Quasi Judicial authorities are independent, bound by law but not by administrative instructions
The officials of the sales tax department are administrative authorities. However, such of the officials as are vested with jurisdiction to assess. The business transactions of the dealers to tax, discharge function which is judicial in nature. The function though administrative is obliged to be performed with judicial approach. The basic requirements of justice have to be complied with and rules of natural justice have to be followed. Objectivity has to be maintained. The conclusion arrived at by the Assessing Authorities have to be based on the material available on record and supported by reasons.
Whenever judicial or quasi judicial power is vested in a person, the decision must be his. Even though he may obtain the assistance of other persons, he cannot be influenced by anyone in coming to the decision. In short, the jurisdiction so conferred can neither be tempered nor tinkered.
Can such jurisdiction, that is the jurisdiction to assess to tax, be controlled, regulated or influenced by circulars containing instructions issued by the superior officers.
In Orient Paper Mills Ltd. vs. Union of India, 1978(2) ELT (J382) their Lordships of the Supreme Court have held that the Assessing Authorities under various taxation laws exercise quasi-judicial function. The duty cast on them is to act in a judicial and independent manner. If their judgment is controlled by the directions given by the collector it cannot be said to be their independent judgment in any sense of the word.
In Bengal Iron Corporation VCTO (1993)3 PHT 600(SC) referring to the provisions of Section 37B of Central Excise Act, 1944 and Section 42(2) of Andhra General Sales Tax Act their lordships have held that clarification and circulars issued by the Govt. represent their understanding of the statutory provisions. The Govt. is bound by them but not the courts and the authorities acting in quasi-judicial capacity where as they are bound by law and not by administrative instructions, opinions and clarifications. Nothing would prevent the state from recovering the tax if in truth being no estoppels against the statue.
In Orient Paper Mills Ltd. V Union of India (1978) 2 ELT (J345), their Lordship have held that a quasi-judicial power cannot be controlled by the directions issued by the Board. No authority however high placed can control the decision of a judicial or a quasi-judicial authority. That is the essence of our judicial system.
Their Lordships also quoted from Mahadayal Prem Chandra V CTO, Calcutta and another, AIR 1958 SC 667 wherein an assessing Officer acting on the basis of instructions from superiors was held to have vitiated the entire proceedings. Their Lordships have further held:-
That is the essence of our judicial system. There is no provision in the Act empowering the Board to issue directions to the Assessing Authorities or the Appellate Authority in the matter of deciding Disputes between the persons who are called upon to pay duty and the department. It is true that the Assessing Authorities are judges in their own cause; yet when they are called upon to decide disputes arising under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is controlled by the directions given by others. Then it is a misnomer to call their orders as their judgments; they would essentially be the judgments of the authority that gave the directions and which authority had given those judgments without hearing the aggrieved party.
Their Lordships made it clear that the only instructions that the Board can issue relate to administrative matters; otherwise they will be ultra virus.
High court of Gujarat has held in Genset Engineers Pvt. Ltd. V Union of India, 1989 (43) ELT 24 that the general instructions given by the Board bind the officers only when they act in their administrative capacity and do not bind the authorities in discharge of their quasi-judicial functions.