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TMI Blog2025 (5) TMI 1533X X X X Extracts X X X X X X X X Extracts X X X X ..... d 26.05.2023 (Annexure-2) of the Assistant Commissioner of Central Tax, GST & Central Excise Commissionerate, Rourkela-I Division-opposite party No. 4 dropping the proceeding under Section 73 of the Finance Act, 1994, this writ petition has been filed craving to invoke extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India with the following prayer(s): "Therefore, in the facts and circumstances stated above, it is most humbly prayed that this Hon'ble Court may be pleased to; (i) issue appropriate writ, order or direction to set aside/quashed the order dated 24.02.2025 passed by opposite party No. 1 at Annexure-5 and restore the appeal to its Original Number; (ii) issue appropriate declaration to the effect that the impugned Order-in-Appeal dated 24.02.2025 is not sustainable as arises out of an invalidated Order-in-Original being the Order-in-Original barred by limitation under Section 73 (4B) of the Finance Act, 1994; (iii) issue appropriate declaration to the effect that the services provided by the petitioner qualifies to be 'export service' under Rule 6A of the Service Tax Rules, 1994 and exempt from levy of Service Tax; (iv) pass any order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of appeal petition was served on the petitioner. 2.4. Another notice dated 29.10.2024 fixing date of personal hearing on 12.11.2024. After service of copy of appeal petition on the petitioner this being the first date of deferred hearing, a petition for adjournment was moved, considering which the prayer was allowed. 2.5. Further notice dated 26.11.2024 fixing date of hearing via video conferencing mode on 02.12.2024 was served on 30.11.2024. On account of short notice, the advocate for the petitioner sought for accommodation on 02.12.2024. 2.6. The appeal stood disposed of by the Commissioner (Appeals), Bhubaneswar vide Order dated 24.02.2025, though no date of hearing in consideration of petition dated 30.11.2024 was given. 2.7. Aggrieved thereby, the petitioner has filed this instant writ petition. Hearing: 3. This matter came up before this Court under the heading "Fresh Admission". 3.1. Since issues of non-assignment reason and violation of principles of natural justice are involved, in absence of factual dispute, counsel for both the sides consented for disposal of the matter at this stage. 3.2. Accordingly, heard Sri Chittaranjan Das, learned Advocate appearing f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 02.12.2024. Since the counsel for the petitioner did not choose to appear before him, he had no other option but to proceed with the matter and dispose of the appeal in absence of petitioner/counsel representing it. 5.1. Since no response/explanation has been proffered by the petitioner with reference to grounds contained in the appeal petition, the Appellate Authority has allowed the appeal based on the material on record with reference to Review Order. Since the petitioner had the occasion to have the said document, it could not be contended that proper opportunity was not afforded to him for presenting the matter. Therefore, he fervently prayed for dismissal of the writ petition in view of availability of alternative remedy. Discussions and analysis: 6. Since principles of natural justice and assignment of reason are the issues raised by the petitioner, this Court notwithstanding availability of alternative remedy entertained this writ petition. In this respect a Division Bench of this Court in the case of Tribal Development Co-operative Corporation of Orissa Ltd. Vrs. Sales Tax Officer, (2003) 133 STC 620 (Ori) observed as follows: "Normally where alternative remedy is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified by the Commissioner of Central Excise in his order. (2) Every order under sub-section(1) shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority. (3) Where in pursuance of an order under sub-section (1), the adjudicating authority or any other officer authorised in this behalf makes an application to the Commissioner of Central Excise (Appeals) within a period of one month from the date of communication of the order under sub-section (1) to the adjudicating authority, such application shall be heard by the Commissioner of Central Excise (Appeals), as if such application were an appeal made against the decision or order of the adjudicating authority and the provisions of this Chapter regarding appeals shall apply to such application. Explanation.