PRINCIPLES OF NATURAL JUSTICE. PART-2

PRINCIPLES OF NATURAL JUSTICE. PART-2.                                                               

1. In a recent landmark decision of  the Hon'ble Supreme Court rendered in the case of MADHYAMAM BROADCASTING LIMITED VERSUS UNION OF INDIA AND ORS. - 2023 (7) TMI 1010 - SUPREME COURT, the principles of natural justice have been crystalized in the words of Hon’ble CJI-Dr Dhananjaya Y Chandrachud as under:

“53. …The facet of audi alterum partem encompasses the components of notice, contents of the notice, reports of inquiry, and materials that are available for perusal. While situational modifications are permissible, the rules of natural justice cannot be modified to suit the needs of the situation to such an extent that the core of the principle is abrogated because it is the core that infuses procedural reasonableness….”

2. A reading of the above clearly indicates that, under the GST Act the “Proper Officer” is a primary quasi-judicial authority at the field level and therefore exercises adjudicatory function. The very nature of an adjudicatory function would carry with it the requirement that principles of natural justice are complied with, particularly when there is an adversarial system of hearing of the cases before the Proper Officer or for that matter before the Appellate Authorities too. Although the Proper Officer is an authority created by the GST Act, nevertheless, the discharge of its function are to be in accordance with law which would also include compliance with the principles of natural justice as envisaged in Section 75[4] of the Act.

3. In this context, it would be useful to refer to what is known as the ‘official notice’ doctrine, which is a device used in tax administrative procedure. Although the Proper Officer can rely upon materials familiar to it in its proceedings without the need to formally introduce them in evidence, nevertheless the taxpayers ought to be informed of materials so noticed and be given an opportunity to explain or rebut them. The materials on which the Proper Officer unilaterally acts shall apprise to the taxpayers against whom the material is to be used, so that the taxpayers would then have an opportunity not only to refute it but also supplement, explain or give a different perspective to the facts upon which the Proper Officer relies. The aforesaid doctrine applies with greater force to the quasi- judicial authorities working under the GST Act.

4. Therefore, applying the aforesaid principle, when a case comes up before the Appellate Authority, if the Appellate Authority intends to rely upon the same material, it should disclose the full details of materials during personal hearing to the appellant so as to give an opportunity for discussion and rebuttal. And the appellant is entitled for it. Thus, factual information which comes to the knowledge of the Proper Officer, if it is to be relied upon by the Appellate Authority, then, the same shall be disclosed to the appellant for its response and a reasonable opportunity shall be afforded to present its observations or comments on such a reported material to the Appellate Authority. However this is seldom done.

5. So, the higher quasi-judicial authorities cannot simply accept the material of the Proper Officer without complying with “Principles of Natural Justice” as mandated under Section 75[4] of the GST Act. The lack of compliance of Section 75[4] of the Act would be blatant violation of principles of natural justice by the quasi-judicial authorities, which has the “chilling effect” on the taxpayers.

6. There cannot be deafening silence to hide the double standard by the Proper Officers. When the taxpayers demand the materials used against them, they are accused of committing crime simply for wanting what is legitimately theirs. The asymmetrical approach is that, the less privileged taxpayers do not dare to question their self- acquired rights though not vested under the law, for fear of consequences. This further blinds such authorities to increase their audacity in ignoring the provisions of Section 74[4] of the Act or rather the higher authorities to defend such violations in the interest of “revenue”.  'Err on the revenue side' is the much bugled slogan [slow-gun] to get immunity from doing  what is contrary to the law.

7. A problem cannot be fixed unless and until one looks beyond the surface of plaster and wallpaper. This requires an x-ray vision into the real problem. Such problems prevalent today can be solved with higher levels of consciousness. Problems are best solved by transcending them and looking them at a higher viewpoint. This requires inner self-awareness to respect the law the way it is legislated. To achieve this, the authorities need not compromise with legitimate revenue. Essentially when tax is genuinely and legally fastened, no one would get aggrieved. Revenue is really purposeful when the principles of natural justice are complied by the quasi-judicial authorities besides reduction of mounting litigation in the courts.

8. Everyone knows the “ethical issues in taxation”. Without consumer, there is no business. Without business, there is no tax. Without tax, there is no taxpayer. Without taxpayer, there is no tax collection. Without tax collection, Government cannot have financial resources to meet its fundamental social responsibilities. So essentially business gives birth to huge financial resources. The GST is a consumption based tax. As such, it is the final consumer who pays it on every goods or services consumed. Although GST is an indirect tax, it has direct impact on the consumer’s purse on daily basis. Due to vibrant economic empowerment, the purchasing power has increased never ever before. Thanks to modern economic hubs. The recent constant progressive growth in GST collection is the best evidence for higher consumption of goods and services.

 9. So the businesses being large tax-pots must not only be protected but also be encouraged to be the most and more durable than ever before. However due to obsessive ‘art of interpretation of law’ followed by fallible orders, some officers satisfy the administrative bosses under obligation and some other officers for some other reasons. Such fallible orders are like brief candles or have short-shelf life and see their sunset in the courts. The Courts are changing that everything is wrong. Hence there shall be integrated and ethical practices till the taxes collected from innocent consumers reach the Government treasuries without any pilferage. This requires a seamless and galvanised pipeline right from the businesses to the top tax administration. Rational tax administration is the object of GST regime. Quasi-judicial orders are not sacrosanct per say. They are capable of being fallible, as there is an element of human intrusion. Any attempt to throw sharp stones at the tax-pots through glamourisation of illogical interpretation of law may cause collateral damage. This reminds me the tragic tale of “goose that lays golden eggs”.

10. If the roots [principles of natural justice] are forgotten, then fruits [legitimate revenue] are also to be forgotten. So the quasi-judicial authorities are expected to believe in ideologies and not in individuals to come out with neutral decisions and victory in courts too. Otherwise it becomes debate without subject!

Will this dream happen?  History says, this is an “augean task”.