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2015 DIGILAW 377 (GAU)

Rahul Kar v. State of Assam

2015-03-26

A.K.GOSWAMI

body2015
JUDGMENT Arup Kumar Goswami, J. 1. This writ petition under Article 226 of the Constitution of India is filed with the following prayers: "In the aforesaid premises the humble petitioner above named most respectfully begs to pray before Your Lordships to admit the petition and issue Rule calling upon the respondents to show-cause as to why a writ in the nature of certiorari should not be issued for quashing and setting aside the impugned order dated 13.08.2014 and after hearing the parties be further pleased to make the rule absolute and/or pass such order/orders as Your Lordships may deem fit and proper. -AND- Pending disposal of the rule, your Lordships may be pleased to stay the operation of the Order dated 13.08.2014 and/or pass such further order/orders as Your Lordship may deem fit and proper in the ends of justice." The impugned order dated 13.08.2014 is an order passed by the Commissioner of Excise, Assam, in exercise of the powers conferred under Section 29(1)(a) and 29(1)(b) of the Assam Excise Act, 1910 (for short, 'the Excise Act') ordering cancellation of IMFL "OFF" licence granted to the petitioner and forfeiting the security deposit paid by the licences to the State. The stock of the licenced premises is also confiscated by the aforesaid order dated 13.08.2014. 2. The basic facts giving rise to filing of the writ petition may briefly be noticed: "(i) The petitioner was granted licence, initially; for the period 1998-1999 to 31st March, 2001 and, accordingly, the petitioner was operating IMFL "OFF" shop in the name and style of M/s. Gold Rush Wine Shop, at Hospital Road, Silchar, since 20.07.1998 and it is averred that he was paying excise duty, sales tax and all the taxes and duties levied on him. On 22.08.2009, at about 9-45 P.M., the shop premises of the petitioner caught fire and due to the fire, the entire IMFL stock of the shop as well as the building was gutted. As the landlord, namely, Smt. Umatara Roy, was not in a position to construct a new building, the shop ceased to operate with effect from 22.08.2009. On 22.08.2009, at about 9-45 P.M., the shop premises of the petitioner caught fire and due to the fire, the entire IMFL stock of the shop as well as the building was gutted. As the landlord, namely, Smt. Umatara Roy, was not in a position to construct a new building, the shop ceased to operate with effect from 22.08.2009. The petitioner had submitted a letter on 16.12.2009 for shifting of the shop to a new site at Jirighat, under Lakhipur Sub- Division and, thereafter, by letter dated 29.12.2009, the Under Secretary to the Government of Assam, Excise Department, issued a letter to the Commissioner and Secretary, Excise, Assam, indicating that the Governor of Assam was pleased to allow shifting of the IMFL "OFF" shop of the petitioner to a new premises at Jirighat, covered by Dag No. 90/100, Patta No. 1, under Jirighat Mauza (2nd R.S.). After the procedural formalities were over, the Superintendent of Excise, Cachar, Silchar, issued an order dated 30.01.2010 allowing the petitioner to shift the IMFL "OFF' shop to Jirighat, Cachar, in the premises of Smt. Suchitra Deb. On 04.08.2014, an order passed by the Deputy Commissioner, Cachar, Silchar, was served upon the petitioner whereby the licence of the petitioner was suspended for violation of the provisions of Section 29(1)(a) of the Excise Act. (ii) Thereafter, on 13.08.2014, the Commissioner of Excise, Assam, passed an order to the effect that as per report of the Deputy Commissioner on 04.08.2014, the petitioner was involved in defalcation of excise revenues to the tune of Rs. 11,28,15,939/-and since the petitioner had not submitted any explanation or had not appeared before the District authorities, it was assumed that the petitioner admitted the charges drawn against him. Accordingly, the impugned order was passed. (iii) An ejahar was lodged against the petitioner alleging defalcation of excise revenue and the same was registered as Silchar P.S. Case No. 1951/2014, under Section 409/420 IPC and, on the petitioner filing an application for grant of pre- arrest bail registered as A.B. No. 3596/2014, this Court, initially, by an order dated 14.08.2014, had granted the privilege of interim pre-arrest bail pending consideration of the case diary and, thereafter, by an order dated 23.09.2014, the interim order of pre-arrest bail was made absolute. (iv) The petitioner had submitted a representation on 211.08.2014 to the Deputy Commissioner, Cachar, Silchar, stating that the petitioner had gone to Kolkata to undergo treatment and there only he came to learn about the passing of the order dated 04.08,2014 by which his licence had been suspended. It is stated that the said representation dated 21.08.2014 was not considered. Subsequently, another representation was filed praying for review of the order dated 13.08.2014 as the said order had been passed without affording opportunity of hearing to the petitioner." 3. Heard Mr. K.N. Choudhury, learned Senior counsel appearing for the petitioner. Also heard Mr. J. Handique, learned State counsel, appearing for the State respondents. 