to make an appropriate application/representation before the concerned authority under the relevant provision of the Act, 2017 ventilating their grievances along with a certified copy of this order enclosing therewith a copy of the writ petition and its Annexures and, if any such application/representation is filed, the concerned authority shall make all endeavour to consider and decide the same by a reasoned and speaking order, after affording opportunity of personal hearing to the petitioners, in accordance with law expeditiously preferably within two weeks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no.5 that M/s Jai Balaji Trading Company has not received consideration in respect of outward supply or that the input tax credit availed by petitioner on inward supply was ineligible. The petitioner had disclosed the details of payment worth ₹ 226.98 crores made against the outward supplies by Jai Balaji Trading Co. worth ₹ 225.89 Crores (including the amount of S.G.S.T. and C.G.S.T after the price settlement). This factual aspect was not rebutted by the respondents. (vi) On the basis of material available on record, it cannot be said that the inward supply of the petitioner was on the basis of fake invoices; (vii) Unless and until the details submitted by petitioner are examined and verified after giving opportunity of cross examination, the same cannot be rejected; (viii) Before blocking input tax credit, concerned authorities have not conducted any enquiry and the decision dated 6.8.2020 has been passed by respondent no.5 in a routine manner only on the basis of letter issued by Deputy Commissioner (SIB), Ayodhya, without verifying the same himself; (ix) Principle of natural justice also requires that a speaking and reasoned order is passed, but respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visional authority on his own motion and upon information received by him or on request of Commissioner of Central Tax, if he considers that any decision or order passed by any officer subordinate to him is erroneous insofar as it is prejudicial to the interest of revenue and illegal or improper or has not taken into account any material facts, he may stay the operation of such decision or order and after giving the person concerned an opportunity of being heard, pass such order, as he thinks just and proper including enhancing or modifying or annulling the decision or order. He submitted that sub-section (2) of Section 108 of SGST Act prohibits exercise of powers under sub-section (1) with an exception contained in the proviso. Sub-section (2) prohibits exercise of revisional powers, if (a) the order has been subjected to an appeal under Section 107 or Section 112 or Section 117 or Section 118; or (b) the period specified under sub-section (2) of Section 107 has not yet expired or more than three years have expired after the passing of the decision or order sought to be revised; or (c) the order has already been taken for revision under this Section at an earlier stage; or (d) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent no.3 had not called for and examined the record of the aforesaid appeal as well as order dated 10.3.2021. The jurisdiction under Section 108 can be exercised only if the twin conditions specified in sub-section (1) of Section 108 are satisfied. The words 'erroneous insofar as it is prejudicial to revenue' have been used in other statutes like Income Tax Act, 1961 and the same has been considered by the Supreme Court in Malabar Industrial Co. Ltd. vs. CIT (2000) 2 SCC 718 , wherein it has been held that twin conditions are required to be satisfied i.e. (i) the order sought to be revised must be erroneous; (ii) it is prejudicial to the interest of revenue. It is submitted that the impugned order does not record any finding to the effect that the order dated 10.3.2021 passed by the Appellate Authority is erroneous insofar as it is prejudicial to the interest of revenue. On the contrary, in the impugned order the respondent no.3 has only observed that prima facie, there is reason to believe that the order dated 10.3.2021 is improper and prejudiced to the interest of revenue. In absence of any finding to the effect, that the order dated 10.3.2021 is erroneous, the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty has taken a view to which the respondent no.3 does not agree, the same does not make the order dated 10.3.2021 prejudicial to the interest of revenue unless the order dated 10.3.2021 is, otherwise, sustainable in law. 21. Shri Sinha would argue that in the present case, there is no finding as to show that the order dated 10.3.2021 is unsustainable in law and therefore, the observation of respondent no.3 regarding 'prejudiced to the interest of revenue' is wholly misplaced. The impugned order, being a quasi-judicial order, affects the rights of the petitioner, and it could not be passed on the prima facie opinion. After conducting due enquiry once the Appellate Authority has passed a detailed and reasoned order then the respondent no.3 cannot assume jurisdiction to revise such order simply on the ground that the revenue is not happy with the order and under the garb of revision, the respondent no.3 cannot be allowed to conduct a fishing and roving enquiry in the matter. In this regard, he has placed reliance on the judgments in Paul Mathew Sons v. CIT 263 ITR 101 (Ker.) , CIT v. Gabriel India Ltd 203 ITR (Bom.) ; CIT v. Arvind Jewellers 259 ITR 502 (Guj.) ; S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isplayed 'exchange' is not taking place. There was strong reason to believe that actual supply of goods by the merchant by creating a network can be obtained in large quantities without