Gujarat High Court
M/S.Padmavati Tubes vs The Commissioner Of Central Excise And ... on 9 February, 2017
Bench: M.R. Shah, B.N. Karia
O/TAXAP/702/2016 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 702 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH sd/
and
HONOURABLE MR.JUSTICE B.N. KARIA sd/
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1 Whether Reporters of Local Papers may be allowed to see NO
the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law as NO
to the interpretation of the Constitution of India or any
order made thereunder ?
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M/S.PADMAVATI TUBES....Appellant(s)
Versus
THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE
TAX,VAPI....Opponent(s)
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Appearance:
MR HARDIK P MODH, ADVOCATE for the Appellant(s) No. 1
MR ANKIT SHAH, ADVOCATE for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 09/02/2017
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad passed in Appeal No.E/399/2008 dated 31.10.2014, by which, the learned Tribunal has dismissed the said appeal preferred by the appellant herein and has confirmed the Order in Original passed by the Adjudicating Authority dated 22.01.2008, the Page 1 of 9 HC-NIC Page 1 of 9 Created On Sat Aug 12 06:33:30 IST 2017 O/TAXAP/702/2016 JUDGMENT appellantassessee has preferred present appeal with the following substantial question of law:
"A. Whether the learned Tribunal was correct in holding that the appellant manufactured and cleared the finished goods clandestinely without payment of duty even though the evidences produced before the CESTAT clearly demonstrates that the appellant never cleared the goods without payment of duty?
B.Whether the Revenue sufficiently discharged their burden to prove that the appellant manufactured and cleared the goods illicitly without payment of Central Excise Duty ?
C.Whether the order passed by the learned Tribunal is considered as violation of principles of natural justice as the points urged before the learned Tribunal have been disregarded without giving finding on it ?"
2.0. Shri Hardik Modh, learned advocate for the assessee appellant has vehemently submitted that at the time of hearing of the appeal before the learned Tribunal, number of submissions were raised and numbers of decisions were cited, however they have not been dealt with and / or considered by the learned Tribunal. It is the case of the appellantassessee that even subsequently when the ROM was filed pointing out the aforesaid, again the same have not been dealt with and / or considered by the learned Tribunal. Therefore, it is the case on behalf of the assessee that the impugned order passed by the learned Tribunal is in violation of principle of natural justice as the points urged before the learned Tribunal have not been considered and / or have been disregarded without giving finding on it. Therefore, it is the case on behalf of the appellant assessee that the impugned judgment and order passed by the learned Tribunal deserves to be quashed and set aside and the matter is remanded to the learned Tribunal to decide the appeal afresh in accordance with law and on merits by directing the Tribunal to consider all the submissions on merits and to deal with the decisions which were cited.
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O/TAXAP/702/2016 JUDGMENT
2.1. Shri Modh, learned advocate for the appellant assessee has heavily relied upon the following decisions of the Hon'ble Supreme Court as well as this Court in support of his submission that the learned Tribunal was required to pass speaking and reasoned order while dealing with all the contentions raised in the appeal, for which, submissions were made.
(1) Rajesh Kumar & Ors vs. Deputy Commissioner of Income Tax & Ors. reported in 287 IRT 91 (SC) (2) Commissioner of Income Tax II vs. Surat Beverages Ltd rendered in Tax Appeal No.291 of 2013.
(3) Gautam Harilal Gotecha vs. Deputy Commissioner of Income Tax (Investigation) reported in 281 ITR 283 (4). Dattani and Co. vs. Income Tax Officer rendered in Tax Appeal No. 847 of 2013.
Making above submissions and relying upon the above decisions, it is requested to allow the present appeal and to quash and set aside the impugned judgment and order and remand the matter to the learned Tribunal to consider the appeal afresh in accordance with law.
3.0. Shri Ankti Shah, learned advocate for the revenue / department is not in a position to satisfy the Court that while disposing of the appeal the learned Tribunal is dealt with and / or given finding on all the points which were raised by the appellant and that the learned Tribunal is deal with and considered the decisions which were cited before it.
4.0. Heard the learned counsel for the the respective parties at length. We have perused and considered the impugned judgment and order passed by the learned Tribunal.
