TaxTMI 
TaxTMI 
2010 (12) TMI 945
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....) of the Customs Act issued by the Assistant Commissioner of Customs (Bonds), Visakhapatnam. 2. The Officers of Revenue intelligence of customs house gathered information with regard to misuse of licence and improper/unauthorised removal and sale of goods in the local market in the guise of sales to crew members of foreign going vessels. On 22nd January, 2008, the merchant vessel MV. Hope Star was searched and in it was found non-duty paid 50 cartons of Cigarettes and 15 cases of beer, branded as ship stores on the master's request. They were removed by the Petitioner from the bonded warehouse. The Inspecting Officials recorded the statements of the local manager and, on further investigation, they found that the Petitioner had allegedly removed the non-duty paid goods from the bonded warehouse without following prescribed procedures and in gross violation of the conditions of licence besides manipulating the documents by forging wrong/additional entries in the duplicate and triplicate copies of the sale vouchers so as to account for more quantities than what was actually shown as sold to the crew members of the vessel as per original copies. Therefore, summons were issue....
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....nd August, 2010 they sent a communication to the Assistant Commissioner of Customs seeking adjournment to any date after 15th September, 2010 (except 20th September) on the ground that their Senior Counsel was advised bed rest as he was not well. The Petitioner also contends that, without considering the same, the Commissioner Sri P.V.R. Reddy, IRS, passed the impugned order though the matter was heard by Sri Ponnusamy. This, according to the Petitioner, is illegal and violative of principles of natural justice. 5. The Deputy Commissioner of Customs in the office of the Respondent filed counter-affidavit denying petition averments. It is stated that the Adjudicating Authority had provided adequate opportunity under Section 122A of the Customs Act, and that the Petitioner resorted to delays in the proceedings as a result of which, the Respondent had no option but to adjudicate the case as it is pending since long. It is further averred that the Adjudicating Authority had given opportunity to the Petitioner on two occasions, which were not utilised by him in a proper manner. Therefore, the written reply to the Show Cause Notice as well as written arguments were considered a....
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....urts to usurp the functions of the Appellate body. The principle applies equally to bodies not created by statute which have their own appellate system. Secondly, the public interest dictates that judicial review should be exercised speedily, and to that end it is necessary to limit the number of cases in which judicial review is used. More generally, the Courts now encourage parties to resolve disputes without resorting to the expense of litigation. To these reasons can be added the additional expertise that the appellate bodies possess. In tax cases, for example, the appellate body, the General or Special Commissioners, have wide experience of the complex and detailed tax legislation. In employment cases, for example, the system of employment and Employment Appeal Tribunals may be better equipped to deal with industrial issues than the High Court. In the financial services field, specialist procedures and a specialist Tribunal have been established to deal with certain matters. Similarly, where there is a further appeal to the Courts, this may be to a division of the High Court particularly familiar with the area in question, as in tax cases, where the appeal is heard in the Chan....
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....nterpreted by pointing out deficiencies. On the first question, it was held that, "Assessee cannot abandon to resort to machinery provided under the Act and directly invoke remedy under Article 226 of Constitution of India". The observations are as follows (Para 3). 9. In our view, the petition filed by the Appellant should not have been entertained. The Income Tax Act provides a complete machinery for assessment of tax and imposition of penalty and for obtaining relief in respect of any improper orders passed by the Income Tax authorities, and the Appellant could not be permitted to abandon resort to that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Tribunal. 10. In Champalal Binani v. The Commissioner of Income Tax, West Bengal (1971) 3 SCC 20: AIR 1970 SC 645, the Commissioner of Income Tax issued a notice to the Appellant under Section 33-B of the Income Tax Act, 1922 to show cause as to why the orders of assessment for A Ys 1953-1954 to 1960-1961 should not be revised. Copies of the notices were sent to the addresses disclosed in the IT Returns. O....
