TaxTMI 
TaxTMI 
2019 (4) TMI 1931
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....after) to other States against export permits issued by the Excise Department. The permits were got issued for export of IMFL to the importers in the State of Goa. The export of IMFL from the State of Jammu and Kashmir to any other State against due permission was exempted from payment of Excise Duty. The petitioner availed that exemption. Later on, the department found that the export was on the basis of some fake documents. Accordingly, demand notice dated 25.09.2010 was issued against the petitioner, directing the petitioner to remit an amount of Rs. 4,51,65,600/- as Excise Duty within a period of 15 days from the date of service of the notice failing which same was to be recovered as arrears of land revenue. Against the demand raised, the petitioner has filed the present writ petition. OWP No. 1384/2010 3. Subsequently, the respondents issued notice dated 07.10.2010, directing the petitioner-M/s Basantar Bottlers to remit an amount of Rs.2,70,000/- as toll tax and fine of Rs. 27,00,000/- on account of misuse of Toll Tax exemption on fake documents. The petitioner was further directed to explain his as to why he should not be debarred from claiming toll tax exemption for a per....
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....d 07.10.2010 to the petitioner-New India Breweries for recovery of toll tax of Rs. 4,06,922/- and fine amounting to Rs. 40,69,220/-. The petitioner was further directed to explain his as to why he should not be debarred from claiming toll tax exemption for a period of one year in terms of Rule 58 of the Rules. The aforesaid notice was followed by another notice dated 23.10.2010. By final notice dated 08.11.2010, the petitioner was directed to deposit the aforesaid amount and was further directed to explain his position within 15 days as to why he should not be debarred from claiming the toll tax exemption for a period of one year. Both the aforesaid notices and vires of Rule 58 of the Rules have been challenged by the petitioner by filing the present writ petition. OWP No. 1185/2010 7. As pleaded, the petitioner ( M/s New India Distillery) herein is a sole proprietorship concern. He is engaged in business of blending and bottling of Indian Made Foreign Liquor and JK Desi Whisky. He is having his Unit at Sujwan, Samba under license No. JKEL07/D-2. It is claimed that during the years 2008-09 and 2009-10, the petitioner exported Indian Made Foreign Liquor (for short 'IMFL' herei....
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.... beyond the rule making powers vested in the State. If the goods had left the State toll barriers, the only authority which could take action may be some officer in the office and not at the Toll barrier. The provision regarding penalty is totally vague and excessive besides being without jurisdiction. Though Section 8 of the Act deals with certain situations where penalty could be levied, however, the situation of this kind has not been provided for in the Toll Act or the Rules. No penalty could be levied on the petitioners merely for the reason that the goods did not reach the destination. Penal provisions have to be construed strictly. In the absence of enabling provision, such powers cannot be assumed by the official concerned. In fact if the Rules have to be held to be intra vires, these will have to be read down. 11. As far as merits of the controversy is concerned, it was submitted that the Deputy Excise Commissioner at Lakhanpur did not have jurisdiction to inquire about the import permits on the basis of which, export permits had been issued. Import and export permits have been issued by different authorities situated in two different States. Rule 58 of the Rules does not....
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....uch huge demand against the petitioners. 14. As far as demand of excuse duty raised against the petitioners, the learned senior counsel for the petitioners submitted that from a perusal of the show cause notice it is evident that some enquiry was conducted regarding genuineness of the Import and Export permits, on the basis of which the petitioner claimed exemption from payment of excise duty under the Jammu and Kashmir Excise Act, Svt. 1958. The petitioners were not associated during the process of enquiry. The petitioners had filed detailed reply to the aforesaid show cause notices, specifically stating that they were not aware of any complaint filed as neither the copy of the complaint nor copy of the enquiry report was supplied to the petitioners. Despite request made no material which was relied upon by the authorities for raising huge demand against the petitioners was supplied to them and they were condemned unheard. There was violation of principles of natural justice. Hence, the demand of excise duty raised against the petitioners also deserves to be set aside. 15. On the other hand, learned counsel for the respondents submitted that the petitioners, were able to defraud....
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....erever any devise or method is used, resulting in evasion of tax. 18. Learned State counsel further submitted that petitioners had been granted due opportunity of hearing but they failed to avail the same. Hence, there was no option with the authorities except to pass the order. 19. In response, learned senior counsel for the petitioners submitted that alternate remedy will not be a bar for entertainment of the writ petitions, once vires of the Rules is under challenge and secondly, when there is blatant violation of principles of natural justice. The judgment in FEDCO (P) Ltd's case (supra) is not applicable as the same is distinguishable. Even the department had admitted that a deeper probe was needed in the matter. The enquiry in fact remained inconclusive. Once there is a procedure prescribed in the Act and the Rules providing for verification of the import permits before issuance of the export permits, the department should have followed the same. If it has failed, the petitioners cannot be faulted with. A huge demand cannot be created against the petitioners, including fine, once the officers of the department are at fault. Even the petitioners have been cheated in the ....
