2025 (10) TMI 244 - HC - GST

Appellate order of 28 Sept 2024 set aside for breach of natural justice; matter remanded for fresh hearing

The HC found the appellate order dated 28 Sept 2024 was passed in violation of natural justice for failing to afford the appellant a hearing and not ... Violation of principles of natural justice - appellate order passed without hearing the appellant - sufficient opportunity of hearing was not given to the petitioner to produce the documents and even the grounds of appeal raised, were not considered - HELD THAT:- There are substance in the argument of the learned counsel for the petitioner that the impugned order dated 28th September, 2024 was passed without hearing the petitioner. In the case of Mangilal Vs. State of M.P. [2004 (1) TMI 698 - SUPREME COURT], the Hon’ble Supreme Court has held that even in the absence of any specific provision in procedural laws, power inheres in every tribunal/court of a judicial or quasi-judicial character, to adopt modalities necessary to achieve requirements of natural justice and fair play to ensure better and proper discharge of their duties. Procedure is mainly grounded on the principles of natural justice irrespective of the extent of its application by express provision in that regard in a given situation. It has always been a cherished principle. The aim of application of the principles of natural justice is to secure justice or to prevent miscarriage of justice. The principles of natural justice do not supplant the law, but supplement it. In the case of Dharampal Satyapal Limited Vs. Deputy Commissioner of Central Excise, Gauhati & Others [2015 (5) TMI 500 - SUPREME COURT], the Hon’ble Supreme Court has held that the opportunity to provide hearing before making any decision is considered to be a basic requirement in the court proceeding which is also applied to quasi-judicial authorities, other tribunals and even in the administrative actions, where the decision of the authority may result in adverse civil consequences. Thus, it is the duty of the administrative, quasi-judicial authorities and other tribunals to exercise their discretionary power in the line of the principles of fairness and good governance. Moreover, such action should neither be suggestive of discrimination, nor even apparently give an impression of bias, favouritism and nepotism. It is well settled that the principles of natural justice are integral part of Article 14 of the Constitution of India. An opportunity of hearing must be given to the aggrieved person where the decision of the authority may result in civil consequences. No decision prejudicial to a party should be taken without affording an opportunity or supplying the material which is the basis for the decision. The impugned order dated 28th September, 2024 passed by the State-Tax Additional Commissioner (Appeal), Santhal Pargana Division, Dumka is set aside, as the same has been passed in violation of the principles of natural justice - The matter is remanded to the State-Tax Additional Commissioner (Appeal), Santhal Pargana Division, Dumka, without going into the merit of the case, for deciding it afresh, after providing due opportunity of hearing to the parties and considering the materials produced by them. Petition disposed off by way of remand. ISSUES PRESENTED AND CONSIDERED 1. Whether an appellate order passed without hearing the appellant violates the principles of natural justice (audi alteram partem) and is liable to be set aside. 2. Whether failure to consider the appellant's submissions and to afford opportunity to produce documentary evidence amounts to arbitrariness and breach of procedural fairness requiring remand for fresh adjudication. 3. Whether, in the absence of adjudication on the merits, the appropriate relief is quashing of the impugned appellate order and remand for fresh decision after affording hearing. ISSUE-WISE DETAILED ANALYSIS Issue 1: Whether an appellate order passed without hearing the appellant violates natural justice. Legal framework: Fundamental principles of natural justice, specifically audi alteram partem (right to be heard) and nemo judex in causa sua, are applicable to quasi-judicial and administrative adjudications that may result in civil consequences. Such principles supplement procedural statutes and are integral to Article 14 standards of fairness and non-arbitrariness. Precedent Treatment: The Court relied on established Supreme Court authorities holding that (a) tribunals/authorities must adopt modalities necessary to secure natural justice and prevent miscarriage of justice, (b) administrative action likely to affect rights must be fair, transparent and non-arbitrary, and (c) opportunity of hearing is a basic requirement in quasi-judicial proceedings. These precedents were followed and applied directly to the facts. Interpretation and reasoning: The appellate order record demonstrated that the appeal was disposed after hearing only the departmental representative and without any appearance for the appellant; grounds raised in the appeal and documents relied upon by the appellant were not considered. Applying the cited principles, the Court held that passing a determinative order without affording the affected party an opportunity to be heard constitutes a violation of audi alteram partem and is arbitrary. Ratio vs. Obiter: Ratio - An appellate/quasi-judicial authority must afford an opportunity of hearing before passing an order adverse to a party; absence of such hearing vitiates the order. Obiter - Observations on the general requirement of fairness and transparency in administrative action reiterating settled law. Conclusions: The impugned appellate order was set aside for violating the principles of natural justice; the matter required fresh consideration after affording hearing. Issue 2: Whether failure to consider appellant's submissions and to afford opportunity to produce documentary evidence amounts to arbitrariness and breach of procedural fairness requiring remand. Legal framework: Authorities exercising discretionary or adjudicative power must act in consonance with fairness, good governance and non-arbitrariness; affected parties are entitled to know and respond to the case against them and to produce supporting materials. Precedent Treatment: The Court followed precedents that impose substantive obligations on decision-making authorities to adhere to natural justice; arbitrariness and discrimination are impermissible and undermine certainty in state action. Interpretation and reasoning: The appellate order refused relief on the ground that supporting documents (tax invoices, ITC register, bank statements, transport challans) were not produced, yet the record showed the appellant had filed replies and attempted to explain discrepancies. Since the appellate authority did not hear the appellant or confront and consider the materials the appellant sought to place on record, the Court treated the omission as procedural unfairness and arbitrariness in state action. Ratio vs. Obiter: Ratio - Non-consideration of an appellant's grounds and documentary material without affording opportunity to produce or address them constitutes a breach of procedural fairness that necessitates setting aside the order. Obiter - Emphasis on the duty of authorities to exercise discretion in line with fairness, avoiding bias or appearance of bias. Conclusions: The appellate order could not stand where the appellant was denied opportunity to produce and have considered material evidence; remand was necessary to enable fresh adjudication on merits after hearing. Issue 3: Appropriate remedy where appellate order is vitiated by denial of hearing but merits are undecided. Legal framework: When procedural infirmity (denial of hearing) prejudices a party, courts routinely quash the impugned order and remit the matter for fresh consideration, leaving the merits to be decided afresh in accordance with law after affording opportunity to be heard. Precedent Treatment: The Court applied established remedial principles from higher courts that emphasize remand for fresh decision rather than deciding merits where procedural breach prevents fair appraisal of evidence and submissions. Interpretation and reasoning: Given the absence of a counter-affidavit and the recordal that the appellant was not heard at the appellate stage, the Court refrained from adjudicating the substantive tax liability and interest claims. Instead, it annulled the appellate order and remitted the matter to the appellate authority to decide afresh after hearing parties and considering materials. Ratio vs. Obiter: Ratio - Where denial of hearing vitiates an adjudicative order, the proper course is to set aside the order and remit for de novo consideration after affording the affected party an opportunity to be heard; courts should not resolve merits if procedural fairness has been denied. Obiter - None beyond affirmation of established remedial practice. Conclusions: The impugned appellate order was quashed and the matter remanded for fresh adjudication after due hearing; the court did not decide on substantive claims. Cross-references and Related Points 1. Issues 1 and 2 are interrelated: the denial of hearing (Issue 1) amplified the failure to consider documentary submissions (Issue 2), together constituting a breach of natural justice and arbitrariness under Article 14 principles. 2. Issue 3 flows from Issues 1 and 2: remedial relief of quashing and remand was imposed because procedural unfairness precluded fair adjudication on merits.