Case Law Details
Essel Propack Limited Vs Union of India and others (Bombay High Court)
When the appeal of the petitioner was heard by the CESTAT, learned counsel for the petitioner furnished sample invoice copies to justify labour charges incurred. It was at that stage that the authorized representative of the department raised objection that such invoices could not have been produced before the CESTAT without It was he who pointed out to the two invoices and alleged that there was insertion of words ‘labour charges’ to convert transportation bills to labour charge bills. Thus, he alleged that fraud was practised by the petitioner. We find that learned Member of CESTAT inspected the sample invoices whereafter he observed that labour charges were inserted in the two bills dated 06.09.2010 and 06.03.2011 by a different handwriting. Taking the view that it should be considered as mis- statement or fraud, CESTAT held that it would amount to fraud within the definition of the Indian Penal Code. Thereafter, the appeal was dismissed by relying on the judgment of the Supreme Court in S. P. Chengalvaraya Naidu Vs. Jagannath, AIR 1994 SC 853 holding that a person whose case is based on a false suit has no right to approach the Court.
When the petitioner sought for rectification of the above finding of fraud by filing miscellaneous application, the same was dismissed by the impugned order dated 28.08.2019. In paragraph 5 of the said order, it is stated that respondent had made submission regarding tampering of the invoices and fraud being practised by the petitioner. Counsel for the petitioner was asked by the CESTAT to respond to such allegation but he did not respond. Therefore, relying on section 73 of the Indian Evidence Act, 1872, CESTAT compared the handwriting and signature on the two invoices and was satisfied that those were tampered with. Thereafter, it was observed that fraud was practised by the Thus, the miscellaneous application was rejected with cost of Rs.10,000.00.
We have already discussed above the serious consequences which may follow following a finding of fraud. While there cannot be any two opinion that fraud vitiates everything and should be strongly dealt with particularly in a judicial or a quasi-judicial proceeding, Supreme Court in Harjas Rai Makhija (supra) had sounded a note of caution. Firstly, there must be a specific allegation of fraud being played by a party to the When such an allegation is made, it must be enquired into. The party against whom the allegation of fraud is made has to be put on notice and heard. Evidence must be led where from a conclusion can be drawn that there was intent to deceive by the party who is alleged to have committed fraud. It is only thereafter that a finding of fraud can be arrived at. Simply asking counsel for the party alleged to have committed fraud to instantaneously respond to such allegation certainly cannot be approved of. On such a haphazard and hurried basis without any conclusion having been reached as to the intent to deceive, no finding of fraud could have been reached by the CESTAT. Thus, fraud cannot be said to have been proved; it was merely alleged and an inference of fraud was drawn. Therefore, CESTAT was not justified in rejecting the application filed by the petitioner for recalling the finding of fraud and additionally in imposing cost.
We had already indicated in our order dated 17.09.2020 which we have extracted above that since the tax dues of the petitioner have been settled under the amnesty scheme, we would refrain from examining the ultimate decision of CESTAT in rejecting the appeal. The examination would be confined to the finding recorded by CESTAT that petitioner had played fraud and the consequential rejection of the rectification application on this point.
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