4. Mr. K.N. Choudhury, learned Senior counsel has submitted that the order dated 13.08.2014 was passed in gross violation of the principles of natural justice as no opportunity at all was provided to the petitioner to present his case. Further, the learned Senior counsel submits that while passing the order dated 13.08.2014, the authority failed to discuss any material on record to come to the conclusion that the licensee was involved in fraud and defalcation of excise revenue and was engaged in serious shop malpractice of unlawful import, transport and possession of IMFL. It is contended by him that the petitioner is not involved in the defalcation of excise duty payable and, on the contrary, he is paying excise duty regularly and diligently and, therefore, the petitioner's licence had been renewed from time to time. Moreover, the mechanism for payment of the excise duty under the Excise Act and also the mechanism for prevention, detection of non-payment of excise duty is such that non-payment of excise duty by the petitioner as alleged could not have been continued for so many years and, therefore, the very allegation that there is defalcation of excise duty from the year 2011-2012 raises doubt about the veracity of the allegation. Mr. Choudhury has submitted that the impugned order has been passed on extraneous consideration and with ulterior motive and with such motive the ejahar had been lodged against the petitioner. Learned Senior counsel also submits that although Section 29 of the Excise Act does not provide for affording opportunity of hearing, principles of natural justice will have to be read into the provision in absence of any provision specifically excluding the principles of natural justice. Mr. Learned Senior counsel also submits that although Section 29 of the Excise Act does not provide for affording opportunity of hearing, principles of natural justice will have to be read into the provision in absence of any provision specifically excluding the principles of natural justice. Mr. Choudhury further submits that on the ground of violation of principles of natural justice alone the impugned order dated 13.08.2014 is liable to be set aside and quashed. He has also submitted that on the same analogy, the order dated 04.08.2014 is also liable to be set aside and quashed. In support of his submissions, learned Senior counsel has placed reliance on the following judgments: "(i) State of M.P. & Ors. v. Nandlal Jaiswal & Ors., reported in (1986) 4 SCC 566 , (ii) Doongaji and Co. (I) v. State of M.P. & Ors., reported in 1991 Supp. (2) SCC 313, (iii) Kesar Enterprise Ltd. v. State of U.P. & Ors., reported in (2011) 13 SCC 733 , (iv) Delhi Transport Corporation (DTC) v. DTC Mazdoor Congress & Ors., reported in 1991 Supp (1) SCC 600, (v) Union of India & Anr., v. Tulsiram Patel, reported in (1985) 3 SCC 398 , (vi) Biecco Lawrie Limited & Ann v. State of West Bengal & Anr., reported in (2009) 10 SCC 32 ." 5. Though no affidavit has been filed by the State respondents, Mr. J. Handique, learned State counsel has submitted that a letter dated 01.08.2014 was issued by the Superintendent of Excise, Cachar, Silchar, asking the petitioner to appear with Stock and Sale Register and documents in support of deposit of ad veloram fee levied in respect of the licence of the IMFL "OFF" shop, on or before 03.08.2014 without fail. However, the said letter could not be served upon the petitioner as he was found absent and the shop was also closed and, in such circumstances, the letter was pasted on the shutter of the shop. Learned State counsel has placed before the Court a copy of the letter dated 01.08.2014. It is submitted by him that the Superintendent of Excise, Cachar, had taken up the matter of non-deposit of government revenue (lapse receipt) and reconciliation thereof with relevant records and found that the petitioner had defalcated an amount of Rs. 11,28,15,939/-. 6. Learned State counsel has placed before the Court a copy of the letter dated 01.08.2014. It is submitted by him that the Superintendent of Excise, Cachar, had taken up the matter of non-deposit of government revenue (lapse receipt) and reconciliation thereof with relevant records and found that the petitioner had defalcated an amount of Rs. 11,28,15,939/-. 6. While accepting that no notice had been served upon the petitioner before the order of cancellation was passed on 13.08.2014, learned State counsel submits that in absence of any challenge to the order of suspension dated 04.08.2014, this Court may not go into the validity or otherwise of the order of suspension dated 04.08.2014. 7. I have heard the learned counsel for the parties and have perused the materials on record. 8. At the outset, this Court would like to observe that though some arguments had been advanced by Mr. Choudhury with regard to the order of suspension dated 04.08.2014, in absence of any challenge to the said order, this Court is inclined to accept the submission of Mr. Handique that this Court may not go into the question of validity or otherwise of the order dated 04.08.2014 and, accordingly, this Court is only examining the validity of the order dated 13.08.2014, centering around which the entire edifice of the writ petition is built with the prayer for its quashing. 