actual supply of goods. The search of the petitioner company was made on 13.9.2019, wherein, it was found that the company was not found doing business anywhere nor trading books of account were found at the site. From the initial analysis itself, it came to light that certain other firms are selling in huge quantities to the petitioner company. Six firms were also investigated on 22.10.2019 and out of these firms, M/s Jai Balaji Trading Company, Barabanki was not found in existence at its declared business place, whereas, supply of ₹ 248.85 crores has been made by the said firm to the petitioner firm. Upon making further investigation it was found that the owner of the said firm is residing in Delhi. On analysis of the information available online, it was found that the rules of SEBI and MCX have been violated and fraud has been done in the guise of online trading by the firm in question. 25. Shri Pandey argued that ITC has been used by showing the purchase of about ₹ 250 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rangements made in the Circular dated 03.7.2020, the information regarding blocking of credit was duly sent to the petitioner company by e-mail, wherein the reasons for blocking the credit were mentioned. The said order was assailed by the petitioner company before the First Appellate Officer by preferring Appeal No.GST- 95/20/Year 2019-Appeal and the same was allowed by the First Appellate Officer. Against the aforesaid order, the Additional Commissioner Grade-1, Moradabad vide his letter dated 16.3.2021 moved an application for restoration. In compliance thereof, the Commissioner, Commercial Tax vide its order dated 26.3.2021 stayed the effect and operation of the order having found factual wrong and prejudicial to the interest of revenue. 27. Shri Pandey further argued that Section 49 (4) of CGST Act empowers the State Government to determine the conditions for the use of funds available in the credit ledger for payment of any output tax. Section 49 (4) provides that the amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.f. 26.12.2019) confers power upon the authority concerned to block the ITC, if it is prima facie found that the transactions are fraudulent. He submitted that over a period of time the Government has unearthed many cases of fake input tax credit due to issuance of fake invoices, issuance of invoices without supply and other fraudulent activities which has led to decline in the revenue s exchequer. According to Shri Pandey, to meet with such situations, the Central Government introduced the concept of blocking of input tax credit by way of Rule 86A of the CGST Rules, 2017. In other words, according to Shri Pandey, the object behind the introduction of Rule 86A of the Rules is to curb such fraudulent activities. The supplier of the petitioner company has neither done business from any of his declared place of business nor books of account have been kept at any declared place of business. Therefore, there is sufficient ground to believe that no goods have actually been received by the petitioner company from its supplier M/s Jai Balaji Trading Company Barabanki and only invoices have been received. As per provisions contained in Section 16 (2) (b) the petitioner is not eligible to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed under rule 36- i. issued by a registered person who has been found non- existent or not to be conducting any business from any place for which registration has been obtained; or ii. without receipt of goods or services or both; or b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been paid to the Government; or c) the registered person availing the credit of input tax has been found nonexistent or not to be conducting any business from any place for which registration has been obtained; or d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36, may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under section 49 or for claim of any refund of any unutilised amount. (2) The Commissioner, or the officer authorised by him under sub-rule (1) may, upon being satisfied that conditions for disallowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the powers under sub-section (1): Provided that the Revisional Authority may pass an order under sub-section (1) on any point which has not been raised and decided in an appeal referred to in clause (a) of sub-section (2), before the expiry of a period of one year from the date of the order in such appeal or before the expiry of a period of three years referred to in clause (b) of that sub-section, whichever is later. 33. Rule 86A undoubtedly could be said to have conferred drastic powers upon the proper officers if they have reason to believe that the activities or invoices are suspicious. The Rule 86A is based on reason to believe . Reason to believe must have a rational connection with or relevant bearing on the formation of the belief. It is a subjective term and can be interpreted differently by different individuals. The Constitutional validity of Rule 86A of the Rules is not under challenge in the present case and the Court does not intend to test its validity in the absence of any specific challenge to the same. In such circumstances, the Court would confine its adjudication in the present litigation only to the question, whether the respondents could be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 108 of the SGST Act can be exercised by the revisional authority on his own motion and upon information received by him or on request of Commissioner of Central Tax, if he considers that any decision or order passed by any officer subordinate to him is erroneous insofar as it is prejudicial to the interest of revenue and illegal or improper or has not taken into account any material facts, he may stay the operation of such decision or order and after giving the person concerned an opportunity of being heard, pass such order, as he thinks just and proper including enhancing or modifying or annulling the decision or order. In the present matter, admittedly the respondent no.3 has neither served any notice nor granted opportunity of hearing to the petitioner before passing the impugned order. 