In a recent development, the Supreme Court of India granted leave to revisit and reevaluate crucial issues related to the extended period of limitation and the imposition of penalties in the case of Commissioner Vs Gujarat State Petronet Ltd. The limited issue before the court revolved around the denial of the appellant-Department’s attempt to raise pertinent questions of law regarding the recovery of dues and penalties.
Background: The impugned order faced scrutiny as the appellant-Department sought to bring additional questions before the High Court. These questions pertained to the Tribunal’s refusal to permit an extended period of limitation for the appellant-Department and the imposition of penalties by the Adjudicating Authority. The High Court, in paragraphs 5 to 13 of the impugned order, thoroughly examined these aspects and provided reasons for not allowing the raised substantial questions of law.
Key Points from the Supreme Court Decision:
Supreme Court’s Directive: In light of the above observations, the Supreme Court set aside the portion of the High Court’s order that denied the appellant the opportunity to raise substantial questions of law on the issues of extended limitation and penalty imposition. The High Court is now directed to hear the parties, raise the substantial questions of law, and decide on the merits. The appeals filed by the appellant will be disposed of accordingly, and the Supreme Court refrained from expressing any opinion on the merits of the pending appeals before the High Court.
Conclusion: This Supreme Court directive highlights the importance of allowing parties to raise substantial questions of law at an appropriate stage to ensure a fair and comprehensive adjudication of the issues. It underscores the need for a careful consideration of legal matters without prematurely delving into the merits during the admission stage. The decision provides a procedural safeguard, ensuring that the parties have a fair opportunity to present their arguments on substantial legal questions, particularly in cases involving the extended period of limitation and penalty imposition.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
2. The limited issue which arises in these appeals is with regard to the grievance of the appellant-Department insofar as the impugned order is concerned under which two questions of law which the appellant-Department sought to raise before the High Court in the context of extended period of limitation and imposition of penalty, were not permitted to be raised.
3. To elaborate, the appellant sought to raise additional questions with regard to the Tribunal not permitting extended period of limitation to the appellant-Department for recovery of dues and for receiving penalties imposed by the Adjudicating Authority.
4. On perusal of the impugned order, we find that the High Court in paragraphs 5 to 13 has elaborately considered the aforesaid two aspects on the merits of the case as to why the substantial questions of law cannot be raised. It is not necessary for us to extract those paragraphs.
5. It is stated at the Bar that the main appeals are still pending consideration in the High Court.
6. Learned counsel for the appellant submitted that the High Court could not have considered the merits of the case(s) at the admission stage, even with regard to the raising of substantial questions of law inasmuch as ultimately on hearing the parties, the Court could have assigned reasons as to whether the substantial questions of law were made good by the appellant or it had to be answered in favour of the respondent. However, this is a case where the High Court did not permit even raising of substantial questions of law on the aforesaid aspects of the case. Therefore, it was submitted that portion of the order declining to raise substantial questions of law on the aspect of extended period of limitation and on penalty may be set-aside and an opportunity may be given to the appellant herein to raise those substantial questions of law and on the same being raised, the High Court could frame the said questions of law and the High Court could answer the same one way or the other.
7. Per contra, learned counsel appearing for the respondent vehemently contended that High Court has considered the case(s) of the parties on merits and has declined to raise the substantial questions of law on the aspect of extended period of limitation as well as on penalty and there is no merit in these appeals.
8. At the outset we find that while the High Court has framed certain substantial questions of law as raised by the appellant herein and the matter(s) is pending consideration on merits, the High Court could not have in the first instance gone into the merits of the case(s) insofar as extended period of limitation and imposition of penalty is concerned and, on that basis, declined to frame the substantial questions of law.
9. We find that the High Court ought to have raised the substantial questions of law as sought for by the appellant herein in the first instance and thereafter considered the same on merits by answering the same one way or the other. We say so for the reason that when the appeals were admitted and the main appeals are pending adjudication before the High Court, it was unnecessary for the High Court to have passed detailed reasons as to why the aforesaid two substantial questions of law would not arise for consideration, at the stage of admission. No prejudice would have been caused to any of the parties if the substantial questions of law, as raised by the appellant, had been considered and answered by the High Court on merits at the time of final adjudication of the appeals. Sometimes substantial questions of law may have a bearing on each other and if a particular substantial question of law is not permitted to be raised at the stage of admission of the appeal, it may prejudice the case of the appellant while considering the case on merits. Then at the stage of final adjudication, it may have to be raised and an opportunity to advance arguments will have to be given to the parties. Moreover, any finding arrived at while holding that a particular substantial question of law does not arise in the appeal at the stage of admission may also prejudice the case of the parties and in particular the appellant before the High Court, whether the assessee or the Revenue, at the time of the final adjudication of the appeal on merits.
10. In the circumstances, that portion of the order of the High Court declining to raise the substantial questions of law as sought for by the appellant-Revenue herein is set-aside and the High Court is now requested to hear the parties by raising the substantial questions of law on the issue of extended period of limitation as well as on the issue of imposition of penalty. The High Court shall now consider the aforesaid aspect of the matter(s) on its own merits and dispose of the appeals filed by the appellant herein in accordance with law.
11. The appeals are disposed of in the aforesaid terms. We have not expressed anything on the merits of the appeal pending adjudication before the High Court.
It is needless to observe that if the parties seek early hearing of the appeals, the same shall be considered by the High Court in accordance with law.