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O/TAXAP/702/2016 JUDGMENT
5.0. In the case of Surat Beverages Ltd (supra), the emphasizing the need that by the learned Income Tax Tribunal to pass speaking and reasoned order, in para 5 this Court has observed and held as under:
"[5.0] While taking up tax appeals, we have come across similar nonspeaking and nonreasoned orders passed by the ITAT and passing the order on estimate basis by deleting and/or making addition by observing that to meet with the ends of justice. It cannot be disputed that ITAT, while deciding the appeals, is required to pass the order judiciously and it should reflect that the Tribunal has applied the mind on a particular issue. ITAT is a judicial authority and it should exercise the powers under section 254 of the Act and as per subsection (4) of section 254 save as provided in section 256 or section 260A, orders passed by the appellate tribunal on appeal shall be final. Therefore, a great care should be taken by the ITAT while exercising the powers under section 254 of the Act and while deciding the appeals in exercise of powers under section 254 of the Act. It is true that subsection (1) of section 254 provides that the appellate tribunal may pass such orders as it thinks fit, but that does not mean that the tribunal is not required to assign any reasons and/or the Tribunal is not required to pass a speaking order. In the case of Ravi Yashwant Bhoir vs. Collector reported in (2012)4 SCC 407, the Honble Supreme Court had an occasion to consider the rationale behind the requirement of recording reasons in order.
In the said decision, it is observed and held by the Honble Supreme Court that requirement of recording reasons is one of the principles of natural justice. It is further observed and held by the Honble Supreme Court that right to reasons is an indispensable part of sound judicial system. In the said decision the Honble Supreme Court in paras 44 and 46 has observed as under:
44. This Court while deciding the issue in Sant Lal Gupta and Ors. v. Modern Cooperative Group Housing Society Ltd., placing reliance on its various earlier judgments held as under: (SCC pp.34546, para 27)
27. It is a settled legal proposition that not only administrative but also judicial orders must be supported by reasons recorded in it. Thus, while deciding an issue, the court is bound to give reasons for its conclusion. It is the duty and obligation on the part of the Court to record reasons while disposing of the case.
The hallmark of order and exercise of judicial power by a judicial forum is for the forum to disclose its reasons by itself and giving of reasons has always been insisted upon as one of the fundamentals of sound administration of the justice delivery Page 4 of 9 HC-NIC Page 4 of 9 Created On Sat Aug 12 06:33:30 IST 2017 O/TAXAP/702/2016 JUDGMENT system, to make it known that there had been proper and due application of mind to the issue before the court and also as an essential requisite of the principles of natural justice.
3... The giving of reasons for a decision is an essential attribute of judicial and judicious disposal of a matter before courts, and which is the only indication to know about the manner and quality of exercise undertaken, as also the fact that the court concerned had really applied its mind.* The reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, the order becomes lifeless. Reasons substitute subjectivity with objectivity. The absence of reasons renders an order indefensible/unsustainable particularly when the order is subject to further challenge before a higher forum. Recording of reasons is the principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected."
46. The emphasis on recording reason is that if the decision reveals the 'inscrutable face of the sphinx', it can be its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind of the authority before the court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made. In other words, a speaking out, the inscrutable face of the sphinx is ordinarily incongruous with a judicial or quasi judicial performance.
In the case of Board of Trustees of Martyrs Memorial Trust vs. Union of India reported in (2012)10 SCC 734, in para 22, the Honble Supreme Court has held as under:
22. Brevity in judgment writing has not lost its virtue. All long judgments or orders are not great nor are brief orders always bad. What is required of any judicial decision is due application of mind, clarity of reasoning and focused consideration. A slipshod consideration or cryptic order or decision without due reflection on the issues raised in a matter may render such decision unsustainable. Hasty adjudication must be avoided. Each and every matter that comes to the court must be examined with the seriousness it deserves.Page 5 of 9
HC-NIC Page 5 of 9 Created On Sat Aug 12 06:33:30 IST 2017 O/TAXAP/702/2016 JUDGMENT In the case of Real Estate Agencies vs. State of Goa reported in (2012)12 SCC 170 while emphasizing the necessity of giving reasons by the Courts/Tribunals/Judiciary, it is held that, manner of reaching a decision and reasons for reaching such decisions are sacrosanct to judicial process.
While emphasizing the need to pass a reasoned order, the Honble Supreme Court in the case of Certified Area Committee vs. Additional Director, Consolidation reported in (2002)10 SCC 87, has held as under:
The reasons are the flesh and blood of Judicial adjudication and such reasons must be shown in the orders which are liable to be challenged in the Superior Court.
6.0. Identical question came to be considered by the Division Bench of this Court in the case of Gautam Harilal Gotecha (supra). The Division Bench considering the following question of law:
"Whether, in the facts and under the circumstances of the case, the decision of the ITAT was not perverse in as much as firstly it does not consider the arguments advanced on behalf of the Appellant and secondly the impugned order is not at all reasoned and speaking order, thirdly the impugned order is incoherent and vague and fourthly it does not deal with all the grounds raised challenging various additions on the merits ?"