9. It will be appropriate, at this stage, to extract the order dated 13.08.2014, which is impugned in the writ petition, in its entirety: "ORDER No. III-82/2013-1014/61 dated 13th August, 2014. Whereas, a report has been received from Deputy Commissioner, Cahcar, Silchar, vide No. CXE 59/2014 dated 04.08.2014 to the effect that Shri Rahul Kar, an IMFL "OFF" licensee was involved in defalcation of excise revenue to the tune of Rs. 11,28,15,939.00 (Rupees Eleven Crores Twenty-eight Lakhs Fifteen thousand Nine hundred Thirty-nine only). And whereas, the said IMFL "OFF" shop was sealed and the licence was suspended by the Deputy Commissioner, Cachar, Silchar, for serious misappropriation of Govt. revenue. And whereas, the licensee neither has submitted his explanation on the allegations nor has he appeared before the District authorities to clarify his stand which indicates that he admits the charges drawn against him. And whereas, the said IMFL "OFF" shop was sealed and the licence was suspended by the Deputy Commissioner, Cachar, Silchar, for serious misappropriation of Govt. revenue. And whereas, the licensee neither has submitted his explanation on the allegations nor has he appeared before the District authorities to clarify his stand which indicates that he admits the charges drawn against him. Now therefore it is established that the licensee was involved in fraud and defalcation of excise revenue and serious shop malpractices by indulging in unlawful import, transport and possession of IMFL. And whereas, it is decided to prosecute the licensee for such serious offence and accordingly an FIR was lodged by the Deputy Commissioner, Cachar, Silchar against the licensee with the local police station for taking lawful action. Now after careful consideration of the merit of the case, seriousness of the offence committed by the licensee, interest of excise revenue and having regard to the relevant provisions of law including instruction No. 148 of Instructions relating to Liquor contained in Assam Excise Manual, the undersigned is of the view that continued running of the IMFL "OFF" shop owned by Shri Rahul Kar is against public interest. Accordingly, I, Shri Ahmed Hussain, IAS, Commissioner of Excise, Assam, and Head of the Department of Excise, Assam in exercise of the powers conferred by Section 29(1)(a) and (b) of the Assam Excise Act, 1910, hereby order cancellation of the IMFL "OFF' licence owned by Shri Rahul Kar located at Jirighat, Lakhipur, Cachar. The Deputy Commissioner, Cachar, Silchar, is requested to take follow-up action accordingly. The security deposit paid by the licensee is forfeited to the State. The remaining stock in the licensed premises is confiscated and shall be dealt with as per law by the Deputy Commissioner, Cachar, Silchar. Sd/- Ahmed Hussain, IAS, Commissioner of Excise, Assam, Housefed Complex, Dispur, Guwahati-06" 10. A perusal of the aforesaid order would go to show that the Commissioner of Excise, Assam, had received a report dated 04.08.2014 from the Deputy Commissioner, Cachar, indicating that the petitioner was involved in defalcation of excise revenue to the tune of Rs. 11,28,15,939/- for which the IMFL "OFF" shop of the petitioner was sealed and the licence was suspended on 04.08.2014. It has also been noted that the licensee had neither submitted his explanation on the allegations nor has he appeared before the District authorities to clarify his stand. 11,28,15,939/- for which the IMFL "OFF" shop of the petitioner was sealed and the licence was suspended on 04.08.2014. It has also been noted that the licensee had neither submitted his explanation on the allegations nor has he appeared before the District authorities to clarify his stand. On his failure to do so, the authority concerned has taken the view that the petitioner admitted the charges drawn against him and, as a consequence thereof, it was held established that the licensee was involved in fraud and defalcation of excise revenues and serious sharp practices. On the aforesaid premises, it was concluded that permitting to run the petitioner the IMFL "OFF" shop would be against public interest and, accordingly, in exercise of the powers under Section 29(1)(a) and 29(1)(b) of the Excise Act, the Commissioner of Excise, Assam, ordered cancellation of the IMFL licence of the petitioner with consequential actions to follow. 11. It will be appropriate to reproduce Section 29 in its entirety for better appreciation of the contentions advanced. "Cancellation or suspensions of licenses, etc., in certain cases 29. 11. It will be appropriate to reproduce Section 29 in its entirety for better appreciation of the contentions advanced. "Cancellation or suspensions of licenses, etc., in certain cases 29. (1) Subject to such restrictions as the State Government may prescribe, the authority who granted any license, permit or pass under this Act may cancel or suspend the same - (a) If any duty or fee payable by the holder therefore be not duly paid; or (b) In the event of any breach by the holder thereof or by his servants, or by any one acting on his behalf, with his express or implied permission, of any of the terms or conditions of such license, permit or pass; or (c) If the holder thereof is punished for any offence punishable under this Act or any law for the time being in force relating to revenue, or of any cognisable and non-bailable offence, or of any offence punishable under the Dangerous Drugs Act, 1930, or under the Indian Merchandise Marks Act 1889 or under sections 482 to 489 of the Indian Penal Code; (d) If the holder thereof is punished for any offence referred to in clause B of section 167of the Sea Customs Act 