TaxTMI 
TaxTMI 
2012 (3) TMI 396
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....en 1st October, 1994 and 31st May, 1996. During the pendency of the Special Leave Petitions, Writ Petition (C) No.144/2005 was filed under Article 32 of the Constitution of India, inter alia, praying for a writ of certiorari, quashing order dated 25th September, 2004 passed by the Deputy Director (Administration) Krishi Utpadan Mandi Parishad, Gomti Nagar, Lucknow in another batch of revision petitions (pertaining to the period between 3rd June, 1996 and 30th April, 2004) and an assessment order dated 7th July, 1998 passed by the Krishi Utpadan Mandi Samiti, Aligarh. A declaration to the effect that the goods removed from the petitioner's unit at Aligarh to places outside the State of Uttar Pradesh were by way of stock transfer and no Mandi Fee was payable on such transfers has also been prayed for. The facts giving rise to the appeals and the writ petition may be summarised as under: 2. Glaxo India Ltd., set up an industrial unit at Aligarh for the manufacture of what is sold in the market under the brand names Glacto, Complan, Farex, Glucon D and other products generically called milk foods/weaning foods and energy beverages. It is not in dispute that the manufacturing pro....
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....te passes remained in vogue upto February, 1995, whereafter the Mandi Samiti started issuing gate passes only on payment of the Mandi Fee demanded by it. This change came about as a result of the aforementioned decision of this Court in Shree Mahalaxmi Sugar Works (supra). Subsequently, in Krishi Utpadan Mandi Samiti v. M/s Saraswati Cane Crusher & Ors. (Civil Appeal Nos. 1769-1773 of 1998), decided on 25th March, 1998 this Court prescribed the procedure to be followed in the matter of issue of gate passes, making of provisional assessment and the time frame for making a final assessment. "We are satisfied that the orders of this Court afore-referred to would need some repair work. We treat the said order to be conceiving of a provisional assessment where after doors are opened for a final assessment. We conceive that when demands are raised by the Krishi Utpadan Mandi Samiti against a trader before he could ask for transit of goods outside the market area, the trader would be entitled to tender a valid rebuttal to say that no sale had taken place within the notified area and that if the explanation is accepted there and then by the Mandi Samiti, no question of payment would ari....
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....then evaluated by the Mandi Samiti who came to the conclusion that the same was not sufficient to rebut the statutory presumption that the removal of goods from the Mandi limits was pursuant to a sale effected within such limits. The claim for refund of the amount paid by the appellant-Heinz was accordingly rejected by the Mandi Samiti in terms of the orders referred to earlier. 7. Aggrieved by the order passed by the Mandi Samiti both Glaxo India Ltd. and Heinz India Pvt. Ltd. filed revision petitions before the Director, Mandi Parishad, invoking his jurisdiction under Section 32 read with Section 33 of the Act as a delegate of the Mandi Parishad. By his order dated 24th October, 1996, the Director dismissed the revision petitions, aggrieved whereof the companies filed Writ Petitions before the High Court of Allahabad. These Writ Petitions were eventually allowed by the High Court in terms of an order dated 3rd April, 1997, and the matter remitted back to the Director for a fresh consideration and disposal in accordance with law. 8. The Director accordingly heard the revision petition afresh, re- appraised the material relied upon by the companies in support of their claim f....
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....ck transfer and the concept of taking out the sale under explanation of 17(3)(B), it has failed to prove by producing counter valid rebuttal of concept because according to the case went for revision on stock transfer and place of destination it has failed to tell the presence by producing the best chain of evidence for proving...." 9. Writ Petition Nos. 2320(M/S), 2516(M/S), 2517(M/S), 2518(M/S), 2519(M/S), 250(M/S), 226(M/S) and 2527(M/S) of 1997 filed by Glaxo India Ltd., before the High Court of Allahabad challenged the correctness of the above order. Heinz India Pvt. Ltd. also filed Writ Petition Nos. 2323(M/S), 2321(M/S), 2322(M/S), 2324(M/S), 2325(M/S), 2326(M/S), 2474(M/S), 2475(M/S), 2476(M/S), 2477(M/S) and 2478(M/S) of 1997 before the High Court challenging the same order. The High Court, however, concurred with the view taken by the Mandi Samiti and the Director of the Parishad and dismissed the writ petitions by its order dated 20th August, 2004. The High Court held that the material produced by the companies did not make out a case for refund for it did not rebut the presumption that ghee produced in the company's unit at Aligarh was not sold from Aligarh or th....
