9911796707
TMI Blog2021 (9) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 erstwhile Companies Act, 1956 having its unit at Shaktinagar, Chandausi, District Sambhal, U.P.. It is a subsidiary company of M/s Sohanlal Commodity Management Pvt. Ltd ('SCMPL') dealing in the business of procuring commodities on behalf of its customers on Pan India basis, storing such commodities in the warehouses owned and operated by SCMPL and thereafter supplying such commodities to different persons on the instructions of the customers. The SCMPL is primarily engaged in providing warehousing services for which it is registered under the provisions of the Warehouse (Development and Regulation) Act, 2007. On account of multiplicity of operations, the petitioner company maintains its books of account electronically in a centralized system prescribed under Rule 10 of the erstwhile Central Excise Rules, 2002 and Section 35 of the GST Act read with Rules 56 & 57 of the Central Goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 received the goods or services or both. Section 17 of SGST Act provides for apportionment of credit and blocked credits. Sub-sections (1), (2), (3) & (4) provide for restricted credit, whereas sub-section (5) provides for circumstances in which credit is not admissible. Sub-section (6) confers powers on Government to prescribe the manner in which credits referred to in sub-section (1) and (2) may be attributed. Section 49 provides that every deposit made towards tax, interest, penalty, fee etc. shall be credited to the electronic cash ledger, whereas input tax credit as self-assessed in the return of registered person shall be credited to his electronic credit ledger. Section 49 also provides that the amount available in the electronic cash ledger may be used for making any payment towards output tax in such manner and subject to such conditions and within such time, as may be prescribed. 7. Section 164 confers power on the St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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. Upon receipt of Mentha oil at warehouses of SCMPL, three samples are drawn for testing quality/properties of Mentha oil. After receipt of test reports, Mentha oil is warehoused, after making appropriate entry in stock register maintained at warehouses. The Mentha oil are not brought to the branches of petitioner situated within the State of U.P. The petitioner company maintains books of accounts electronically online and details of goods purchased and sold by the petitioner are also available at the warehouses operated by SCMPL. 10. During the period of 2018-19 the petitioner purchased Mentha oil from different suppliers including M/s Jai Balaji Trading Company. The purchases made from M/s Jai Balaji Trading Company during the period 2018-19 were to the tune of Rs. 20188.39 lacs (inclusive of SGST & CGST). The Mentha oil so purchased was later on sold by the petitioner to different purchasers. The petitioner disclosed the input ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 disclosure the same stock was seized on 28.2.2020. The petitioner through its authorized representative appeared on every occasion, whenever he was summoned either at Moradabad or at Ayodhya. The search was conducted on 13.9.2019 at all the places and the petitioner submitted its detailed explanation on 21.9.2019. On 04.12.2019 the entire details relating to outward supplies of Mentha oil made by the petitioner including the ledger account, e-way bills, 9R Forms, gate passes, invoices, bank transactions, were made available to the officers of State tax and after submission of these details, out of 1397 drums of Mentha oil detained from the Barabanki warehouse, 1236 drums relating to other parties, were released by the officers of State tax. The summons dated 09.12.2019 under Section 70 of the SGST Act were issued to the officers of the petitioner company requiring their attendance for the purposes of furnishing various documents mentioned in the summon. Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 said provision. In our opinion, therefore, the orders passed by the High Court which are contrary to the stated provisions shall not be given effect to by the authorities. Instead, the authorities shall process the claims of the concerned assessee afresh as per the express stipulations in Section 67 of the Act read with the relevant rules in that regard. In terms of this order, the competent authority shall call upon every assessee to complete the formality strictly as per the requirements of the stated provisions disregarding the order passed by the High Court in his case, if the same deviates from the statutory compliances. That be done within four weeks without any exception. We reiterate that any order passed by the High Court which is contrary to the stated provisions need not be given effect to in respect of all the cases referred in the affidavit by the State Government before this Court and fresh cases which may have been filed or likely to be filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from the date of receipt of the said application." 