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2010 (3) Supreme 98
SUPREME COURT OF INDIA
S.H. Kapadia and Swatanter Kumar , JJ.
Assistant Commissioner, Commercial Tax Department, Works Contract & Leasing, Kota — Appellant
versus
M/s Shukla & Brothers — Respondent
Civil Appeal No. 3289 of 2010
(@ Slp (c) No. 16466 of 2009)
Decided on : 15-04-2010
Doctrine of audi alteram partem- Essential Requirements of- A person against whom an order is required to be passed or whose rights are likely to be affected adversely must be granted an opportunity of being heard- The concerned authority should provide a fair and transparent procedure -The authority concerned must apply its mind and dispose off the matter by a reasoned or speaking order. (Para 9)
Principles of natural justice –Recording of reasons one of Necessary Ingredients of - The principle of natural justice has twin ingredients- The person who is likely to be adversely affected by the action of authorities should be given notice to show cause thereof and granted an opportunity of hearing- Orders so passed by the authorities should give reason for arriving at any conclusion showing proper application of mind- Violation of either of them could in the given facts and circumstances of the case, vitiate the order itself-Such rule being applicable to the administrative authorities certainly requires that the judgment of the Court should meet with this requirement with higher degree of satisfaction- The order of an administrative authority may not provide reasons like a judgment but the order must be supported by the reasons of rationality- The distinction between passing of an order by an administrative or quasi-judicial authority has practically extinguished and both are required to pass reasoned orders. (Para 13)
Facts of the Case :
Present Appeal has been filed against Judgment passed by High Court in S.B. Sales Tax Revision Petition, whereby it dismissed revision petition in exercise of its power under Section 86 of Act of 1994. Plea of appellant that Order passed by High Court did not record any reasons for dismissing the Revision Petition preferred by the Department. Case of appellant that various contentions raised as grounds in the Revision Petition and two questions of law formulated by the Department for consideration in the High Court while impugning the judgment of the Rajasthan Tax Board, Ajmer had not been reverted to by the High Court, resulting in serious prejudice caused to petitioner.
Findings of the Court :
In the instant case challenge was raised to order of Board before High Court on alleged questions of law as well as mixed question of law and fact. The contention that respondent had not manufactured the shutters from the tax paid raw material and also that the contract in question was not impartible but a consequential item for completion of the contract required examination by the High Court. It is true that requirement of stating reasons for judicial orders necessarily does not mean a very detailed or lengthy order, but there should be some reasoning recorded by Court for declining or granting relief to petitioner. The purpose, is to make the litigant aware of the reasons for which the relief is declined as well as to help the higher Court in assessing the correctness of the view taken by High Court while disposing off a matter.May be, while dealing with the matter at the admission stage even recording of short listening dealing with the merit of the contentions raised before the High Court may suffice, in contrast, a detailed judgment while matter is being disposed off after final hearing, but in both events, it is imperative for the High Court to record its own reasoning however short it might be. No infirmity was found in the arguments advanced on behalf of the Department, that no reasons had been recorded for rejecting the contentions raised.Said legal infirmity had, in fact, prejudicially affected the case of appellant. The judgment of the High Court must speak for itself to enable the higher Court to do complete and effective justice between the parties-Evidence on record that question of law, mixed questions of law and facts were not examined by the High Court in some detail, but , by one line order the Revision Petition was dismissed-It was expected of the High Court to deal with the contentions rather than pass a cryptic order-Held It would have been desirable if the High Court would have recorded some reasons for rejecting the Revision Petition preferred by the Department-Hence for said reasons impugned order passed by High Court was set aside and case was remitted back to High Court with a request to hear the case de novo and pass appropriate order in accordance with law. Appeal was allowed to said extent.
The Court's conclusion that reasons must be recorded in judicial orders and that the absence of reasons renders an order unsustainable is primarily articulated in paragraph (!) .
JUDGMENT
Swatanter Kumar, J. —
1.Delay condoned.
2.Leave granted.
3.The present appeal under Article 136 of the Constitution of India is directed against the Judgment dated 29th February, 2008 passed by the High Court of Judicature for Rajasthan Bench at Jaipur in S.B. Sales Tax Revision Petition No.92 of 2007, and in exercise of its power under Section 86 of Rajasthan Sales Tax Act 1994 (for short ‘the Act’). The impugned Order reads as under:-
“After having carefully gone through the material on record, since after due consideration proper discretion has already been used by the Deputy Commissioner (Appeals) as also Rajasthan Tax Board, in the facts and circumstances, no further interference is called for by this Court. The revision petition is dismissed accordingly as having no merits.”
4.The Learned Counsel appearing for the appellant, Assistant Commissioner of Income Tax has argued that Order passed by the High Court does not record any reasons for dismissing the Revision Petition preferred by the Department. According to the Learned Counsel, various contentions raised as grounds in the Revision Petition and two questions of law formulated by the Department for consideration in the High Court while impugning the judgment of the Rajasthan Tax Board, Ajmer have not been reverted to by the High Court, resulting in serious prejudice caused to the present petitioner. On merits as well, challenge has been raised to the Order of the Tax Board as well as that of the Order of the High Court.
5.It may be necessary for that to refer to the basic facts giving rise to the present appeal. The respondent claimed to be a contractor who has obtained impartible contract of constructing 400 shops in JP Market, Chhota Talab, Kota. As per the contract the shops were to be handed over to Cloth Merchant Association, Kota. The respondent had received Rs.95,26,276.00 in the year 1997-98 and Rs.22,38,026.00 in the year 1998-99. The assessing authority formed an opinion and recorded a finding that the shutters and doors were not manufactured from tax paid raw material in impartible contract and as such shutter was excluded from labour charges in the above years, and levied tax, interest, penalty and surcharge upon the respondent. The order of the assessing authority dated 19th July, 2000 and 22nd February, 2001 respectively were challenged by the respondent before the Deputy Commissioner (Appeals), Kota and intended that if the shutters were not installed in the shops, then as per the contract the shops would not have deemed to be complete. Relying upon the judgments of the Supreme Court in Gannon Dunkerley & Co. (Madras) Ltd. - State of Madras,1 [AIR 1958 SC 560] as well as State of Rajasthan Vs. Man Industrial Corporation,2 [(2003) 7 SCC 522] it was contended that in an impartible work contract as per the terms of that contract, the material has been used in work contract and there was no contract for manufacturing shutters. Thus on account of execution of impartible work contract, the property was immovable and tax could not be levied thereon.
6.The appeal preferred by the respondent was accepted by the Deputy Commissioner vide his Order dated 23rd February, 2002. This Order was assailed in appeal by the Department before the Rajasthan Tax Board which also came to be rejected vide Order dated 18th October, 2003. The Board accepted the plea of the respondent that the shutters and doors were manufactured from tax paid raw material in a work contract, therefore, could not be the goods transferred for the purposes of levy of tax, holding the same not justifiable to set aside the levy of tax, penalty, interest or surcharge. Aggrieved from the Order of the Board dated 23rd February, 2002, the appellant filed Tax Revision before the High Court and inter alia and raised the following questions of law:-
A. Whether the Rajasthan Tax Board Ajmer was justified in dismissing the appeal of the petitioner in the facts and as mentioned above?
B. Whether the iron rolling
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