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....he petitioners claimed exemption, was assessed and fine to the tune of ten times of the amount of toll tax was levied. The petitioners were directed to deposit the same vide notice dated 07.10.2010, failing which proceedings under the Tolls Act were to be initiated. Notices were also issued to show cause as to why action be not taken for debarring the petitioners from availing toll tax exemption for a period of one year. Though complete documents in each case have not been placed on record by either of the parties, however, it is evident that the aforesaid notices dated 07.10.2010 were followed by reminder dated 23.10.2010 and thereafter final notice dated 08.11.2010 was issued. 25. In OWP No. 1423/2010, subsequent to final notice dated 08.11.2010, vide order dated 27.11.2010 the petitioner was debarred from claiming the toll tax exemption for a period of one year from 25.09.2010 onwards. Further a sum of Rs. 29,556/- was assessed as toll tax exemption availed of from 21.09.2010 onwards. Subsequently a notice was issued on 27.11.2010 for depositing the aforesaid amount. RELEVANT PROVISIONS AND SCHEME OF THE TOLLS ACT AND THE RULES 26. Before considering the rival contentions rai....
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....ods or animals reaching a Toll Post for levy of toll. Explanation: For the purposes of this section assessment shall mean scrutiny of invoices, challans, or bills or documents, or declaration or physical verification of goods, vehicles or animals, or such evidences which the Assessing Officer may collect in order to ascertain correctness of the statement of the driver or the person incharge of goods or animals and to assess toll leviable on such vehicles, goods, or animals on challan weight or actual weight whichever is higher or ad-valorem, as the case may be. Section 5. Exemption from tolls:- The Government may from time to time define and grant exemptions from payment of tolls levied under this Act. Section 5-A. Recovery and refund of toll short levied or erroneously paid etc.:- (1) When toll or charges have been short levied through inadvertence, error, collusion or misconstruction on the part of the Toll Officer, or through mis- statement as to the quantity, number or description of the goods, animals or vehicles on the part of the owner, or when such toll or charges after having been levied has been owing to any such cause erroneously refunded, the person chargeable w....
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.... & Kashmir Government Gazette, make rules from time to time for the purpose of carrying out the provisions of this Act." 27. Section 3 of the Tolls Act provides for levy of toll and the rates thereof. Section 4 of the Act authorizes the Government to establish toll gates/stations at such places as it may decide. Section 4-A provides that any Officer mentioned in Section 2(2) of the Tolls Act may access the vehicles, goods or animals reaching at the toll post for levy of the tax. Section 5 authorizes the State Government to define and grant exemption from toll leviable under the Tolls Act. In exercises of power conferred under Section 5 of the Tolls Act, the State Government issued notification vide SRO 129 dated 30.03.2001 exempting the IMFL/Beer manufactured in the State and exported outside the State from payment of additional and special tax leviable under the Tolls Act for a period of two years. The exemption came into force w.e.f. 01.04.2001. Vide notification bearing SRO 117 dated 24.04.2002 the words 'two years' were deleted from the notification dated 30.03.2001. Section 5-A deals with recovery and refund of toll short levied or erroneously paid. Section 8 deals with ....
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....violation. (iii) The Dy. Excise Commissioner (Executive) or any other Officer not below the rank of Excise and Taxation Officer duly authorised by the Commissioner shall have the power to enter and inspect any industrial unit / premises to verify and examine the books and account, stock of raw material / finished goods to ensure that the facility of toll exemption being availed of by the concerned Industrial Unit is not being misused. An Industrial Unit misusing toll exemption or claiming exemption on toll fraudulently shall, besides penal action warranted for evasion to toll, be debarred from claiming any further exemption of toll. (iv) Where misuse of industrial incentives comes to the notice of the Sales Tax Department the officer concerned of that Department shall immediately inform the concerned toll authorities about the facts of the case. Proceedings under section 8 and 13 of the Act shall be initiated against the defaulter besides any other action as envisaged in sub-rule(ii). (v) Where an industrial unit has availed exemption on import of raw material or export of finished goods and such raw material or finished goods have been rejected by the consignee, such consign....
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....rom payment of toll tax. It was in exercise of powers conferred under Section 5 of the Act that the petitioners had been granted exemption from payment of toll tax on export of IMFL/Beer manufactured in the State to any other State in the country. As tax is leviable on the goods which leave the boundary of the State, there is power conferred on the authorities to assess the amount of toll. To promote industrialization, as the power has been vested with the government to grant exemption, the petitioner being manufacture and exporter of IMFL/Beer, claimed exemption. 33. Section 8 of the Tolls Act provides that for any attempt to evade payment of toll, fine to the extent to the ten times the amount of toll is leviable. Section 13 defines the officers who can exercise powers under Section 8. Rule 58 enables the authorized officers to watch the movement of goods on which exemption has been granted to ensure that such goods actually reach the declared destination. These Rules form part of Chapter 4 in the Rules dealing with exemptions. 34. In the case of the petitioners exemption was claimed by the petitioners and had been granted from payment of toll on IMFL/Beer manufactured in the S....