14. The petitioner company was contesting with the respondents in respect of the drums seized from the warehouses of SCMPL by email dated 23.7.2020 sent by Goods and Services Tax network. For the first time, it was transpired to the petitioner through e-mail communication dated 23.7.2020 that the input tax credit available in the electronic credit ledger of the petitioner has been blocked and upon further enquiry, copy of the decision taken by the respondent no.5 was provided to the petitioner on 06.8.2020 informing that input tax credit of Rs. 47,40,767/- under the CGST Act and Rs. 47,40,767/- under the SGST Act (cumulative Rs. 95,11,774/-) was blocked under Rule 86-A of the SGST Rules. 15. Aggrieved with the said decision/order dated 06.8.2020 the petitioner preferred statutory appeal before the Additional Commissioner, Grade-2 (Appeal)-I, State Tax, Moradabad/Appellate Authority and the same was registered as Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued 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 respondent no.5 has passed a non-speaking and nonreasoned order; (x) There is no requirement under the SGST Act that purchased goods must necessarily be first brought to the business premises and thereafter transported to the warehouse. Such practice is time saving, commercially expedient as warehouse has sophisticated infrastructure to store mentha oil, saves money and quality of mentha oil. (xi) Adverse inference cannot be drawn if the business premises is found closed during inspection and the registered person cannot be treated as bogus on the said ground." 16. The Appellate Authority, on the basis of aforesaid reasoning/findings, decided the appeal with the findings that before blocking the credit, there was no 'reason to believe' with respondent no.5 that the credit available in the ledger was fraudulently availed or was ineligible. The appeal was allowed and the directions were issued for unblocking of credit of Rs. 47,71,007/- of SGST & CGST. However, the order was rectified under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpired 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 order has been passed in exercise of the powers under sub-section (1). The proviso carves out an exception and provides that the revisional authority may pass an order 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 period of one year from the date of order in such appeal or before the expiry of period of three years, whichever is later. 18. Shri Sinha would argue that once the word 'order' used in clause (a) refers to 'adjudication order' then such order can be passed by 'Adjudicating Authority'. Thus, the order passed in appeal by the Appellate Authority is not an 'Adjudication Order' and consequently, the same cannot be revised, in view of specific bar under clause (a) of sub-section (2) of Section 108 of SGST Act. It is submitted that under sub-sections (3) and (4) of Section 112 of SGST Act, the Commissioner may call for and examine the record of any appellate authority and may direct any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 exercise of powers under Section 108 by the respondent no.3 is wholly without jurisdiction. The defect in the said order while invoking revisional powers under Section 108 cannot be cured at a later stage, inasmuch as Section 108 can be invoked only if the circumstances specified in Section 108 exist and once it is invoked, the respondent no.3 is free to pass such order as he thinks just and proper and thus the impugned order suffers from inherent lack of jurisdiction. 20. Shri Sinha further pointed out that every loss of the revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of revenue. An order can be erroneous only when it is based on incorrect assumption of facts and incorrect assumption of law or without applying principles of natural justice or without applying mind. In the present case the Appellate Authority has concluded that there were no reasons to believe with respondent no.5 that credit was fraudulently availed or ineligible. This conclusion is based on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents 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.); Sun Beam Auto Limited (2009) TOIL-552-HC-Del-IT , CIT v. Ratlam Coal Ash Co. 171 ITR 141 (MP), CIT v. Ganpat Ram Bishnoi 152 Taxman (2008) 296 ITR 0292, CIT v. Mehrotra Brothers 270 ITR 157 (MP) and CIT v. Associated Food Products (P) Ltd. 280 ITR 377 (MP). 22. He further submitted that the respondent no.3 has neither served any notice nor granted opportunity of hearing to the petitioner before passing the order impugned. Rule 86A could not have been invoked by the respondents during the investigation or inquiry. Rule 86A has prescribed a mandatory procedure to be followed for the purpose of invoking the same. The Rule provides for "reasons to be recorded in writing" for blocking or not allowing the utilization of the ITC. It is argued that the procedure, as prescribed under Rule 86A of the rules, requires two conditions to be satisfied; namely, recording of the reasons in writing by the officer ordering blocking of the ITC and secondly, communication of such reasons to the affected person. It is argued that the bare minimal requirement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question. 