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....ame, appeal was carried to the Supreme Court. Confirming the order of the High Court, the Supreme Court observed (Para 2) as under. The Appellant challenged before the High Court an order of the Tribunal allowing the appeal of the Revenue. The High Court simply said that the Appellant had a statutory alternative remedy and the Appellant had to avail that statutory remedy instead of filing writ petition. Accordingly, the High Court dismissed the writ petition. The Appellant instead of challenging the order of the Tribunal by availing the statutory alternative remedy has filed this appeal by special leave challenging the order of the High Court. We are of the view that the High Court was right in dismissing the writ petition directing the Appellant to avail the statutory alternative remedy. 12. In K.S. Rashid and Son v. ITI Commission1 AIR 1954 SC 207, a Constitution Bench of the Supreme Court held as follows. So far as the second point is concerned, the High Court relies upon the ordinary rule of construction that where the legislature has passed a new statute giving a new remedy, that remedy is the only one which could be pursued. It is said that the T....
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.... In Carl Still G.M.B.H. v. State of Bihar AIR 1961 SC 1615, another Constitution Bench considered the question whether this Court can exercise jurisdiction under Article 226 of the Constitution even though authorities are constituted by special enactments to decide disputes. In Paragraph 11 of the said judgment, it was observed thus: It is next contended for the Respondents that, whatever the merits of the contentions based on the construction of the contract, the proper forum to agitate them would be the authorities constituted under the Act to hear and decide disputes relating to assessment of tax, that it was open to the Appellants to satisfy those authorities that there have been no sales such as are liable to be taxed, that indeed they were bound to pursue the remedies under the Act before they could invoke the jurisdiction of the Court under Article 226 and that the learned Judges of the High Court were, therefore, right in declining to entertain the present petitions. It is true that if a statute sets up a Tribunal and confides to it jurisdiction over certain matters and if a proceeding is properly taken before it in respect of such matters, the High Court will not....
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....e legislations enacted by Parliament and State legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi-judicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must enhaust the remedies available under the relevant statute. (Emphasis supplied) 17. The position in English Courts is also well accepted. In R v. IRC Ex parte Preston (1985) AC 835: (1985) 2 All E.R. 327: (1985) STC 282, Lord Scarman summed up the position in English Administrative Law, thus: My fourth proposition is that a remedy by way of judicial review is not to be made available where an alternative remedy exists. This is a proposition of great importance. Judicial review is a collateral challenge: it is not an appeal. When Parliament has provided by statute appeal procedures, as in the taxing statutes, it will only be very rarely that the Courts will allow the collateral process of judicial review to be used to attack a....
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.... Sons (P) Limited v. Invest Import (1981) 1 SCC 80, State of U.P. v. Maharaja Dharmander Prasad Singh (1989) 2 SCC 505, Shree Rama Packaging v. Union of India 1991 (56) ELT 15 (Guj), Union of India v. E.K. Andrew 1999 (95) Comp Cas 537, Suresh Chandra Nanhorya v. Rajendra Rajak (2006) 7 SCC 800 Baraka Overseas Traders v. Director General of Foreign Trade (2006) 8 SCC 103, Popcorn Entertainment v. City Industrial Development Corporation (2007) 9 SCC 593, M.P. State Agro Industries Development Corporation Limited v. Jahan Khan (2007) 10 SCC 88 and Satwati Deswal v. State of Haryana (2010) 1 SCC 126, the Petitioner's Counsel submits that, as the arguments were heard by one Commissioner but the order was passed by another Commissioner, there is violation of principles of natural justice. 20. If the hearing authority and the deciding authority are different, it would destruct the concept of judicial hearing (Gollapalli Nageswara Rao). But as a matter of fact, if the deciding authority also gives an opportunity to hear the matter which is not availed by the person, or the statute enabling adjudication itself excludes natural justice or affords limited access to natural justice,....