1878; (e) When a license, permit or pass held by any person is cancelled under clauses (a), (b), (c) or (d) of sub-section (1), the authority aforesaid, may with the previous sanction of the State Government cancel any other license, permit or pass granted to such person under this Act or under any other law for the time being in force relating to excise revenue or under the Opium Act, 1878. (3) The holder of a license, permit or pass shall not be entitled to any compensation for the cancellation or suspension of his license, permit or pass under this section or to the refund of any fee paid or deposit made in respect thereof: Provided that in cases of hardship the State Government may grant such payment of compensation or refund of fee or deposit as it may think fit. The sub-Sections (2) and (3) have been amended by substituting "State Government" for "the Excise Commissioner" and "District Collector" and consequential portion by the Assam Excise (Second Amendment) Act, 1973, Section 4." 12. The sub-Sections (2) and (3) have been amended by substituting "State Government" for "the Excise Commissioner" and "District Collector" and consequential portion by the Assam Excise (Second Amendment) Act, 1973, Section 4." 12. A perusal of Section 29 demonstrates that the provision does not prescribe that any opportunity is to be granted to the person to meet the allegation who will be visited with civil consequences in the form of cancellation of licence. 13. In State of M.P. v. Nandlal Jaiswal (supra), the Apex Court reiterated the proposition that there is no fundamental right of a citizen to carry on trade and business in liquor. No one can claim as against the State the right to carry on trade or business in any intoxicants nor can the State be compelled to part with its exclusive right or privilege of manufacture, sale, and storage of liquor. But, when the State decides to grant such right or privilege to others, the State cannot escape the rigor of Article 14 of the Constitution of India 14. In Doongaji and Co (I) (supra), it was held that when the State decides to part with such right or privilege to the others, then the State can regulate consistent with the principles of equality enshrined under Article 14. 15. The principle of natural justice is, now, recognized as being firmly entrenched as part of the guarantee contained in Article 14 of the Constitution. Dynamic interpretation given by the Apex Court has crystallized that violation of a rule of natural justice results in arbitrariness and, therefore, violation of principles of natural justice by a State action is violation of Article 14. In Tulsiram Patel (supra), the Apex Court had held that the principles of natural justice are not the creation of Article 14 and that Article 14 is not their begetter but their constitutional guardians. In the said case, the Apex Court also held that the principles of natural justice can not only be modified, but in exceptional cases, they can even be excluded. 16. In Biecco Lawrie Limited (supra), the Apex Court had held that it is fundamental to fair procedure that both sides should be heard. In the said case, the Apex Court also held that the principles of natural justice can not only be modified, but in exceptional cases, they can even be excluded. 16. In Biecco Lawrie Limited (supra), the Apex Court had held that it is fundamental to fair procedure that both sides should be heard. One of the essential ingredients of fair hearing is that a person should be served with a proper notice and that the notice should be clear and precise so as to give the other party adequate information of the case he has to meet and make an effective defence. Denial of notice and opportunity to respond result in making the administrative decision as vitiated. The adequacy of notice is a relative term and must be decided with reference to each case. One of the essentials of a notice is to bring to the notice of the noticee the specific charges which he is to meet. 17. In Delhi Transport Corporation (DTC) (supra), the Apex Court has held that 'audi alteram partem' rule which, in essence, enforces the equality clause in Article 14 of the Constitution, is applicable not only to quasi- judicial orders but to administrative orders affecting prejudicially the party in question unless the application of the rule has been expressly excluded by any Act or Regulation or Rule. 18. In Kesar Enterprises Limited (supra), Rule 633(7) of the U.P. Excise Manual had fallen for consideration of the Apex Court. The said rule provided for imposition of penalty, which may be equivalent to the excise duty leviable under the charging Section28 of the U.P. Excise Act, 1910, on potable liquor. Rule 633 was held to be of regulatory character meant to ensure that the liquor being exported under a bond reaches its destination and is not misused or misutilised in transit. The rule did not contain any express provision for the affected party being given an opportunity of being heard before imposition of penalty. The Apex Court held that keeping in view the nature, scope and consequence of the direction under Rule 633(7) of the Excise Manual, the principles of natural justice should be followed and that that it is imperative that a Show Cause notice should be issued and an opportunity of hearing be afforded. 