36. The pre-conditions to the exercise of this powers were two folds, namely, error in the order passed by an officer subordinate to the revisional authority and prejudicial to the interest of revenue. Once these two conditions stood fulfilled, the revisional authority was authorized to give an opportunity to the assessee of being heard and after making such inquiry as he thought fit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus, a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the rule cannot be applied to the goods manufactured prior to 16.3.1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. 38. As significant reliance has been placed on Eicher Motors Ltd. (supra), the Court may also look into the decision of the Supreme Court in the case of C.C.E vs. Dai Ichi Karkaria Ltd. 1999 (112) ELT 353 (SC) . In the said case, the manufacturers purchased raw material and used the same in the manufacture of an intermediate product and, in turn, used the intermediate product in the manufacture of the final product. The raw material and the intermedia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the respondents submitted that there is no such requirement that a specific order should be passed assigning, prima facie, reasons to block the input tax credit and communicate the same to the person concerned. Shri Pandey would submit that ordinarily, the reasons are found in the form of notings in the original file, on the basis of which, the Court may be in a position to ascertain the genuineness of the belief formed by the authority. The formation of the opinion by the authority undoubtedly should reflect intense application of mind with reference to the materials available on record that it had become necessary to order blocking of the input tax credit pending the inquiry. (See Bhikhubhai Vithlabhai Patel Ors. vs. State of Gujarat AIR 2008 SCC 1771 ). 41. On 12.5.2021, learned counsel appearing for the respondents was asked to get instructions on certain aspects. For ready reference, order passed by this Court on 12.5.2021 is reproduced below: Mr. Nimai Das, learned Additional Chief Standing Counsel is granted a week's time to seek instruction in the matter. It is argued by Mr. Navin Sinha, learned Senior Advocate assisted by Mr. Nishant Mishra, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL. Also, no relevant documentary evidences like agreement between ISRPL and M/S Jai Balaji Trading Company, terms of appointment, terms of payment/ commission, etc. were provided by you in support of the above. (k) There are no justifiable reasons/relevant documentary evidences provided by you for the following: Funds received from NEFM by ISRPL, whereas delivery of Mentha Oil taken by ISRPL on the exchange were transferred off-market to retain related entities without any corresponding settlement of funds with these entities. Invoices of purchase by NEFM from ISRPL were without GST. No documentary evidence including agreement between ISRPL and M/S Jai Balaji Trading Company i.e. ( C F agent), terms of appointment, terms of payment/ commission, actual payment/ commission to M/S Jai Balaji Trading Company, etc. 11- In addition to the above, it is observed from the submission advanced by the notices, that except for NEFM none of the other Notices was registered with any mandi for Mentha Oil and majority of them have appointed Jai Balaji Trading Company as their C F Agent for offmarket/ physical market transactions in the Mentha Oil. Incidentally, the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entha Oil futures were being taken by a new set of entities who were also found to be funded directly or indirectly through proxy entities by NEFM. Another instance of inconsistency is noticed in the submission of Group 'A' entities who have claimed-that they were only providing handling and transportation services to NEFM whereas in reality, the stock of Mentha Oil in exchange approved warehouses were held in their names as owners, hence the claim made by them about providing only handling and transportation services does not conform to their actual transactions. In accordance with the provisions of Section 108(1), the Revisional Authority may (i) on his own motion, or (ii) upon information received by him, or (iii) on request from the Commissioner of Central/ State Tax, or (iv) in consequence of an observation by the Comptroller and Auditor General of India call for and examine the record of any proceedings and if he considers that any decision or order passed by any officer subordinate to him is erroneous in so far as it is prejudicial to the interest of revenue and is (i) illegal or (ii) improper or (iii) has not taken into account cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concept of natural justice and the principles governing its application. 47. Rules of natural justice are not embodied rules. The phrase natural justice is also not capable of a precise definition. The underlying principle of natural justice, evolved under the common law, is to check arbitrary exercise of power by the State or its functionaries. Therefore, the principle implies a duty to act fairly, i.e. fair play in action. As observed by this Court in A.K. Kraipak Ors. Vs. Union of India Ors . AIR 1970 SC. 150 , the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. They do not supplant the law but supplement it. (Also see: Income Tax Officer Ors. Vs. M/s Madnani Engineering Works Ltd., Calcutta (1979) 2 SCC 455 ). 