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....l". This through bred must not be allowed to turn into a wild and unruly horse, careering off where it lists, unsaddling its rider and bursting into fields where the sign "no pasaran" is put up. 21. Therefore, the rule that whenever natural justice is violated, the judicial review Court should ignore the statutorily provided remedy of appeal or revision and entertain the writ petition is not acceptable absolutely. In all tax cases - judicial notice may be taken that the endeavour of the tax payer is to gain as much time as possible, and postpone payment probably to maintain financial liquidity in business operations. The Court, therefore, must strictly scrutinise in proceeding under Article 226 of Constitution with respect to the availability of remedy under the Statute. Further, there cannot be any doubt that all issues in tax matters are not simple questions of fact and law. The expert consideration by specialist Tribunals may be necessary at the first instance before the judicial remedy is made available as provided in the statute. All the direct and indirect tax laws provide the remedy of appeal or revision to the High Court against specialist Tribunals established un....
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....l E.R. 842: (1985) STC 144 and R v. Brentford General Commissioners Ex p. Chan (1986) STC 65. 24. Clive Lewis in Judicial Remedies (2004 edn., p 412), after considering the issue comes to the conclusion that in the tax field issues of natural justice can be dealt with by the appeal system. The learned author gives the following reasons. One issue that has arisen is the extent to which questions of procedural error or breach of natural justice are suitable for resolution by an appellate mechanism. This area straddles the border between general public law and the specialised statutory scheme, since the issue of what procedure is appropriate depends on what is fair in the circumstances of a particular case. Breaches of the procedural rules will normally be dealt with on appeal, where the statutory scheme itself sets out the relevant procedural rules. Breach of the common law principles of natural justice may be dealt with on appeal, providing that the appellate body can deal adequately with such complaints. In the tax field, for example, the Courts have held that issues of natural justice may be dealt with by the appeal system. Appeals on points of law to the county Court in....
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...., the licensee shall be given a reasonable opportunity of being heard. (3) Pending an enquiry whether a licence granted under Sub-section (1) should be cancelled under Clause (b) of Sub-section (2), the Assistant Commissioner of Customs or Deputy Commissioner of Customs may suspend the licence. 27. Sub-section (1) of Section 58 of Customs Act deals with the issue of the licence. Sub-section (2) empowers the cancellation of licence if the licensee has contravened any of the provisions of the Customs Act, Customs Rules or regulations or has committed breach of any conditions of licenc, by giving one month's notice to the licensee and by affording a "reasonable opportunity" of being heard. In this case, there is no dispute that while submitting explanation to the Show Cause Notice, the Petitioner did ask for personal hearing. As we shall presently show "giving reasonable opportunity of being heard" does riot mean that the Adjudicating Authority should adjourn the case from time to time month after month to suit the convenience of the Petitioner's Counsel, and wait for a long period before passing O-in-O. The power of the Adjudicating Authority to afford a reasonabl....
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....G.V.S. Kondala Rao appeared. At the request of other noticees, the hearing was postponed to 12th April, 2010 which was preponed to 7th April, 2010. On that day, Sri Habibulla Basha, Senior Advocate and Sri Mani Shankar, Counsel for Petitioner argued the matter and submitted written arguments. What happened thereafter? It is necessary to refer to relevant paragraph in the impugned O-in-O (Paragraph 41.8). 30. Due to change of Adjudicating Authority another opportunity has been granted on 6th August, 2010 in order to follow the principles of natural justice and the same has been adjourned to 16th September, 2010 as requested on behalf of M/s. Flemingo (DFS) Pvt. Ltd. and Sri Ajay Thoria, Operational Manager (Seaport) of M/s. Flemingo (DFS) Pvt. Ltd. Again they requested another adjournment which was not accepted by the Adjudicating Authority in as much as they have been granted two hearings by the present Adjudicating Authority in addition to the hearings granted by the then Commissioner and decided to process the case as per evidence available in the file. Shri V. Prasad Rao and Sri G.V.S. Kondala Rao have neither appeared for personal hearing on 6th August, 2010 nor reque....