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2019 DIGILAW 844 (GUJ)

Essen Dyechem v. State of Gujarat

2019-10-03

HARSHA DEVANI, SANGEETA K.VISHEN

body2019
JUDGMENT : Harsha Devani, J. 1. Rule. Ms. Maithili Mehta, learned Assistant Government Pleader waives service of notice of rule on behalf of the respondents. 2. Having regard to the controversy involved in the present petition, which lies in a very narrow compass and with the consent of the learned advocates for the respective parties, the petition was taken up for final hearing today. 3. By this petition under article 226 of the Constitution of India, the petitioner has challenged the assessment order dated 20.8.2019 passed by the second respondent under subsection (2) of section 34 of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as the "GVAT Act") whereby the petitioner has been held liable to pay an amount of Rs. 46,779/-. 4. The facts stated briefly are that the petitioner is in the business of sale and resale of goods. The petitioner entered into business transactions with three vendors being M/s. Rupangi Enterprise (VAT No. 24073905061), M/s. Swastik Enterprise (VAT No. 24070702003) and M/s. Detson Industries (VAT No. 24074202363) and had purchased various commodities from the said firms. It appears that the firms -vendors, from whom the petitioner had purchased the commodities, did not pay revenue to the Government, and hence, proceedings were initiated against them which culminated into orders of cancellation of the registration of the said firms under the GVAT Act. Such cancellation of registration of the firms was ordered to be void ab initio. Pursuant to the order passed against the above firms, on 23.2.2019, a notice came to be issued to the petitioner under section 34(2) of the Gujarat Value Added Tax Act, 2003 for the period 1.4.2016 to 31.3.2017. It is the case of the petitioner that upon being served with the assessment notice, the petitioner cooperated with the revenue authority and remained present on the date mentioned in the notice. The petitioner remained present before the authority with all the necessary documents but no hearing took place on that date. It is the case of the petitioner that he was awaiting a notice for the next date of hearing so as to make submissions in support of the documents produced by him; however, to his surprise the impugned order came to be served upon him giving the details of tax, interest and penalty imposed on it. Being aggrieved, the petitioner has filed the present petition. 5. Mr. Being aggrieved, the petitioner has filed the present petition. 5. Mr. Digant Popat, learned advocate for the petitioner, submitted that the impugned order has been passed without affording any opportunity of hearing to the petitioner and does not contain any reasons for the conclusions arrived at by the second respondent-State Tax Officer (1) and hence, the same is bad in law, being in breach of the principles of natural justice as well as on the count of being a non-speaking order, and therefore, deserved to be quashed and set aside. 6. On the other hand, Ms. Maithili Mehta, learned Assistant Government Pleader, submitted that the second respondent has duly considered the submissions advanced by the petitioner while passing the impugned order and, hence, there is no warrant for interference by this court. She, however, was not in a position to dispute the fact that the impugned order does not reflect any application of mind to the submissions made on behalf of the petitioner. 7. In the aforesaid backdrop, a perusal of the impugned order reveals that the second respondent has merely recorded that pursuant to the notice issued in Form No. 302, the dealer had remained present with the relevant documents. He, thereafter, has merely computed the tax payable by the petitioner and has ordered that a demand notice be issued accordingly. On a plain reading of the impugned order, it is apparent that the same is totally non-speaking order and does not record the reasons for the conclusions arrived by the assessing authority. 8. At this juncture it may be germane to refer to the decision of the Supreme Court in the case of Kranti Associates Private Limited and another v. Masood Ahmed Khan and others, (2010) 9 SCC 496, wherein the court, in the context of a non-speaking order, has held thus: "47. Summarising the above discussion, this Court holds: (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior courts. (h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice. (i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. (j) Insistence on reason is a requirement for both judicial accountability and transparency. (k) If a judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. (l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decision-making process." 9. In Assistant Commissioner, Commercial Tax Department, Works Contract and Leasing, Kota v. Shukla and Brothers, (2010) 4 SCC 785 , the Supreme Court held thus: "13. At the cost of repetition, we may notice, that this court has consistently taken the view that recording of reasons is an essential feature of dispensation of justice. A litigant who approaches the court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. At the cost of repetition, we may notice, that this court has consistently taken the view that recording of reasons is an essential feature of dispensation of justice. A litigant who approaches the court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher court in the event of challenge to that judgment. … …. 24. Reason is the very life of law. When the reason of a law once ceases, the law itself generally ceases (Wharton's Law Lexicon). Such is the significance of reasoning in any rule of law. Giving reasons furthers the cause of justice as well as avoids uncertainty. As a matter of fact it helps in the observance of law of precedent. Absence of reasons on the contrary essentially introduces an element of uncertainty, dissatisfaction and give entirely different dimensions to the questions of law raised before the higher/appellate courts. In our view, the court should provide its own grounds and reasons for rejecting claim/prayer of a party whether at the very threshold i.e. at admission stage or after regular hearing, howsoever concise they may be." 10. As noted hereinabove, it is the case of the petitioner that no opportunity of hearing was given to him, inasmuch as, the petitioner had remained present pursuant to the notice issued to it, however, on that date, no hearing had taken place and certain documents were submitted by the petitioner. Thereafter, without giving any notice for hearing to the petitioner, the second respondent has passed the impugned order, which therefore is clearly in breach of the principles of natural justice. Thereafter, without giving any notice for hearing to the petitioner, the second respondent has passed the impugned order, which therefore is clearly in breach of the principles of natural justice. Not only that, on a plain reading of the impugned order it is manifest that the same is totally bereft of any reasons. In the absence of any reasons for arriving at his conclusions, it is not possible for an appellate court to ascertain as to what weighed with the second respondent while arriving at his decision. As held by the Supreme Court in the above decisions, a quasi-judicial authority must record reasons in support of its conclusions. A litigant who approaches the court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the court in rejecting his claim and also causes impediments in his taking adequate and appropriate grounds before the higher court in the event of challenge to that judgment. It cannot be gainsaid that since the impugned order is a non-reasoned order, the petitioner is unable to know the ground which weighed with the second respondent while rejecting his submissions. 11. The upshot of the above discussion is that the impugned order being violative of the principles of natural justice as well as being a non-speaking order, cannot be sustained. 12. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned order dated 20.8.2019 issued by the respondent No. 2 under sub-section (2) of section 34 of the Gujarat Value Added Tax Act, 2003 is hereby quashed and set aside and the matter is restored to the file of the second respondent, who shall decide the same afresh in accordance with law, after affording a reasonable opportunity of hearing to the petitioner and pass a reasoned order thereon. 13. Rule is made absolute, accordingly, to the aforesaid extent.