6.1. The Division Bench in the said decision has observed that the Apppellate Tribunal is the final fact finding body in the hierarchy of appellate jurisdiction under the Act. Its order is supposed to reflect not only the facts and contentions of the rival parties before it, but the issues which arise for its consideration and the reasons for deciding the issues one way or the other. While criticizing such orders, in para 8 & 9, the Division Bench has observed and held as under:
8. On a plain reading of the aforesaid extract of the order of the Tribunal it becomes apparent that the Tribunal is not aware of its duty. The appellate Tribunal is the final fact finding body in the hierarchy of appellate jurisdiction under the Act. Its order is supposed to reflect Page 6 of 9 HC-NIC Page 6 of 9 Created On Sat Aug 12 06:33:30 IST 2017 O/TAXAP/702/2016 JUDGMENT not only the facts and contentions of the rival parties before it, but the issues which arise for its consideration and the reasons for deciding the issues one way or the other. The present is a case where it cannot be stated that the Tribunal has followed the well settled position while discharging its duty. The Tribunal has singularly failed in its duty. The order is not only cursory but if one may say so, is not an order at all. In the case of S.J. And S.P.Family Trust vs. Deputy Commissioner of Income Tax [2005] 277 ITR 557 (Guj) this Court was constrained to observe :
Having heard the parties, and in the light of the facts narrated hereinbefore, it is apparent that the Tribunal has made short shrift of its duty to adjudicate. This Court has time and again, reiterated the procedure required to be adopted by the Tribunal so as to ensure that the order, which is an appealable order, reflects not only its conclusion, but the decision making process also. Reasons however brief are the soul and backbone of an order. In the absence of such reasons, which must be reflected on a reading of the order, it is not possible to state as to whether the Tribunal was aware as to what the controversy was before it, and what were the factors pro and con in relation to the said issue, and the reasons which ultimately weighed with the Tribunal for arriving at a decision?.
9. Only by way of an illustration it is necessary to take note of the fact that the Assessing Officer himself in paragraph No.10 states :?The assessee has filed his block period return on 27.9.99 declaring undisclosed income of Rs.Nil?, and yet the Tribunal states that the return of block assessment was not furnished. It is not necessary to multiply instances of non application of mind by the Tribunal. This Court has been constrained to remind the Tribunal of its duties time and again, but one can only lament that the Tribunal, it appears, is not amenable to constructive suggestions. The Tribunal fails to appreciate the basic fact that by making such slipshod orders it only generates unwarranted litigation, apart from putting the parties to unwarranted hardship, harassment and cost for no fault of theirs. The Court can only hope that the Tribunal applies its mind and takes care in future to ensure that the approach of the Tribunal undergoes a change and it may regain its past glory.Page 7 of 9
HC-NIC Page 7 of 9 Created On Sat Aug 12 06:33:30 IST 2017 O/TAXAP/702/2016 JUDGMENT 6.3. In the case of Dattani and Co (supra) when it was found that the learned Tribunal did not consider and / or deal with the decisions relied upon by one of the party, it is observed by the Division Bench of this Court that the learned Tribunal at least ought to have considered and dealt with the decisions relied upon by one of the party. The Division Bench has further observed that whenever any decision has been relied upon and / or cited by the assessee and / or any party, the authority/tribunal is bound to consider and/or deal with the same and opine whether in the facts and circumstances of the particular case, the same will be applicable or not.
7.0. Now, considering the facts of the case on hand, the impugned judgment and order passed by the learned Tribunal and even the RMO filed by the appellant, we are of the opinion that the decisions relied upon by the appellant have not been considered at all by the learned Tribunal. Some of the submissions which were raised are also not dealt with by the learned Tribunal. Under the circumstance, the matter is required to be remanded to the learned Tribunal to consider the appeal afresh in accordance with law and on merits and after dealing with all the submissions which may be raised and after dealing with the decisions cited at the bar.
8.0. In view of the above and for the reasons stated above and on the aforesaid ground, the impugned judgment and order passed by the learned Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad passed in Appeal No.E/399/2008 dated 31.10.2014 is hereby quashed and set aside and the matter is remanded to the learned Tribunal to decide the appeal afresh in accordance with law and on merits and after considering the submissions which may be raised by the Page 8 of 9 HC-NIC Page 8 of 9 Created On Sat Aug 12 06:33:30 IST 2017 O/TAXAP/702/2016 JUDGMENT respective parties and after considering and dealing with the citations that may be relied upon by either of the parties. The aforesaid exercise shall be completed within the period of three months from the date of the receipt of writ of the present order. The present appeal is partly allowed to the aforesaid extent. The question No. C is held in favour of assessee and against the revenue. The question Nos. A and B are not answered in favour of either party.
sd/ (M.R. SHAH, J.) sd/ (B.N. KARIA, J.) Kaushik Page 9 of 9 HC-NIC Page 9 of 9 Created On Sat Aug 12 06:33:30 IST 2017