25. Shri Pandey argued that ITC has been used by showing the purchase of about Rs. 250 crores from non-existent firm M/s Jai Balaji Trading Company, whereas, it is clear from the money trail of the bank statement that only Rs. 5 crore has been paid against it. In this way, ITC has been obtained through bogus invoices. On analysis of bank account it was also found that the petitioner company paid a fixed amount of Rs. 22,500/- per month to the proprietor of M/s Jai Balaji Trading Company, Barabanki. From the money trail of the petitioner's bank statement it was revealed that huge money has been transacted with some suspicious names/firms but on perusal of returns, no purchase/sale was declared from these dealers and most of these firms have been paid a fixed amount every month. The fixed monthly payment to the aforesaid persons makes it clear that these persons are employees of the firm and are on the payrolls, in whose names the trading is done indirectly through MCX online. Moreover, it was also found that Mentha oil was bought and sold by these employees and some other proxy firms indirectly through funding on MCX. The billing to a non-existent firm opened in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Goods and Services Tax Act in such manner and subject to such conditions and within such time, as may be prescribed. Section 16 of the Act determines the eligibility and conditions for claiming input credit and empowers the Government to impose conditions and restrictions through rules. Section 16 (2) of the Act prescribes the entitlement of input credit. It is clear from Section 16 (2) (b) of the Act that there is no entitlement of input credit without receipt of goods or services. In view of the increasing cases of loss to the exchequer through bogus ITC claims on the basis of bogus forms, it was recommended by the GST Council to bring Rule 86A of GST Rules. There is no provision in Rule 86-A to provide an opportunity of being heard before blocking the credit. The restrictions prescribed by Rule-86A are for a limited period and are not in any way contrary to Section 73/74 or any other provisions of the Act. In fact, the ban was imposed for a limited period under Rule 86A. With regard to credit, proceedings are done naturally in due course and there is a legal arrangement to provide proper opportunity of being heard to the registered person concerned at the time of proceeding u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 16 (2) (b) the petitioner is not eligible to claim input credit on the basis of the invoices received by the petitioner company. The action in respect of bogus invoices received before implementation of Rule 86A is completely in accordance with the law. The notice has been issued to the petitioner company on 07.5.2021 to appear in the office of Commissioner, Commercial Tax, U.P. on 02.6.2021 for hearing. The order passed by the Appellate Authority under Section 108 of UPGST Act is in consonance with the order of the revisional authority passed by the Appellate Tribunal under Section 113 and the order passed by the High court under Section 117 as well as the order of Hon'ble Apex Court under Section 118. The stay order has been passed by the revisional authority under Section 108 (1) of UPGST. 29. In such circumstances, referred to above, Shri Pandey prays that the present writ petition does not merit any consideration and the same be dismissed. 30. Having heard the learned counsel appearing for the parties and having gone through the materials available on record, the question that falls for consideration is whether pending inquiry or investigation into the allegatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied that conditions for disallowing debit of electronic credit ledger as above, no longer exist, allow such debit. (3) Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction.". 32. Having referred to Rule 86A above, the Court may now look into Sections 16 and 108 (1) and (2) of the CGST Act. The same read thus; "Section 16 - Eligibility and conditions for taking input tax credit (1) 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. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,-- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub- section (1) of said section for the month of March, 2019. Section 108 - Powers of Revisional Authority - (1) Subject to the provisions of section 121 and any rules made thereunder, the Revisional Authority may, on his own motion, or upon information received by him or on request from the Commissioner of central tax, call for and examine the record of any proceedings, and if he considers that any decision or order passed under this Act or under the central Goods and Services Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be said to be justified in invoking Rule 86A of the Rules for the purpose of blocking the input tax credit of the petitioner company pending the inquiry as regards the fraudulent transactions. 