- For the removal of doubts, it is hereby declared that any order passed by an adjudicating officer subordinate to the Commissioner of Central Excise immediately before the commencement of clause (c) of Section 113 of the Finance (No.2) Act, 2009, shall continue to be dealt with by the Commissioner of Central Excise as if this section had not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory discretion may legitimately adopt general rules or principles or policy to guide itself as to the manner of exercising its own discretion in individual cases, provided that such rules or principles are legally relevant to the exercise of its powers, consistent with the purpose of the enabling legislation and not arbitrary or capricious. Nevertheless, it must not disable itself from exercising a genuine discretion in a particular case directly involving individual interests; hence it must be prepared to consider making an exception to the general rule if the circumstances of the case warrant special treatment. The amplitude of a discretionary power may be so wide that the competent authority may be impliedly entitled to adopt a fixed rule never to exercise its discretion in favour of a particular class of person; and such a power may be expressly conferred by statute. [See, Halsbury, Vol. I, 4th Edition, para 33, page 35]. 7.2. Discretion when applied to a Court of justice means sound discretion guided by law. It must be governed by rule, not by humour; it must not be arbitrary, vague and fanciful but legal and regular. 'Discretion' means when it is said that something is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bearing scheduled date of personal hearing on 02.12.2024, the petitioner had filed a petition dated 30.11.2024 seeking consideration of deferment of date of hearing as the counsel for the petitioner was otherwise preoccupied and with short notice it was difficult on his part to collect all the documents and present the matter on behalf of the petitioner. 7.6. It appears that petition dated 30.11.2024, was received in the Office of the Commissioner (Appeals), GST, Central Excise & Customs, Bhubaneswar, but nothing is emanating on perusal of the Appellate Order that the Appellate Authority has considered the same and rejected such prayer for deferment of date of hearing in order to proceed further to close the appeal for delivery of order. 7.7. Conjoint reading of sub-section (3) of Section 84 and sub-section (5) of Section 85 of the Finance Act, 1994 read with Section 35(1A) of the Central Excise Act, 1944, it is manifest that the Appellate Authority is empowered to consider the petition for adjournment of hearing on being satisfied with respect to sufficient cause at any stage of hearing of appeal. However, as proviso to sub-section (1A) of Section 35 of the Central Excise Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discretion to grant reasonable opportunity, this Court cannot countenance the Appellate Order, but to set it aside for disposal of appeal de novo after affording appropriate reasonable opportunity to the parties. 8. This Court is also called upon to consider another aspect other than audi alteram partem. Another facet of principles of natural justice is sought to be pressed into service is "right to reason". 8.1. The Appellate Order is bereft of reason. Non-speaking and terse order deserves to be interfered with by the writ Court. In absence of discussion on merit on consideration of each ground pressed in the appeal, the order in appeal is liable to be set aside. 8.2. After making mere statement that sufficient number of opportunities for appearing before the Appellate Authority being given, the petitioner did not submit its counter and in absence of response he proceeded to dispose of the appeal in the following manner: "*** 4. In such a scenario, I do not find any merit in keeping the appeals pending and I am of the view that the duty demanded, along with interest and penalties, in the Review Order is to be recovered from the Respondents. The quantum of the amounts to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In hearing the appeal and making order, the Appellate Authority is empowered to exercise the same powers and follow the same procedure as he exercises and follows in hearing the appeals and making orders under the Central Excise Act, 1944. Thus, the Appellate Authority is required to address each of the issue/ground set out in the appeal petition on merit of the matter, even in the absence of either of the parties. 8.7. In East Coast Railway Vrs. Mahadev Appa Rao, (2010) 7 SCR 908, the Hon'ble Supreme Court in very categorical terms has held that arbitrariness in making of an order by an authority can manifest itself in different forms. Every order passed by a public authority must disclose due and proper application of mind by the persons making the order. Application of mind is best demonstrated by disclosure of mind by the authority making the order and disclosure is best done by recording the reasons that led the authority to pass the order in question. Absence of reasons either in the order passed by the authority or in the record contemporaneously maintained is clearly suggestive of the order being arbitrary, hence, legally unsustainable. In the absence of reasons in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made; in other words, a speaking-out. The "inscrutable face of the sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance." 8.9. In Broom's Legal Maxims (1939 Edition, Page 97) there can be found a useful principle, Cessante Ratione Legis Cessat Ipsa Lex, that is to say, 'Reason is the soul of the law, and when the reason of any particular law ceases, so does the law itself'. 