The respondent-CCL must satisfy itself regarding the authenticity of the end use of coal by calling for/inspecting the documents and by physical verification as per Clause 4.4 of the FSA. The principles of natural justice must be mandatorily followed in cases leading to adverse civil consequences against the affected person.

1. The present writ petition is taken up today through Video conferencing.

2. The present writ petition has been filed for quashing the order as contained in Reference No.CCL/HQ/C-4/2019/6171 dated 07th November, 2019 issued under the signature of General Manager (M&S), Central Coalfields Limited (in short ‘CCL’), Darbhanga House, Ranchi-the respondent no.3, whereby the said respondent has rejected the request of the petitioner for resumption of supply of coal and has terminated the Fuel Supply Agreement (FSA) by invoking Clause 4.4 and 15.1.5 of FSA and has further forfeited the security deposit by invoking Clause 3.6 of the FSA. Further prayer has been made for commanding upon the respondents to allow the petitioner to participate in e-auction process and to resume supply of coal in terms of the prevalent policy.

3. The factual background of the case as stated in the present writ petition is that the petitioner is primarily engaged in the business of manufacture of ‘Special Smokeless Fuel’ and a FSA was entered between the CCL, Ranchi and the petitioner under the new Coal Distribution Policy, 2007 to fulfil the regular requirement of coal for use as raw material in its unit. Pursuant to the said FSA, yearly quantity of coal was allocated to the petitioner for supply and use in its manufacturing unit. Since, the petitioner was purchasing coal for use in its manufacturing unit, deduction of “Tax Collected at Source” (in short ‘TCS’) was not required by CCL at the time of sale of coal to the petitioner as per the newly inserted provision of Section 206(1A) of the Income Tax Act, 1961 w.e.f. 1st July, 2012 and in turn the petitioner had to furnish statutory declaration in Form-27C to the CCL. A survey under Section 133-A (2A) of the Income Tax Act, 1961 was conducted in the office premises of the petitioner and during the said survey proceeding, it was alleged by the officers of the Income Tax Department that the petitioner had the capacity to process only about 0.05% of the total quantity of coal sold by CCL for its manufacturing unit. Thereafter, a communication dated 31st October, 2017 was made by the Principal Commissioner of Income Tax, Ranchi to the CCL stating that the petitioner-company was only having capacity to process 0.05% of the raw coal purchased by it from CCL and thereafter order dated 02nd November, 2017 was passed by the CCL suspending supply of coal to the petitioner with immediate effect. The petitioner represented before the General Manager, Sales & Marketing, CCL, Ranchi for withdrawal of suspension of supply of coal stating that the facts communicated by the Income Tax Department were not correct. The petitioner also filed a detailed representation dated 13th November, 2017 before the Principal Commissioner of Income Tax, Cental Revenue Building, Ranchi stating that due to its communication dated 31st October, 2017, the CCL had suspended supply of coal to the petitioner and a request was made to the Department to issue necessary direction to CCL for resumption of coal supply to it. Thereafter, the Principal Commissioner of Income Tax, Ranchi vide letter dated 14th November, 2017 informed the petitioner that it should approach the CCL, Ranchi for resumption of coal delivery and the Income Tax Department would have no objection in the matter for resumption of coal supply in favour of the petitioner. In pursuance of the said letter, the petitioner again filed a representation on 17th November, 2017 before the respondent no.3 requesting it to resume the supply of coal in its favour pursuant to the FSA. The respondent no.3 also made further communication with the office of Income Tax Department seeking clarification regarding resumption of coal of the petitioner which was replied vide letter dated 12th December, 2017 stating inter alia that it had no locus standi in the matter relating to resumption of coa