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....er at Toll Post to assess the amount of toll and levy of fine is concerned, in our opinion the contention raised is totally misconceived. 39. Section 8 talks about the offences for which fine can be levied. The same is permissible in case any person adopts any devise to evade payment of toll tax. Section 13 deals with the Officers who can exercise the powers under Section 8 of the Act. It provides that the Officer in-charge of the Toll Gate may impose fine on any person guilty of an offence under Section 8. Hence, to claim that the Officer at the Toll Post was not competent to levy fine as the same could be done only by the Officers in the office, is totally misconceived, hence, is rejected. VIOLATION OF PRINCIPLES OF NATURAL JUSTICE 40. The undisputed facts which are available in the pleadings and what transpired at the time of hearing are that, there was some complaint received by the Chief Minister from one Romesh Kumar resident of Faridabad regarding evasion of toll tax and excise duty. The matter was enquired into by the department at different levels. In the process the petitioners were not associated. First notice served upon the petitioners under the Tolls Act was dated ....
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....along with fine. Show cause was only limited to debarring the petitioners from claiming exemption for a period of one year. The petitioner denied receipt of the aforesaid communication and nothing was referred to by the respondents to substantiate their plea that the aforesaid communication was served upon the petitioners. It was followed by another notice dated 23.10.2010, clearly mentioning that vide earlier letter dated 07.10.2010 the petitioners were directed to remit the toll along with fine and show cause as to why action for debarring them from claiming exemption from toll tax be not taken, which had not been responded to, therefore, further time was granted. It was followed by final notice dated 08.11.2010, which was in similar terms. It was at this stage that the present writ petitions were filed in this Court, except OWP No. 1442/2010, where in exercise of powers conferred under Rule 58(ii) of the Rules, the petitioner therein was debarred from claiming exemption from payment of toll tax for a period of one year w.e.f. 21.09.2010 and amount of toll tax exemption claimed by the petitioner therein from 21.09.2010 till issuance of the order dated 08.11.2010 was also worked o....
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....se proceeding. A show cause proceeding is meant to give the person proceeded against a reasonable opportunity of making his objection against the proposed charges indicated in the notice. xxxx 31. It is of course true that the show cause notice cannot be read hyper-technically and it is well settled that it is to be read reasonably. But one thing is clear that while reading a show-cause notice the person who is subject to it must get an impression that he will get an effective opportunity to rebut the allegations contained in the show cause notice and prove his innocence. If on a reasonable reading of a show- cause notice a person of ordinary prudence gets the feeling that his reply to the show cause notice will be an empty ceremony and he will merely knock his head against the impenetrable wall of prejudged opinion, such a show cause notice does not commence a fair procedure especially when it is issued in a quasi-judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable opportunity of defence. 32. Therefore, while issuing a show-cause notice, the authorities must take care to manifestly keep an open mind as they are to....
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....g by the Commission. It cannot be disputed that no one can be condemned unheard. In case, the petitioners had filed appeal, minimum that was required was intimation of date of hearing to them so as to enable them to appear before the Commission and present their case. Reference can be made to Sayeedur Rehman v. State of Bihar, (1973) 3 SCC 333; Maneka Gandhi v. Union of India, (1978) 1 SCC 248; Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405; Swadeshi Cotton Mills v. Union of India, (1981) 1 SCC 664; Special Leave Petition (Civil) No. 23781 of 2007--Indu Bhushan Dwivedi v. State Jharkhand and another, decided on 5.7.2010. The same having not been done, it has resulted in prejudice to the petitioners. This ground alone is also sufficient to set aside an order passed by any authority. 14. A similar issue came up for consideration before this court in C.W.P. No. 17157 of 2010--M/s Mahindra and Mahindra Ltd. v. The Employees Provident Fund Appellate Tribunal and another, decided on 24.7.2012, where the Employees Provident Fund Appellate Tribunal, which has its principal seat at New Delhi, heard some cases by holding Camp Court at Chandigarh. However, proper intim....
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....d to ensure service of notice on the parties could be through the concerned Regional office of Employees' Provident Fund Organisation, as the establishment normally pertains to that area. We are living in the era of technology. For the means of communication, the same should be utilised. Wherever the establishments are having fax or email I.D. efforts should be made to sent a copy of the notice through that mode as well. In case it is successful, this can be adopted as the method of service of notice in future. In addition thereto, the counsel who filed the appeal should also be informed. The same can also be by way of emails. At the time of filing of the appeal, it should be a requirement that the party, and the counsel who has filed the appeal should provide their complete address, telephone number, fax number and email address so as to enable the Tribunal to communicate with them." ORDER BEING NON-SPEAKING 46. Impugned order also deserves to be set aside on the ground of its being totally non-speaking. No reasons have been assigned in any of the orders for taking action against the petitioners and raising huge demand of toll and fine against them. Considering the issue reg....
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....e sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-737). (n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija v. Spain (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process". 47. In the case in hand a perusal of the impugned order shows that the same is totally non-speaking and lacking in reasons, hence, the same dese....