8.10. In Kranti Associates (P) Ltd. Vrs. Masood Ahmed Khan, (2010) 9 SCC 496 the legal position has been summarised as follows See also, Nareshbhai Bhagubhai Vrs. Union of India, (2019) 15 SCC 1.: "12. The necessity of giving reason by a body or authority in support of its decision came up for consideration before this Court in several cases. Initially this Court recognised a sort of demarcation between administrative orders and quasi-judicial orders but with the passage of time the distinction between the two got blurred and thinned out and virtually reached a vanishing point in the judgment of this Court in A.K. Kraipak Vrs. Union of India, (1969) 2 SCC 262. *** 47. Summarising the above discussion, this Court holds: (a) In India the judicial trend has always been to reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law Review 731-37). (n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija Vrs. Spain, (1994) 19 EHRR 553 EHRR, at 562 para 29 and Anya Vrs. University of Oxford, 2001 EWCA Civ 405 (CA), wherein the Court referred to Article 6 of the European Convention of Human Rights which requires, 'adequate and intelligent reasons must be given for judicial decisions'. (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of 'due process'." 8.11. In Abhiram Caretaking & Expert Services Vrs. Bharat Sanchar Nigam Limited, 2017 (II) ILR-CUT 1029 the importance of assigning reason in detail has been emphasized with the following observations Giving reasons facilitates the detection of errors of law by the Court. Santosh Kumar Paikray Vrs. State of Odisha, 2016 (II) OLR 1131 (Ori).: "10. Franz Schubert said: 'Reason is nothing but a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial examination of executive orders could, with impunity, be set at naught by an obdurate determination to suppress the reasons." 8.12. It is stated by Hon'ble Supreme Court in State Bank of India Vrs. Ajay Kumar Sood, 2022 SCC OnLine SC 1067 that individual judges can indeed have different ways of writing judgments and continue to have variations in their styles of expression. The expression of a judge/ authority is an unfolding of the recesses of the mind. However, while recesses of the mind may be inscrutable, the reasoning in judgment cannot be. While judges/ authorities may have their own style of judgment writing, they must ensure lucidity in writing across these styles. 8.13. Decision sans reason renders the decision making process arbitrary [See Steel Authority of India Limited Vrs. Sales Tax Officer, (2008) 10 SCR 655 = 2008 INSC 799.]. The Hon'ble Supreme Court of India in the case of State of Punjab Vrs. Bhag Singh, (2004) 1 SCC 547, observed as follows: "6. Even in respect of administrative orders, Lord Denning, M.R. in Breen Vrs. Amalgamated Engg. Union, (1971) 1 All ER 1148 = (1971) 2 QB 175 = (1971) 2 WLR 742 (CA) observed: 'The giving of reasons is one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has failed to exercise its jurisdiction vested in it while exercising the powers under Articles 226/227 of the Constitution of India. 9. While emphasising the necessity to pass a reasoned order, in Central Board of Trustees Vrs. Indore Composite (P) Ltd., (2018) 8 SCC 443, it was observed and held by this Court that the courts need to pass a reasoned order in every case which must contain the narration of the bare facts of the case of the parties to the lis, the issues arising in the case, the submissions urged by the parties, the legal principles applicable to the issues involved and the reasons in support of the findings on all the issues arising in the case and urged by the learned counsel for the parties in support of its conclusion. It was further observed in the said decision that an order bereft of reasoning causes prejudice to the parties because it deprives them to know the reasons as to why one party has won and other has lost. 10. In a recent decision in UPSC Vrs. Bibhu Prasad Sarangi, (2021) 4 SCC 516, while emphasising that reasons ought to be given by the High Court while exercising powers under Article 226 of the Constitution of India, it was observed and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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.' 16. In McDermott International Inc. Vrs. Burn Standard Co. Ltd., (2006) 11 SCC 181 the Supreme Court clarified the rationality behind providing of reasons and stated the principle as follows: '56. ... '... "Reason" is a ground or motive for a belief or a course of action, a statement in justification or explanation of belief or action. It is in this sense that the award must state reasons for the amount awarded. The rationale of the requirement of reasons is that reasons assure that the arbitrator has not acted capriciously. Reasons reveal the grounds on which the arbitrator reached the conclusion which adversely affects the interests of a party. The contractual stipulation of reasons means, as held in Poyser and Mills' Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced hereunder: '8. ... 