34. The Rule 86A is in respect of the power and procedure for blocking the input tax credit (ITC) in the electronic credit ledger of a registered person. A bare reading of Section 86A indicates that the Commissioner or an officer authorised by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it 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 officer subordinate to him had passed an erroneous order, which was also prejudicial to revenue, the Commissioner was required to call for and examine the record of such proceedings. Therefore, the revisional authority had to call for the records, he had to examine such records, he had to be satisfied regarding fulfilment of the above two conditions and thereafter give opportunity to the assessee of being heard and on making appropriate inquiry the revisional authority is empowered to pass appropriate orders. 37. In Eicher Motors Ltd. vs. Union of India 1999 (106) ELT 3 (SC ), the validity and application of the scheme as modified by introduction to Rule 57F (read as 57F (4-A) of the Central Excise Rules, 1944 under which the credit which was lying unutilised on 16th March, 1995 with the manufacturers, stood lapsed in the manner set out therein, was questioned. Paras 4 and 5 of the judgment are quoted hereinafter:- "4.......As pointed out by us that when on the strength of the rules available certain acts h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were liable to excise duty and they were specified goods for the purposes of the Modvat Scheme. The assessable value of the intermediate product for the purposes of excise duty in the instant case was admittedly to be determined on the basis of its cost which necessitated the taking into account of the cost of the raw material. The Revenue contended that the excise duty paid by the seller on the raw material was also to be included in the cost of the excisable goods (the intermediate product) in this case. On the other hand, the manufacturers contended otherwise. The Supreme Court rejected the contentions of the Revenue and held in Paras-18 and 19 as under; "18. It is clear from these rules, as we read them, that a manufacturer obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable product immediately it makes the requisite declaration and obtains an acknowledgment thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. There is no provisions in the rules which provides for a reversal of the credit by the Excise Authorities except where it has been illegally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that operation of the appellate order, by which the Adjudicating Authority's order locking the Input Tax Credit had been reversed, has now been stayed. The submission is that the Revisional Authority has passed the order impugned without application of mind, merely paraphrasing the words of the statute with no reference to the facts of the case, or other material on record to reach his conclusion in favour of passing an interim order of stay. The State shall clarify in its instruction the aforesaid fallacy urged on behalf of the petitioner. Lay this matter as fresh again on 20.05.2021 before the appropriate Bench." 42. Thereafter, the matter was taken up on 20.5.2021 and on the said date, the Court had proceeded to pass following order:- "In response to the aforesaid order, Shri Nimai Das, learned Addl. Chief Standing Counsel assisted by Shri Devesh Vikram, learned Standing Counsel, on the basis of instructions, has informed the Court that 2.6.2021 is the next date fixed in the revision in question for final disposal of the matter. Put up this matter as fresh." 43. Again the matter was taken up on 16.7.2021 and learned Additional Chief Standing Counsel was directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p 'A' entity in the interim order. The above facts submitted by the Notices raises further suspicion that the trades executed by these entities through the said C&F agent appears to have been executed at the behest of or under instructions from NEFM. While perusing the submissions of NEFM and of other Notices, I notice certain glaring inconsistencies in the stands taken by them which need to be highlighted here. AS an illustration, I note that NEFM has initially in its reply had admitted that it had procured stock of Mentha Oil from 5 entities viz. Invictus, Gaurav Gupta, Saurabh Kumar Vaish, Vimuk and Yash Gupta. However, in its written submission filed before me after the personal hearing, is has stated that Mentha Oil was procured by it from Invictus, Gaurav Gupta and Yash Gupta and thereby has preferred to remain silent about its transactions with Saurabh Kumr Vaish and Vimuk. Further, NEFM has claimed that is was not aware about the trading activities of entities of Group 'A' and Group 'B' especially with respect to their holding of Mentha Oil stock and trading in Mentha Oil futures, which have been highlighted in detail in interim order. However, on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or not he may, if necessary, stay the operation of such decision or order for such period as he deems fir and pass and order (i) enhancing or (ii) modifying or (iii) annulling the said decision or order. 