2012 (9) TMI 853 - HC - VAT and Sales Tax

Improper Addition of Member Compromised Fairness in Tribunal Hearing

The court held that the third member joining the Tribunal mid-hearing was improper and compromised the fairness of the process. It directed the Tribunal ... Part-heard bench and substitution of member - Right to fair hearing / audi alteram partem - Member who hears should ordinarily pronounce the order - Appearance of justice and impartiality of tribunal - Tribunal sittings en banc versus ad hoc bench constitutionPart-heard bench and substitution of member - Right to fair hearing / audi alteram partem - Member who hears should ordinarily pronounce the order - Appearance of justice and impartiality of tribunal - Whether a member who did not participate in earlier hearings may join and participate in the determination of an appeal which is already part-heard before the other members, and whether such participation is consistent with principles of natural justice - HELD THAT: - The Court held that while the VAT Tribunal is a statutory body intended to function judicially and the statute does not expressly prohibit sittings when a member is temporarily absent, fundamental principles of natural justice and the need to preserve public confidence require that a member who has not heard the oral arguments in a part-heard appeal should not join and decide that appeal mid-stream. Authorities were cited for the proposition that hearing and decision should not be divided so as to render personal hearing an empty formality; a successor or joining member deciding without having heard the parties offends the right to be heard and the appearance of impartiality. The statutory provisions and Regulations do not mandate a minimum quorum or foreclose incidental powers for continuance, but that statutory neutrality does not justify a practice that would permit a member who missed earlier hearings to participate in deciding a part-heard matter. To safeguard fairness and public confidence in adjudicatory processes the Court directed that part-heard appeals be continued and decided by the same members who heard the matter when arguments concluded. [Paras 10, 11, 12, 13, 14]The Tribunal was directed not to permit the Administrative Member who had not participated in the earlier hearings to join and decide the part-heard appeals; the matter must proceed before the original two members who heard the arguments when the matter was part-heard.Final Conclusion: Writ petition allowed; the VAT Tribunal is directed to continue and decide Appeal Nos. 81-83/ATVAT/11-12 in the composition that heard the matter when it was part-heard (the Chairman and Member (J)), and the Administrative Member who did not participate in earlier hearings shall not take part in deciding these part-heard appeals. Issues Involved:1. The propriety of the third member joining the Tribunal mid-hearing.2. The legality of the Tribunal's procedure under the Delhi VAT Act.3. The fairness of the hearing process.Detailed Analysis:1. Propriety of the Third Member Joining Mid-Hearing:The petitioner challenged the procedure of the Appellate Tribunal, Value Added Tax, where a third member, who was on leave during the initial hearings, joined the bench mid-way through the proceedings. The petitioner argued that this was improper and denied a fair hearing, as the third member had not heard the substantial arguments already presented. The Tribunal initially consisted of two members, the Chairman and a Judicial Member, who heard the case on multiple dates. The third member, an Administrative Member, joined only after the petitioner had concluded their arguments. The petitioner objected to this, stating that the hearing should continue with the two original members to maintain consistency and fairness.2. Legality of the Tribunal's Procedure under the Delhi VAT Act:The petitioner argued that the Delhi VAT Act does not authorize a procedure where a member who has not heard a matter can join and participate mid-way. The Tribunal's procedure was claimed to be unsupported by law and unreasonable. The respondents countered that the Delhi VAT Act and the VAT Tribunal Regulations, 2005, require the entire Tribunal to hear cases together, and the Chairman does not have the authority to constitute benches or hear appeals with fewer than the full membership. They cited Section 73 of the Act and Regulation 35, which suggest that the Tribunal should function with all its members unless a member has a conflict of interest.3. Fairness of the Hearing Process:The court emphasized that a fundamental premise of the legal system is that no one should suffer an adverse order without a fair hearing. It noted that the VAT Tribunal, being a statutory body tasked with judicial functions, must adhere to principles of fairness and impartiality. The court referenced precedents which state that the authority hearing a matter must be the one to issue the order, ensuring that the decision is based on a full understanding of the arguments presented. The court found that allowing the third member to join mid-hearing would undermine public confidence in the Tribunal's fairness and impartiality.Conclusion:The court directed the Delhi VAT Tribunal to continue hearing the appeals with the original two members who had heard the case substantially. The third member, who joined mid-way, was barred from participating in the part-heard matter but could participate in other cases. The Tribunal was instructed to expedite the hearing of the petitioner's appeals and decide on their merits in accordance with the law. The petition was allowed, and the Tribunal's file was ordered to be returned immediately.Order:The court ordered that the Tribunal should refrain from hearing the appeals with the third member who joined mid-way and continue with the original two members. The petition was allowed, and the Tribunal's file was to be returned forthwith.