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....ng statute is not wholly immune from attack on the ground that it infringes the equality clause in Article 14, this Court found that the enactment in question was violative of Article 14 of the Constitution for inequality was writ large on the Act and inherent in the very provisions under the taxing section thereof. Having said so, this Court also noticed that the Act was silent as to the machinery and the procedure to be followed in making the assessment. It was left to the Executive to evolve the requisite machinery and procedure thereby making the whole thing from beginning to end purely administrative in character completely ignoring the legal position that the assessment of a tax on person or property is a quasi-judicial exercise. Speaking for the majority Sinha, C.J. said: "Ordinarily, a taxing statute lays down a regular machinery for making assessment of the tax proposed to be imposed by the statute. It lays down detailed procedure as to notice to the proposed assessee to make a return in respect of property proposed to be taxed, prescribes the authority and the procedure for hearing any objections to the liability for taxation or as to the extent of the tax proposed to ....
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....urts to consider whether the failure to provide for a machinery and to prescribe a procedure does not tend to make the imposition of the tax an unreasonable restriction within the meaning of Article 19(5). An imposition of tax which in the absence of a prescribed machinery and the prescribed procedure would partake of the character of a purely administrative affair can, in a proper sense, be challenge as contravening Article 19(1)(f)." (emphasis supplied) 15. In The State of Andhra Pradesh and Anr. v. Nalla Raja Reddy and Ors. (AIR 1967 SC 1458), this Court was examining the constitutional validity of Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision Act (22 of 1962) as amended by Amendment Act (23 of 1962). Noticing the absence of machinery provisions in the impugned enactments this Court observed: "...if S.6 is put aside, there is absolutely no provision in the Act prescribing the mode of assessment. Section 3 and 4 are charging sections and they say in effect that a person will have to pay an additional assessment per acre in respect of both dry and wet lands. They do not lay down how the assessment should be levied. No notice has been prescribed;....
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....question whether the said Act provides a suitable machinery for assessment and recovery of the fee has been examined by this Court in Ram Chandra Kailash Kumar & Co. & Ors. v. State of U.P. & Anr. 1980 (Supp) SCC 27. That decision arose out of a writ petition filed before the High Court of Allahabad challenging the constitutional validity of the Adhiniyam. The High Court had dismissed the challenge to the constitutional validity of the enactment which order was then assailed before this Court in an appeal by special leave. This Court formulated as many as 24 distinct points for determination based on the grounds that were urged in support of the challenge. One of the points that fell for consideration was whether the rules framed under the Act provide for any machinery for adjudication of disputes in addition to the factum and quantum of liability arising as under the Act. The contention precisely was that neither the Act nor the rules made any provision for adjudication of disputes that would arise on both these aspects. While rejecting the submission on behalf of the Marketing Committee that no such disputes actually exist or are likely to exist which would require any machinery ....
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....on 33 of the Act. What according to Mr. Chandra is surprising is that even the Director does not hear the matters himself. The actual disposal of the revision is left to a junior officer to whom the Director may assign the case for disposal. Hearing by any such junior officer who is neither by training nor by qualification suited for such determination of complicated issues regarding the liability of the purchaser or seller of goods within a market area makes the entire process of determination farcical. A machinery for adjudication of disputes can be said to have been provided for only if the same ensures a fair and objective adjudication of the matters in disputes at the hands of the authority who is either by reasons of his training, experience or qualification fit to determine the controversy. So long as such a provision is absent in the scheme of the Act, the requirement of machinery for adjudication of disputes must be deemed to be absent, argued Mr. Chandra. 21. Section 32 of the Act empowers the Board to call for and examine the proceedings of the Committee for the purpose of satisfying itself as to the legality or propriety of any decision or order passed by a Committee....
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....to perform all or any of his functions under this Act." 24. It is manifest from a plain reading of the above that the expression 'Director' wherever used in the Act including Section 33 thereof includes an officer authorised by the Director to perform all or any of his functions under the Act. Significantly enough neither before the High Court nor before us was it contended that the officer who had handled and disposed of the revision petitions filed by the dealers, was not duly authorised in terms of Section 2(h) or that the power of the Board under Section 32 of the Act was not duly delegated to the Director. It is not, therefore, a case of inherent lack of jurisdiction. All that the appellants propose is that the revisions could either be heard by the Board itself or made over for disposal to a Committee of officers senior enough to decide issues of fact and law involving substantial financial stakes of the parties. Now it is true that the stakes involved in the present batch of cases are substantial and those called upon to satisfy the demands raised against them would like their cases to be heard by a senior officer or a Committee of officers to be nominated by the ....
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....ch area; the price of the produce so presumed to be sold is then determinable in the manner prescribed. The Explanation reads: Explanation.- For the purpose of clause (iii), unless the contrary is proved, any specified agricultural produce taken out or proposed to be taken out of a market area by or on behalf of a licensed trader shall be presumed to have been sold within such area and in such case, the price of such produce presumed to be sold shall be deemed to be such reasonable price as may be ascertained in the manner prescribed." 26. It is fairly evident that the presumption is rebuttable in nature; for it holds good only till the contrary is not proved by the dealer. The question is what is the standard of proof required to rebut the statutory presumption; and whether the Market Committee, the Director or the High Court applied the correct legal standard for holding that the presumption was not effectively rebutted. 27. Relying upon the decision of this Court in Sodhi Transport Co. & Ors. v. State of U.P. & Ors. (1986) 2 SCC 486, Mr. Sudhir Chandra contended that the standard of proof applicable was that applied in civil actions which are decided on the preponderanc....