2. However, the power of the Revisional Authority as above is subject to the restrictions imposed in terms of sub-section (1) and (2) of Section 108 which is summarized in the following table: Power of a Revisional Authority upon conjoint reading of Section 107(12), 107 (16), 108(1) & 108(2)- Sl. No. Order passed by Action on order Whether Revision is permissible 1 2. 3 4 A Proper Officer Or An Appellate Authority * Order appealed against * Six months from the date of communication of the order has not expired. * three years after the date of passing of order sought to be revised has expired. * Order already taken for revision at an earlier stage or revision order has been passed. * Order is non-appealable u/s 121 No NO NO No 5 A Proper Officer or An Appellate Authority * Following four conditions are required to be satisfied (i) Order is not appealed against (ii) Three years after the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This rule cannot be sacrificed at the altar of administrative convenience or celerity. The general principle as distinguished from an absolute rule of uniform application seems to be that where a statute does not, in terms, exclude this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing, shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short, this rule of fair play must not be jettisoned save in very exceptional circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces' encompasses infraction of not merely property or personal rights but of civil 'liberties, material deprivations, and non-pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life. 51. In Mohinder Singh Gill & Anr. Vs. The Chief Election Commissioner, New Delhi & Ors. (1978) 1 SCC 405, the Apex Court held that 'Civil Consequences' undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and nonpecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence. 52. The question in regard to the requirement of opportunity of being heard in a particular case, even in the absence of provision for such hearing, has been considered by this Court on a number of occasions. In Olga Tellis & Ors. Vs. Bombay Municipal Corporation & Ors. [1985] 2 Supp SCR 51 while dealing with the provisions of Section 314 of the Bombay Municipal Corporation Act, 1888, which confers discretion on the Commissioner to get any encroachment removed with or without notice, a Constitution Bench of Apex Court observed as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere anything in the language of Chapter XX-C which could lead to such an implication. The observance of principles of natural justice is the pragmatic requirement of fair play in action. In our view, therefore, the requirement of an opportunity to show cause being given before an order for purchase by the Central Government is made by an appropriate authority under Section 269-UD must be read into the provisions of Chapter XX-C. There is nothing in the language of Section 269- UD or any other provision in the said Chapter which would negate such an opportunity being given. Moreover, if such a requirement were not read into the provisions of the said Chapter, they would be seriously open to challenge on the ground of violations of the provisions of Article 14 on the ground of non-compliance with principles of natural justice. The provision that when an order for purchase is made under Section 269- UD-reasons must be recorded in writing is no substitute for a provision requiring a reasonable opportunity of being heard before such an order is made." 54. In Sahara India (Firm) (1) v. CIT 2008) 14 SCC 151 the Apex Court held that unless a statutory provision either specifically or by n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by administrative authorities and tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative law, they may have to be so replaced, it is essential that administrative authorities and tribunals should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them. Then alone administrative authorities and tribunals exercising quasijudicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. The Government of India also failed to give any reasons in support or its order rejecting the revision application. But we may presume that in rejecting the revision application, it adopted the same reason which prevailed with the Collector. The reason gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 16.3.1996 did not amount to exercise of power within the meaning of Section 15(4) of the said 1979 Act and if that be the case then, according to the assessee, issuance of the show cause notice on 20.5.1996 was beyond the prescribed period of 4 years from the date of the order passed by the First Appellate Authority on 28.3.1992. According to the assessee, in the present case, the Additional Commissioner had initiated proceedings by way of show cause notice on 20.5.1996. According to the assessee, proceedings under Section 15(1) could only be initiated by issuance of a show cause notice. According to the assessee, a mere consideration by the Additional Commissioner in his Chamber on 16.3.1996 regarding error in the order of the First Appellate Authority and the loss to the revenue cannot constitute initiation of proceedings under Section 15(1) and nor did it constitute exercise of power within the meaning of Section 15(4) of the said 1979 Act. Consequently, according to the assessee, the revisional proceedings (suo motu) were time barred. 