48. In Swadeshi Cotton Mills Vs. Union of India AIR 1981 SC 818 , R.S. Sarkaria, J., speaking for the majority in a three-Judge Bench, lucidly explained the meaning and scope of the concept of natural justice . Referring to several decisions, his Lordship observed as under:- Rules of natural justice a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequences, has to be made consistently with the rules of natural justice. Since then the concept of natural justice has made great strides and is invariably read into administrative actions involving civil consequences, unless the statute, conferring power, excludes its application by express language. 50. In Canara Bank Vs. V.K. Awasthy AIR 2005 SC 2090 , the concept, scope, history of development and significance of principles of natural justice have been discussed in extenso, with reference to earlier cases on the subject. The principles of natural justice are those rules which have been laid down by the Courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial, quasi- judicial and administrative authority while making an order affecting those rights. Concept of natural justice has undergone a great deal of change in recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be implied from the nature of the duty to be performed under a statute. What particular rule of natural justice should be implied and what its context ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of being heard as to why that action should not be taken. The hearing may be given individually or collectively, depending upon the facts of each situation. A departure from this fundamental rule of natural justice may be presumed to have been intended by the Legislature only in circumstances which warrant it. Such circumstances must be shown to exist, when so required, the burden being upon those who affirm their existence. 53. In C.B. Gautam Vs. Union of India Ors . (1993) 1 SCC 78 a question arose whether in the absence of a provision for giving the concerned parties an opportunity of being heard before an order is passed under the provisions of Section 269 UD of the Act, for purchase by the Central Government of an immovable property agreed to be sold on an agreement to sell, an opportunity of being heard before such an order could be passed should be given or not. Relying on the decision of this Court in Union of India Vs. Col. J.N. Sinha [1971] 1 SCR 791 and Olga Tellis (supra) it was held that: Although Chapter XX-C does not contain any express provision for the affected parties being given an opportunity to be heard before an order for purchase is made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector and the Government of India disposed of the proceedings before them. It is incontrovertible that the proceedings before the Assistant Collector arising from the notices demanding differential duty were quasi judicial proceedings and so also were the proceedings in revision before the Collector and the Government of India. Indeed, this was not disputed by the learned counsel appearing on behalf of the respondents. It is now settled law that where an authority makes an order in exercise of a quasi-judicial function it must record its reasons in support of the order it makes. Every quasi-judicial order must be supported by reasons. That has been laid down by a long line of decisions of this Court ending with N. M. Desai v. The Testeels Ltd. Anr. (') But, unfortunately, the Assistant Collector did not choose to give any reasons in support of the order made by him con firming the demand for differential duty. This was in plain disregard of the requirement of law. The Collector in revision did give some sort of reason but it was hardly satisfactory. He did not deal in his order with the arguments advanced by the appellants in their representation dated 8th December, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court in N. Ranga Rao sons vs. State of Karnataka and others (2007) 9 SCC 691 considered the question of exercising revisional power under Section 15 of Karnataka Tax on Entry of Goods Act, 1979 (Act 1979) for determining limitation and held that the initiation of proceedings would take place, when the revisional authority suo motu calls for the records and examines the same, as per Section 15 (4) of Act 1979, which prescribes limitation for initiation of revisional proceedings, whereas Section 15B prescribes limitation for completion thereof. Hence, where the revisional authority called for the records of the case from the first appellate authority within limitation period, the revisional jurisdiction stood exercised within limitation irrespective of the fact that notice to the assessee to show cause against the proposed setting aside of the order of the first appellate authority was issued on a later date. Relevant portion of the judgment is quoted hereinafter:- 5. To complete the chronology of events, it may be noted that the order of the First Appellate Authority was dated 28.3.1992, the order calling for the records by the Additional Commissioner was around 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinbelow Section 15 and Section 15-B. 15. Revisional Powers of Commissioner, Additional Commissioner, Joint Commissioner and Deputy Commissioner: (1) The Commissioner may on his own motion call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by any officer subordinate to him is erroneous in so far as it is prejudicial to the