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....to rebut a presumption whether statutory or at common law. In England, the civil standard of proof is defined by Lord Denning in Miller v. Minister of Pensions [1947] 2 All ER 372, thus: "..........It need not reach certainty, but it must carry a high degree of probability. Proof beyond reasonable doubt does not mean proof beyond the shadow of doubt. The law would fail to protect the community if it admitted fanciful possibilities to deflect the course of justice. If the evidence is so strong against a man as to leave only a remote possibility in his favour which can be dismissed with the sentence "of course it is possible, but not in the least probable" the case is proved beyond reasonable doubt, but nothing short of that will suffice." 32. Three years later came Bater v. Bater [1950] 2 All ER 458, in which the civil standard of proof to an extent modified, was seen by some jurists as somewhat confusing the concept so clearly stated in Miller's case (supra). In Bater (supra) the Court declared that neither civil nor criminal standard of proof was an absolute standard. A 'civil case' may be proved by a preponderance of probability, explained, Denning J., "......bu....
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....one end and 'beyond a reasonable doubt' at the other. Clear and convincing evidence has been described as evidence that produces in the mind of the trier of the fact an abiding conviction that the truth of the factual contentions is highly probable. [See 32A Corpus Juris Secundum Evidence ' 1624]. 35. We may at this stage refer to a few decisions of this Court on the subject. In Izhar Ahmad Khan v. Union of India and Ors. (AIR 1962 SC 1052), this Court was examining the provisions of Schedule III Rule 3 of the Citizenship Rules, 1956 which made it obligatory on the enquiring authority to infer the acquisition of citizenship of a foreign country from the fact that the passport of foreign country has been obtained by an Indian citizen. The question was whether a rule about irrebuttable presumption is a rule of evidence or not. The question had arisen in the context of rule- making power of the Central Government under Section 9(2) of the Citizenship Act, 1955 according to which the Central Government could prescribe rules of evidence subject to which the competent authority could hold an inquiry. The contention urged was that instead of prescribing a rule of evidence t....
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.... the probative value of the said fact A in relation to the proof of the existence of fact B? In regard to the category of facts in respect of which an irrebuttable presumption is prescribed by a rule of evidence, the position is that the inherent probative value of fact A in that behalf is very great and it is very likely that when it is proved in a judicial proceeding, the judicial mind would normally attach great importance to it in relation to the proof of fact B. The rule steps in with regard to such facts and provides that the judicial mind should attach to the said fact conclusiveness in the matter of its probative value. It would be noticed that as in the case of a rebuttable presumption, so in the case of an irrebuttable presumption, the rule purports to assist the judicial mind in appreciating the existence of facts. In one case the probative value is statutorily strengthened but yet left open to rebuttal, in the other case, it is statutorily strengthened and placed beyond the pale of rebuttal. Considered from this point of view, it seems rather difficult to accept the theory that whereas a rebuttable presumption is within the domain of the law of evidence, irrebuttable pr....
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....t of circumstances which would make a transaction liable to tax was tantamount to conferring on the authority concerned the power to levy a tax which the legislature could not otherwise levy. Repelling the contention this Court held that a rebuttable presumption has the effect of shifting the burden of proof, for the authority concerned, before levying sales tax arrives at the conclusion about the exigibility of the tax by a judicial process and only upon his satisfaction that the goods have been sold inside the State. In doing so, the authority no doubt relies upon the statutory rules and presumption contained in Section 28-B of the Act. But such presumption can be rebutted by the person against whom action is taken under Section 28-B when the person concerned has the opportunity to displace the presumption by leading evidence. That being so, provision of Section 28-B inasmuch as the same raises a rebuttable presumption did not suffer from any vice of unconstitutionality. This Court observed: "14. A presumption is not in itself evidence but only makes a prima facie case for party in whose favour it exists. It is a rule concerning evidence. It indicates the person on whom the bu....
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....ed within the market area is not in dispute in the instant case. That they left the market area is also admitted. In the ordinary course, therefore, the presumption would be that the goods left pursuant to a sale unless the appellants are in a position to prove the contrary. 40. The second reason for applying a higher standard of proof than mere preponderance of probability is that the nature of transaction pursuant to which the goods are removed from the market area is within the exclusive knowledge of the appellants or the persons to whom such goods are being dispatched. In other words, the circumstances in which the transactions, which the statute presumes to be sales, but which the appellants claim are simple transfer of stocks are within the exclusive knowledge of the appellants. The entire evidence relevant to the transactions, being available only with the appellants and the true nature of the transactions being within their special knowledge, there is no reason why the rebuttal evidence should not satisfy the higher standard of proof and clearly and convincingly establish that the fact presumed is not the actual fact. Our answer to Question No.2 accordingly is that the e....