'I have perused the order dated 27-5-2005 passed by Respondent 2 and I do not find any illegality in the order so as to interfere under Articles 226/227 of the Constitution of India. The writ petition lacks merit and is liable to be dismissed.' ' and the Court concluded as under: (Sunil Kumar Singh Negi case, (2008) 11 SCC 205: '9. In view of the specific stand taken by the Department in the affidavit which we have referred to above, the cryptic order passed by the High Court cannot be sustained. The absence of reasons has rendered the High Court order not sustainable. Similar view was expressed in State of U.P. Vrs. Battan, (2001) 10 SCC 607. About two decades back in State of Maharashtra Vrs. Vithal Rao Pritirao Chawan, (1981) 4 SCC 129 the desirability of a speaking order was highlighted. The requirement of indicating reasons has been judicially recognised as imperative. The view was reiterated in Jawahar Lal Singh Vrs. Naresh Singh, (1987) 2 SCC 222. 10. In Raj Kishore Jha Vrs. State of Bihar, (2003) 11 SCC 519 this Court has held that reason is the heartbeat of every conclusion and without the same, it becomes lifeless. 11. '8. ... Right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r concise they may be. 25. We would reiterate the principle that when reasons are announced and can be weighed, the public can have assurance that process of correction is in place and working. It is the requirement of law that correction process of judgments should not only appear to be implemented but also seem to have been properly implemented. Reasons for an order would ensure and enhance public confidence and would provide due satisfaction to the consumer of justice under our justice dispensation system. It may not be very correct in law to say, that there is a qualified duty imposed upon the courts to record reasons. *** 27. By practice adopted in all courts and by virtue of judge-made law, the concept of reasoned judgment has become an indispensable part of basic rule of law and, in fact, is a mandatory requirement of the procedural law. Clarity of thoughts leads to clarity of vision and proper reasoning is the foundation of a just and fair decision. In Alexander Machinery (Dudley) Ltd., 1974 ICR 120 (NIRC) there are apt observations in this regard to say "failure to give reasons amounts to denial of justice". Reasons are the real live links to the administration of ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind and non-speaking orders in law. This ground need not detain us any further as even in other cases where identical orders were passed, this Court had the occasion to consider the same grounds at some length. Reference, in this regard, can be made to the judgment of the date, the Bench, in the case of Assistant Commissioner Vrs. M/s. Shukla & Brothers (SLP (C) No. 16466 of 2009) decided on the same day, where after discussing the law at some length, the order passed by the High Court was set aside and the case was remanded to the High Court for hearing the case de novo and passing of an order in accordance with law afresh. 12. In view of the ratio of the case of Mis. Shukla & Brothers (supra), which is squarely applicable on the fact and law to the present case, we are constrained to set aside the order passed by the High Court and remand the matter to the High Court for hearing the case de novo. We are compelled to make this direction as it was expected of the High Court to consider the question of law raised before it and express its own opinion/reasons." 8.17. In Sri Nandlal Tejmal Kothari Vrs. The Inspecting Assistant Commissioner of Income Tax, (1997) 3 SCR 575 following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the Revenue vis-à-vis contents of Review Order qua the Order-in-Original dropping the proceeding initiated under Section 73 of the Finance Act, 1994. Conclusion: 9. With the enunciation of principles of audi alteram partem with reference to prayers made for adjournments, and legal position surfaced through different judicial pronouncements with respect to significance of passing of reasoned order, it is perceived that the Appellate Authority has failed to discuss the fact and the law with respect to each ground taken in the appeal petition of the Revenue. Since the appeal order does not emanate reason for the conclusion, this Court is constrained to observe that absence of reason in the Appellate Order do tantamount to negating the purpose of hearing in appeal and right to know the reason as to why the view expressed in Order-in-Original has been reversed and viewed as flawed. Furthermore, short notice fixing date of personal hearing and/or hearing through video conferencing mode added to consider sustainability of Appellate Order. 10. Though this Court is conscious about existence of alternative remedy to assail the Appellate Order, having regard to the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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