TaxTMI 
TaxTMI 
2024 (5) TMI 722
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....and Fertilizers Limited is a registered company on the rolls of the Commercial Tax Officer, Tadepalligudem and dealer in vegetable oil, deoiled cake etc. During the year 1991-92 the petitioner sent consignment of vegetable oils to outside the State and sales through non-resident agents. The assessing authority-Commercial Tax Officer (CTO) vide proceedings in GI No. 539/91-92 (CST), dated 29.02.1996 granted an exemption on a turnover of Rs. 1,64,15,660/-. The Deputy Commissioner (Commercial Tax), in his revised Order dated 18.03.1997 has brought a turnover of Rs. 1,52,12,755/- to tax as inter-state sales. The assessee/petitioner filed Tribunal Appeal No. 192 of 1997, which has been dismissed by the Appellate Tribunal by Order dated 31.12.2001. 4. The Deputy Commissioner (CT) in its Order has clearly observed that the Commercial Tax Officer examined the books of accounts of the dealers and a show cause notice dated 19.01.1993 was issued allowing exemption on the turnover of Rs. 1,66,70,771/- in addition to other exemption relying on sale patties and F-forms filed by the dealer. The Commercial Tax Officer subsequently issued another show cause notice dated 03.07.1993 proposing with....
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....rms without discharging the responsibility of burden of proof would not make the transactions as consignment sales. The order was passed. 6. The Appellate Tribunal also observed in its judgment that the turnover in question related to the transactions of the following 5 alleged agents. Sl.No. Alleged Agent Turnover 1. M/s. Atlas Trade Links, Bombay 52,48,353.40 2. M/s. Shri Impex, Bombay 57,19,398.00 3. M/s. United Trade Co., Bombay 32,68,451.95 4. M/s. Heera Enterprises, Bombay 3,79,467.00 5. M/s. Ashok Enterprises, Bombay 5,97,085.37 Total Rs. 1,52,12,755,72 The Appellate Tribunal recorded that a copy of the letter of the Deputy Commissioner (Sales Tax) Enforcement, Bombay addressed to the Deputy Commissioner (CT), Eluru made it clear that the Sales Tax Department of Maharashtra had not supplied any 'F' forms to any of the 5 dealers, as mentioned above. M/s. Atlas Trade Links and M/s. Shri Impex were dealers in iron and steel. The registration certificate of M/s. United Trading Company was cancelled with effect from 19.02.1991, when it was found that the dealer was issued Hawala bills. The registration ce....
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....ce in the case of Shalini Steels Pvt. Ltd. v. Commr.of Cus. & C. Ex., Hyderabad 2011 (269) E.L.T. 485 (A.P.). 11. We have considered the submissions advanced and perused the material on record. Question of law: 12. The question of law that arises for consideration is as follows: "Whether the report of the Commercial Tax Department at Bombay could be relied upon without affording an opportunity to the petitioner to cross-examine the Officers of Commercial Tax Department of the reports at Bombay?" Analysis: 13. The Appellate Tribunal on the aforesaid point observed that when the Officers of the Government have issued a statement or sent an enquiry report on the basis of the records available, the question of cross-examining the Officers would not arise. It placed reliance in the case of State of Kerala v. Shaduli Yousuff 39 STC 478 wherein the Hon'ble Apex Court held that the Tax Officers are not bound by any technical rules of law of evidence. It also referred to the case of Sri Venkateswara Rice Shop v. State of A.P. 9 APSTJ 87 to observe that strict rules of evidence embodied in the Evidence Act do not apply to the proceedings before the Assessing Authority....
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....ral justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case." 3. One of the rules which constitutes a part of the principles of natural justice is the rule of audi alteram partem which requires that no man should be condemned unheard. It "is indeed a requirement of the duty to act fairly which lies on all quasi-judicial authorities and this duty has been extended also to the authorities holding administrative enquiries involving civil consequences or affecting rights of parties because as pointed out by this Court in A.K. Kraipak v. Union of India [(1969) 2 SCC 262 : (1970) 1 SCR 457] "the aim of the rules of natural justice is to secure justice or to put it negatively, to prevent miscarriage of justice" and justice, in a society which has accepted socialism as its article of faith in the....
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.... an opportunity to rebut the same. In these circumstances, therefore, we do not agree with Mr Gupte that merely because the technical rules of evidence do not strictly apply, the right of cross-examination cannot be demanded by the assessee in a proper case governed by a particular statute. 12. This Court further fully approved of the four propositions laid down by the Lahore High Court in Seth Gurmukh Singh v. CIT [(1944) 12 ITR 393 (Lahore HC)] . This Court was of the opinion that the Taxing Authorities had violated certain fundamental rules of natural justice in that they did not disclose to the assessee the information supplied to it by the departmental representatives. This case was relied upon by this Court in a later decision in Raghubar Mandal Harihar Mandal case where it reiterated the decision of this Court in Dhakeswari Cotton Mills Ltd. case [AIR 1955 SC 154 : (1955) 1 SCR 941 : (1955) 27 ITR 126] , and while further endorsing the decision of the Lahore High Court in Seth Gurmukh Singh case [(1944) 12 ITR 393 (Lahore HC)] pointed out the rules laid down by the Lahore High Court for proceeding under sub-section (3) of Section 23 of the Income Tax Act and observe....