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....ogic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it. Whether a decision falls within this category is a question that judges by their training and experience should be well equipped to answer or else there would be something badly wrong with our judicial system... ... I have described the third head as 'procedural impropriety' rather than failure to observe basic rules of natural justice or failure to act with procedural fairness towards the person who will be affected by the decision. This is because susceptibility to judicial review under this head covers also failure by an administrative tribunal to observe procedural rules that are expressly laid down in the legislative instrument by which its jurisdiction is conferred, even where such failure does not involve any denial of natural justice." 43. The above principles have been accepted even by this Court in a long line of decisions handed down from time to time. We may, however, refer only to some of those decisions where the development of law on the subject has been extensively examined and the principles applicable clearly en....
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.... review is that unless the restrictions on the power of the Court are observed, the Courts may themselves under the guise of preventing abuse of power, be guilty of usurping that power. Justice Frankfurter's note of caution in Trop v. Dulles 356 U.S. 86 (1958) is in this regard apposite when he said: "All power is, in Madison's phrase, 'of an encroaching nature'. Judicial power is not immune against this human weakness. It also must be on guard against encroaching beyond its proper bounds, and not the less so since the only restraint upon it is self- restraint." 46. That the Court dealing with the exercise of power of judicial review does not substitute its judgment for that of the legislature or executive or their agents as to matters within the province of either, and that the Court does not supplant 'the feel of the expert' by its own review, is also fairly well-settled by the decisions of this Court. In all such cases judicial examination is confined to finding out whether the findings of fact have a reasonable basis on evidence and whether such findings are consistent with the laws of the land. [See Union of India v. S.B. Vohra, (2004) 2 SCC 150, ....
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....hat in case of review, as distinct from an ordinary appeal, the court may not set about forming its own preferred view of evidence." 50. In its order dated 13th September, 1995 the Mandi Samiti, Aligarh, has upon examination of the evidence adduced before it recorded a finding that the same did not inspire confidence for a variety of reasons. The Samiti has found that the appellants had failed to produce any evidence as to when and where any transaction regarding sale and purchase of ghee manufactured within Mandi area was finalised. No evidence was adduced by the appellants to show as to who had been instrumental in finalising such sale transactions out of its officers and employees. If the product was being sold under the directions of the officers of the Company it should have been possible for the company to firmly establish the identity of such officers and furnish details as to when and where the sale transaction of different stocks of ghee sent out from the market area was finalised. The Samiti was of the view that although the appellant had claimed that there were separate C&F agreements with various agents appointed by it at several destinations outside the mandi area t....
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....were paid by it and by no one else. Keeping in view the fact that the company is doing business worth crores of rupees and maintains regular accounts book, both in the ordinary course of its business as also for tax purposes, there was no reason why the company should have failed to establish that the transport charges were paid by it. The Director exercising powers of the Mandi Parishad also held that there was a break in the chain of reasons in as much as the appellants did not bring forth the link evidence giving details of the sale transactions pursuant to which C&F agents had made the delivery of the goods. 52. The orders passed by the Mandi Samiti and the Director exercising powers of the Mandi Parishad thus clearly show that there was no clear and convincing evidence to establish that the presumption arising under Section 17(iii) of the Act stood rebutted and that the actual was not, what was presumed under the said provision. 53. To the same effect are the findings recorded by the Mandi Samiti in its order dated 7th July, 1998 with minor variations here and there. The Mandi Samiti, inter alia, noticed that while some of the transport consignment note showed that the s....
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....ed in the earlier part of this order, it is neither feasible for us to embark upon an exercise of re- appreciating the entire material or to substitute our own findings for those recorded by the Mandi Samiti and the Director/Mandi Parishad. So long as the finding recorded by the Mandi Samiti and the Mandi Parishad are not irrational or perverse, and so long as the view taken by them is a reasonably possible view, this Court would not interfere. 58. In course of arguments at the Bar, we repeatedly asked Mr. Chandra as to why the appellants had failed to adduce the material which would throw a flood of light as to the true nature of the transaction within or outside the mandi area. Mr. Chandra's reply was that the material was available and could be produced if so required. Some of this material which was with the appellant but was not produced was sought to be introduced even at the stage of hearing before us, while the rest could, argued Mr. Chandra be laid before the Samiti, if an opportunity to do so could be granted to the appellant. 59. We regret our inability to accede to any such request. We do not think that a party who has had ample opportunity before the authorit....