Detailed, Lengthy, Preordained & Premeditated Orders passed on the same day of hearing to be set aside

It is a common practice that very lengthy & detailed orders are passed by the Tax Authorities on the same day on which hearing of the case is completed. It is often seen that the cases are heard till the last working hour of the Office and elaborate orders are passed on the same very day giving intricate & minute factual details and dealing with several citations, some of which are not even cited at Bar. There can be no iota of doubt that this is neither practically nor humanly possible. However, such orders are seldom assailed as being passed mechanically without application of mind violating the basic principles of Natural Justice and also being pre-ordained, pre-determined. Probably we have accepted such irregularities as common practice and as being incidental to Taxation Proceedings and we find ourselves so helpless that we do not even protest against such illegalities. It is shocking that we do not specifically assail this grave illegality in our grounds of appeal nor press this issue during the course of arguments in Appeal/Revision before the higher forums. In similar circumstances, the Bombay High Court in the Landmark case of Orkay Silk Mills Limited & others vs. M.S.Bindra & Others 1988 (33) ELT 48 not only quashed such an order passed by the authority in undue haste but also reprimanded him. Although this is an old case but this case beckons the legal fraternity to assail such orders with full vehemence to get such orders quashed/set aside.

The brief facts of the case are that the Respondent No. 1 issued detailed show cause notices to the petitioner and its sister concerns that the company had not accounted for its entire production and had clandestinely removed the finished product alleging that the company is guilty of evading payment of Excise duty on large scale. The hearing of the case was concluded by the Respondent no. 1 on May 31, 1985 at about 1.30 in the afternoon. The respondent No. 1 flew back to Delhi the same evening and declared the impugned order at New Delhi on June 1, 1985 which was a Saturday. Interestingly the order runs into 130 pages. The respondent No. 1 curiously imposed a personal penalty of Rs. 50,00,000 on petitioner No. 2 without even service of the show cause notice. The Petitioner claimed that the impugned order suffers from total non-application of mind and was passed by respondent No. 1 by violating each and every known principle of natural justice. On behalf of the Petitioner it was urged that it is impossible to imagine how respondent No. 1 who flew back to New Delhi late in the evening on May 31, 1985 could have dictated and signed the final order running into 130 pages on next day that too being Saturday and a holiday. The Bombay High Court was aghast by this methodology and undue haste and held as under:

“The method of passing the order creates serious suspicion in my mind about the bona fide exercise of the powers. The respondent No. 1 concluded the hearing on May 31, 1985 at about 1.30 p.m. in the evening and it is claimed on behalf of the respondents that respondent No. 1 proceeded to Delhi by aircraft and reached there by about 8.00 p.m. The respondent No. 1 claimed that he had telephonically informed his stenographer to remain ready to take dictation and dictated the order till 11.30 p.m. and continued the same on the next day from 7.00 a.m. till 11.45 p.m. The respondents claim that the order was signed by respondent No. 1 at 11.45 p.m. on June 1, 1985. It is impossible to accept the claim made on behalf of respondent No. 1 in this behalf. In the first instance, it is physically impossible for any human being to dictate an order running into 130 pages within such a short time. Secondly, it is difficult to believe that respondent No. 1 would fly back to Delhi and straightway proceed to dictate the order for about 3 1/2 hours at night and for the whole day on June 1, 1985 and would complete dictation and signing of the order late at night at 11.45 p.m. June 1, 1985 was a Saturday and it is difficult to believe that any Government Officer would work for such long hours on that day, without any reason.

…………It surpasses my imagination as to how respondent No. 1 could have dictated the order for such long hours and how his stenographer could have transcribed and made it ready for signing of respondent No. 1 at midnight.

…….. In my judgment, this makes mockery of the quasi-judicial proceedings adjudicated by respondent No. 1. The fact that the entire order signed by respondent No. 1 is not on record indicates two possibilities: (1) that the order was kept ready by the respondent No. 1 even before the conclusion of hearing, and (2) that the order was dictated by someone other than respondent No. 1 and respondent No. 1 merely put his signature to it. It is difficult to conceive how the part of the original order could be corrected by someone other than respondent No. 1. This state of affairs indicates that there is something wrong in the working of respondent No. 1 and it is not difficult to imagine why respondent No. 1 was made to compulsorily retire. It is unfortunate that in-spite of this state of affairs, the respondents should think it wise to sustain the order passed by respondent No. 1. In my judgment, the action of a quasi-judicial authority like respondent No. 1 would shake the confidence of the public and the tax-payer in the administration of justice. On this Count alone, the order is required to be struck down as it is prepared not by respondent No. 1 alone but by someone else, who had no authority to do so. It is time that the Government of India investigate into the matter in greater depth and ascertain who is responsible for this mess.

The submission of Shri Desai that the order suffers from non-application of mind is also fortified by the fact that respondent No. 1 has imposed the penalty of Rs. 50,00,000 on petitioner No. 2 even though he was not served with any show cause notice or was not given any hearing. It is impossible to imagine how any quasi-judicial authority would go to such an extent and pass such atrocious order………. The entire order deserves to be quashed on the ground of total non-application of mind, on the ground of violation of every known principle of natural justice and also on the ground that it is not clear whether the order was passed by respondent No. 1 or by someone else in the name of respondent No. 1. In these circumstances, it is not necessary to examine various other contentions urged by Shri Desai to challenge the legality of the order.

……. It is necessary to reiterate that the quasi-judicial authorities exercising powers under the Act should remember that not only justice should be done but the parties who are affected by the adverse order should have a feeling that justice has been done to them. It is not enough for any authority to assert that justice is done without there being a show of justice. The rules of natural justice are not empty formalities but must be observed to remove any feeling in the mind of the party adversely affected that his cause was not considered. The manner in which the respondent No. 1 has proceeded to pass the impugned order leaves an apprehension in the mind that the whole process was per-determind. Such a feeling would destroy the confidence not only of the citizens but also of the Courts in quasi-judicial authorities.”

It is not only amazing but highly disappointing that this landmark judgment is seldom being cited and relied upon when the principles of Natural Justice are being regularly flouted and orders are being regularly passed by the Revenue Officials mechanically in a premeditated & preordained manner in utmost haste smelling of undue Bias.

(Author-  Inder Chand Jain, Agra, Mobile:9319215672, Email: inderjain2007@rediffmail.com)

Read Other Articles of Inder Chand Jain

More Under Income Tax

Posted Under

Category : Income Tax (28049)
Type : Articles (17770)
Tags : Inder Chand Jain (12)

Leave a Reply

Your email address will not be published. Required fields are marked *