6. The Karnataka Tax on Entry of Goods Act, 1979 was enacted to provide for the levy of tax on the entry of goods into local areas for consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding under this Act, and if he considers that any order passed therein by any officer who is not above the rank of Deputy Commissioner is erroneous in so far as it is prejudicial to the interests of revenue, he may, 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 order 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. (4) The power under sub-sections (1) to (3) shall be exercisable only within a period of four years from the date of the order sought to be revised was passed. Explanation: In computing the period of limitation for the purpose of sub- section (4) any period during which any proceeding under this section is stayed by an order or injunction of any Court shall be excluded. xxx 15-B. Limitation in regard to passing orders in respect of certain proceedings: (1) Notwithstanding anything contained in Sections 6 and 15, where any proceeding is initiated under Section 6 or any records have been called for under Section 15, the authority referred to in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing appropriate inquiry the revisional authority was empowered to pass appropriate orders. 9. It is important to note that under Section 15(1) there was no provision for giving a show cause notice as in the case of some other similar enactments. However, the power under sub-sections (1), (2) and (3) of Section 15 was exercisable only within four years from the date of the order sought to be revised. Under Section 15(4), therefore, a period of limitation was prescribed. The revisional authority had to exercise its powers only within four years from the date when the order sought to be revised was passed. Therefore, under Section 15(1) read with Section 15(4), there was no provision for issuance of a show cause notice. The reason is obvious. Section 15(4) required the revisional authority to exercise its powers within four years from the date of passing of the order sought to be revised. The concept of exercising the power is important, particularly in the absence of any provision for issuance of a show cause notice. When the revisional authority suo motu calls for the records for examination and when he examines that records, the exercise of power under Section 15(4) of the Act ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax appeal against the order of the Revisional Authority was pending decision vide Tax Appeal No. E.T. 22/96. Moreover, the law of limitation is generally procedural, hence, in our view, Section 15-B was retrospective. For the above reasons, we find no infirmity in the impugned judgment of the High Court. 13. Before concluding, we may state that, as discussed above, the Karnataka Tax on Entry of Goods Act, 1979 prescribed limitation for initiation of proceedings, it also prescribed limitation for completion of proceedings unlike some other Acts under which the limitation prescribed was only in respect of completion of proceedings. We do not wish to comment about those provisions/enactments. Our present judgment is confined strictly to the 1979 Act herein. 14. For the aforestated reasons, we find no infirmity in the impugned judgment of the Karnataka High Court and accordingly the civil appeal filed by the assessee stands dismissed with no order as to costs. As regards the merits of the case, we express no opinion as the same have not been argued before us." (emphasis supplied) 57. Considering the aforementioned dictum, the Court has occasion to peruse the supplementary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the finalization of proceeding of revision, the appellate order may be stayed. In para-7 of the said communication, it has also been averred that till date at the headquarter level the revisional power has not been exercised. After deliberation with the superior officials, the Additional Commissioner, Commercial Tax, U.P., has submitted categorical comment in para-5 (ii) of the endorsement dated 24.3.2021 to the Commissioner, Commercial Tax, U.P. that the second option is reasonable and in case the same is approved, accordingly leave may be accorded so that the proposal of stay order may be placed. Consequently, after an endorsement by the Commissioner, Commercial Tax, U.P. dated 24.3.2021, the stay order was passed on 26.3.2021. The entire relevant noting, as averred above, clearly reflects to the Court that even though the revisional authority has exercised under-mentioned provision but there was no independent application of mind. 59. The preconditions for the exercise of powers are basically two folds, 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, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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