interests of the revenue, he may, if necessary, stay the operation of such order for such period as he deems fit and after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary pass such orders thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment or directing a fresh assessment. (2) The Additional Commissioner may on his own motion call for and examine the record of any proceedings under the Act, and if he considers that any order passed therein by a Joint Commissioner, or an appellate authority of the rank of a Deputy Commissioner is erroneous in so far as it is prejudicial to the interests of revenue, he may, if necessary, stay the operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er could suo motu call for and examine the records of any proceedings under this Act if he considered that any order passed therein by any officer subordinate to him was erroneous so as to be prejudicial to the interest of the revenue, he was empowered to stay the operation of such order for such period as he deemed fit and after giving the assessee an opportunity of being heard and after making such inquiry, as he thought fit, could pass such orders as the circumstances of the case would justify, including the order enhancing or modifying the assessment or even cancelling the assessment or even direct a fresh assessment. 8. The pre-conditions to the exercise of this suo motu powers were two fold, namely, error in the order passed by an officer subordinate to the revisional authority and prejudice to the interest of revenue. Once these two conditions stood fulfilled, the revisional authority was authorized to give an opportunity to the assessee of being heard and after making such inquiry as he thought fit he could pass appropriate orders as the circumstances of the case would justify. This power was essentially a supervisory power. However, in order to ascertain whether the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in Section 15, where any proceeding is initiated under Section 6 or where any records have been called for under Section 15, the authority shall pass orders within a period of three years from the date of calling for the records. The proviso clarified that in respect of proceedings in which records have been called for before the date of commencement of the Karnataka Taxation Laws (Amendment) Act, 1997 (with effect from 1.4.1997) the revisional authority shall dispose of the proceedings within a period of four years from such commencement. This proviso indicates that proceedings in which records have been called for even in cases falling before 1.4.1997 had to be disposed of within four years from the date of commencement of the (Amendment) Act, 1997. 11. In our view, Section 15-B indicated the dichotomy between initiation of proceedings and completion of proceedings. The legislative intent was clear. It demarcated two aspects, namely, commencement of proceedings and completion of proceedings (outer limit). Section 15(4) prescribed limitation for commencement of proceedings whereas Section 15-B prescribed limitation for completion of the proceedings. We are required to kee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds on the basis of which the revisional jurisdiction is sought to be exercised. Contrarily, the notice dated 7.5.2021 was in fact issued without any ground on the basis of which it could be said that there was no material or record available before the respondent no.3 for exercising jurisdiction under Section 108. In the RTI reply dated 28.7.2021 issued by the Deputy Commissioner (Administration) and Public Information Officer, Commercial Tax, Moradabad, which is appended as Annexure SA-1 to the affidavit, it has been informed that the records of the Appellate Authority in Appeal No.95/2020 (2018-19) were neither called for by the office of respondent no.3 nor the same were ever dispatched by the office of the Appellate Authority to the office of the respondent no.3. As such, the respondent no.3 has assumed the jurisdiction under Section 108 without calling for and examining the record of the aforesaid Appeal filed by the petitioner company. The respondent no.3 has assumed the jurisdiction under Section 108 merely on the basis of letter sent by the respondent no.4. The powers, as conferred under Rule 86A, could not have been exercised merely on the ground that an inquiry h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd option is approved, accordingly stay order may be prepared. This may not be intention of the legislature while incorporating the said feature. Once the supervisory power is being exercised in absence of relevant record merely on the basis of certain noting, which is forwarded to the revisional authority for exercising the powers it is sheer misuse of the power. The said practice cannot be accepted by this Court. 61. After considering the record, the Court is of the considered opinion that while exercising the revisional power the authority has given go-bye to the procedure, that too without application of independent mind. The intent of the legislature to accord such power under the revision with a rider is to ensure that there may not be errors in the order passed by the officer subordinate to the revisional authority and the order may not be prejudicial to the interest of revenue. On the above parameters there is hardly any scope for taking another view. Admittedly, the order impugned has been passed in absence of record and the revenue authority has proceeded to endorse on the dotted line, which has been submitted by the subordinate officer. Even though, the appellate orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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