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....anding cross-examination of witnesses or not would naturally depend upon the nature of the materials relied upon by the Sales Tax Authorities, the manner in which the assessee can rebut those materials and the facts and circumstances of each case. It is difficult to lay down any hard and fast rules of universal application. We would, therefore, first try to interpret the ambit of Section 17 (3) and the proviso thereof in order to find out whether a right of cross-examination of witnesses whose accounts formed the basis of best judgment assessment is conferred on the assessee either expressly or by necessary intendment. Section 17 (3) of the Act runs thus: "If no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment: Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of being heard....
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....e accounts maintained by them. It is quite possible that the wholesale dealers may have mentioned certain transactions in their books of account either to embarrass the assessee or due to animus or business rivalry or such other reasons which can only be established when the persons who are responsible for keeping the account are brought before the authorities and allowed to be cross-examined by the assessees. This does not mean that the assessing authority is bound to examine the wholesale dealers as witnesses in presence of the assessees: it is sufficient if such wholesale dealers are merely tendered by the Sale-Tax Authorities for cross-examination by the assessees for whatever worth it is. In view of the express provision of the second part of the proviso, we are fully satisfied that the respondents had the undoubted right to cross-examine the wholesale dealers on the basis of whose accounts the returns of the assessees were held to be incorrect and incomplete. We are fortified in our view by a decision of this Court in C. Vasantilal and Co. v. CIT [(1962) 45 ITR 206, 209] where this Court observed as follows: "The Income Tax Officer is not hound by any technical rules....
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....omplete he should be conceded the opportunity of cross-examination and it was difficult to conceive as to how the assessee would be able to disprove the correctness of the accounts of the wholesale dealers, unless he was given a chance to cross examine them with respect to the credibility of the accounts maintained by them. Consequently, the opportunity of cross-examination was held to be incorporated in Section 17 (3) itself. 18. In Shalini Steels Pvt. Ltd. (supra), the Andhra Pradesh High Court held that the cross-examination of a witness, on whose statement reliance is placed by the adjudicating authority, is no doubt a facet of the principles of natural justice, however, natural justice is no unruly horse, no lurking landmine, nor a judicial cure-all. If fairness is shown by the decision maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice, without reference to administrative realties and other factors of a given case can be exasperating. It was further held ....
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....the inquiry, the subject-matter to be dealt with, and so forth. (Wade's Administrative Law (5th Edn., pp. 472-75). 10. To sustain the allegation of violation of principles of natural justice one must establish that prejudice has been caused by non-observance thereof, (Syndicate Bank vs. Venkatesh Gururao Kurati {AIR 2006 SC 3542}; K.L. Tripathi; Rajendra Singh v. State of M.P. {AIR 1996 SC 2736}; Aligarh Muslim University v. Mansoor Ali Khan {(2000) 7 SCC 529} and State Bank of Patiala vs. S. K. Sharma {AIR 1996 SC 1669}, more so on the ground ofabsence of opportunity of cross-examination. (Jankinath Sarangi v. State of Orissa {(1969) 3 SCC 392}; K.L. Tripathi - {(1984) 1 SCC 43}. All that the Courts haveto see is whether the non-observance of any of these principles, in a given case, is likely to have resulted in deflecting the course of justice. (State of U.P. vs. Om Prakash Gupta {AIR 1970 SC 679}. Where, on the admitted and indisputable facts, only one view is possible no prejudice can be said to have been caused. (S.L. Kapoor v. Jagmohan {(1980) 4 SCC 379}; Aligarh Muslim University - (2000) 7 SCC 529; Dr.Gurjeewan Garewal v. Dr. Sumitra Dash {(2004) 5 SCC 263}. Where....
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.... in the facts and circumstances of that case. 21. In Telstar Travels Private Limited (supra) the Hon'ble Apex Court further referred to its another pronouncement in the case of Kanungo & Co. v. Collerctor of Customs (1973) 2 SCC 438 in which it was observed that the principles of natural justice do not require that in each case the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross examined by them on the statements made before the Customs Authorities. In Kanungo & Co. (supra) the adjudicating authority had mainly relied upon the statements of the appellants therein and the documents seized in the course of the search of their premises. Apart from that, the adjudicating authority had also placed reliance upon the documents produced by two witnesses. Those documents were disclosed to the appellants therein who were permitted to inspect the same. The Hon'ble Apex Court observed that production of documents duly confronted to the appellants was in the nature of production in terms of Section 139 of the Evidence Act, where the witness producing the documents are not subjected to cross examination. Suchbeing the cas....