19. The Apex Court held that keeping in view the nature, scope and consequence of the direction under Rule 633(7) of the Excise Manual, the principles of natural justice should be followed and that that it is imperative that a Show Cause notice should be issued and an opportunity of hearing be afforded. 19. In Swadeshi Cotton Mills v. Union of India, reported in (1981) 1 SCC 664 , the Apex Court explained the meaning and scope of the concept of natural justice as follows: "Rules of natural justice are not embodied rules. Being means to an end and not an end in themselves, it is not possible to make an exhaustive catalogue of such rules. But there are two fundamental maxims of natural justice viz. (i) audi alteram partem, and (ii) nemo judex in re sua. The audi alteram partem rule has many facets, two of them being (a) notice of the case to be met; and (b) opportunity to explain. This rule cannot be sacrificed at the altar of administrative convenience or celerity. The general principle - as distinguished from an absolute rule of uniform application-seems to be that where a statute does not, in terms exclude this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing, shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short, this rule of fair play must not be jettisoned, save in very exceptional circumstances where compulsive necessity so demands. The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. In short, this rule of fair play must not be jettisoned, save in very exceptional circumstances where compulsive necessity so demands. The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. But, the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise." 20. In Sahara India (Firm) Lucknow v. Commissioner of Income Tax, Central-I & Anr., reported in (2008) 14 SCC 151, the Apex Court, while explaining the concept of natural justice and the principles governing its application, summed up the legal position as follows: "19. Thus, it is trite that unless a statutory provision either specifically or by necessary implication excludes the application of principles of natural justice, because in that event the court would not ignore the legislative mandate, the requirement of giving reasonable opportunity of being heard before an order is made, is generally read into the provisions of a statute, particularly, when the order has adverse civil consequences for the party affected. The principle will hold good irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi-judicial." 21. The position that emerges is that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty formality. Principles of natural justice cannot be sacrificed for administrative expediency or convenience. Unless a statutory provision, either specific or by necessary implication, excludes the application of the principles of natural justice, the requirement of giving a notice and a reasonable opportunity of being heard before an order is passed, is generally read into the provisions of a statute when the order has adverse civil consequences irrespective of the fact whether the order is passed by a statutory body or tribunal in any administrative or quasi-judicial capacity. Principles of natural justice must not be jettisoned save and except in very exceptional situation and circumstances where it will frustrate the need for utmost promptitude. 22. Analysing the scheme of the Excise Act, it is found that no post-decisional hearing is also contemplated to a full review of the original order on merits. Principles of natural justice must not be jettisoned save and except in very exceptional situation and circumstances where it will frustrate the need for utmost promptitude. 22. Analysing the scheme of the Excise Act, it is found that no post-decisional hearing is also contemplated to a full review of the original order on merits. The impugned order has visited the petitioner with civil consequences of grave nature as his licence is cancelled and his security deposit is also forfeited to the State. Having regard to the provisions of the Excise Act, I am of the considered opinion that the requirement of giving a notice to show cause and also reasonable opportunity of being heard must be read into when cancellation of a licence is ordered under Section 29 of the Excise Act. 23. Admittedly, in the instant case, before issuing the order dated 13.08.2014, no notice was issued. Though it was recited in the said order dated 13.08.2014 that the licensee had neither submitted his explanation on the allegations nor had he appeared to clarify his stand, the same was obviously in reference to the letter dated 01.08.2014 as, apart from said letter, no other letter or notice was issued to the petitioner seeking his response. It has also to be borne in mind that the letter, dated 01.08.2014, issued by the Superintendent of Excise had not been served upon the petitioner and the same had been pasted on the shutter of his shop. In such circumstances, it will be difficult to hold, as held in the order dated 13.08.2014, that the petitioner had admitted the charges. As the said order dated 13.08.2014 has been passed in gross violation of the principles of natural justice, the same is not sustainable in law. Resultantly, the impugned order is set aside and quashed. The writ petition is allowed. However, it is made clear that the respondents will be at liberty to initiate a fresh process for cancellation of licence of the petitioner in accordance with law. No cost. Petition Allowed.