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....e same. The production of the documents duly confronted to the appellants was in the nature of production in terms of Section 139 of the Evidence Act, where the witness producing the documents is not subjected to cross-examination. Such being the case, the refusal of the adjudicating authority to permit cross-examination of the witnesses producing the documents cannot even on the principles of the Evidence Act be found fault with. At any rate, the disclosure of the documents to the appellants and the opportunity given to them to rebut and explain the same was a substantial compliance with the principles of natural justice. That being so, there was and could be no prejudice to the appellants nor was any demonstrated by the appellants before us or before the courts below. The third limb of the case of the appellants also in that view fails and is rejected." 23. In State of Uttar Pradesh v. Sudhir Kumar Singh (2021) 19 SCC 706 the Hon'ble Apex Court on an analysis of various judgments observed and held as under in paragraph-42: "42. An analysis of the aforesaid judgments thus reveals: 42.1. Natural justice is a flexible tool in the hands of the judiciary to reach ....
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....Judge in their own cause; and (ii) audi alteram partem, which means that a person affected by administrative, judicial or quasi-judicial action must be heard before a decision is taken. The courts generally favour interpretation of a statutory provision consistent with the principles of natural justice because it is presumed that the statutory authorities do not intend to contravene fundamental rights. Application of the said principles depends on the facts and circumstances of the case, express language and basic scheme of the statute under which the administrative power is exercised, the nature and purpose for which the power is conferred, and the final effect of the exercise of that power. [Union of India v. J.N. Sinha, (1970) 2 SCC 458]. 25. The Hon'ble Apex Court referred inter alia to its earlier judgment in Canara Bank v. V. K. Awasthy {(2005) 6 SCC 321} in which it was held inter alia that what particular rule of natural justice should be implied and what its context should be in a given case must depend to a great extent on the fact and circumstances of that case, the framework of the statute under which the enquiry is held. Paragraph-45 of Rajesh Agarwal (supr....
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....ances of the case. Whether the report should be furnished or not must therefore depend in every individual case on the merits of that case. Paragraph-78 of Rajesh Agarwal (supra) reads as under: "78. In Keshav Mills Co. Ltd. v. Union of India [Keshav Mills Co. Ltd. v. Union of India, (1973) 1 SCC 380], this Court was dealing with the issue of a takeover of a company by the Government under the IDR Act, 1951 after completion of a full investigation into the affairs of the company. The issue was whether the report of an investigating body appointed by an administrative authority should be made available to the person concerned before the authority takes a decision upon that report. While deciding to lay down a general principle, this Court observed that there may be certain situations where an investigation report is required to be furnished to the party concerned to make an effective representation about the proposed action : (SCC p. 393, para 21) "21. In our opinion it is not possible to lay down any general principle on the question as to whether the report of an investigating body or of an inspector appointed by an administrative authority should be made availab....
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....ere not given an opportunity to file objections to the recommendations made by the Committee constituted by the National Green Tribunal (in short 'NGT'). The question was of violation of the principles of natural justice and its effect on the ultimate order passed against the appellants therein. The Hon'ble Apex Court held that the NGT is a judicial body and exercises adjudicatory function. The very nature of an adjudicatory function would carry with it the requirement that principles of natural justice are complied with. The Hon'ble Apex Court referred to the doctrine of "official notice" and observed that although an authority can rely upon materials familiar to it in its expert capacity without the need formally to introduce them in evidence, nevertheless, the parties ought to be informed of materials so noticed and be given an opportunity to explain or rebut them. The data on which an authority is acting must be apprised to the party against whom the data is to be used as such a party would then have an opportunity not only to refute it but also supplement, explain or give a different perspective to the facts upon which the authority relies. The Hon'ble Apex Court observed that....
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.... doctrine applies with greater force to a judicial/adjudicatory body. 23. Therefore, applying the aforesaid principle to the cases that come up before the NGT, if the NGT intends to rely upon an Expert Committee report or any other relevant material that comes to its knowledge, it should disclose in advance to the party so as to give an opportunity for discussion and rebuttal. Thus, factual information which comes to the knowledge of NGT on the basis of the report of the Committee constituted by it, if to be relied upon by the NGT, then, the same must be disclosed to the parties for their response and a reasonable opportunity must be afforded to present their observations or comments on such a report to the Tribunal. 24. It is needless to observe that the experts' opinion is only by way of assistance in arriving at a final conclusion. But we find that in the instant case the report of the Expert Committee as well as the recommendations have been made the basis of the directions and such an approach is improper. 25. We have perused the impugned order [Ashwani Kumar Dubey v. Union of India, 2022 SCC OnLine NGT 120] of the NGT and particularly para "16" ....
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....n base their conclusion on their private opinion or assessment or reports called without the need formally to introduce them in evidence, but (a) the same must be fully disclosed to the assessee, and (b) he is given an opportunity to rebut the same; (v) The position in law is to this effect that the Tax Officer though not debarred from relying on any material against the assessee, but justice and fair play demand that the source of information relied upon by the Tax Officer must be disclosed to the assesse so that he may be in a position to rebut the same and an opportunity should be given to the assessee to meet the effect of the said information. (vi) If the statutory provision provides for right of cross examination or such a right directly or even by necessary implication flows from opportunity of hearing, depending upon the nature of enquiry, the nature and character of the rights effected and consequences flowing from the decision, the right of cross examination cannot be denied. 32. We now proceed to consider if in the facts and circumstances of the present case, the petitioner had a right to cross examine the officials of Tax Department of Bombay on the....