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1 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 20TH DAY OF AUGUST, 2015
BEFORE
THE HON'BLE MR. JUSTICE RAM MOHAN REDDY
WRIT PETITION NOS. 1946-1950 OF 2015 (T-RES)
BETWEEN:
M/S SOWMYASHREE TRADERS SOWMYASHREE NILAYA, VINAYAKA NAGAR, TIPTUR.
REPRESETNED BY ITS PROPRIETOR, SRI.B.C. PRABHUSWAMY, AGED ABOUT 56 YEARS, S/O LATE SRI. CHENNABASAPPA, ... PETITIONER
(By Sri. THIRUMALESH M, ADV.,)
AND
STATE OF KARNATAKA REPRESENTED BY PRINCIPAL SECRETARY TO GOVERNMENT, FINANCE DEPARTMENT, GOVERNMENT OF KARNATAKA, VIDHANA SOUDHA, BANGALORE-560 001.
COMMISSIONER OF COMMERICIAL TAXES KARNATAKA VANIJYA THERIGE KARYALAYA, GANDHINAGAR, BANGALORE-560 009.
ASSISTANT COMMISSIONER OF COMMERICIAL TAXES (AUDIT & RECOVERY) TIPTUR, B.H ROAD TIPTUR. ... RESPONDENTS
(By Sri. S.V. GIRIKUMAR, AGA)
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT ORDERS PASSED UNDER SECTION 9 (2) OF CST ACT BY ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (A & R) TIPTUR FOR THE YEARS 2006-07 TO 2010-11- ANNEXS- H, J, K L & M DTD.20.10.2014, 3.11.2014, 3.11.2014, 22.11.2014, 22.11.2014 RESPECTIVELY.
THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
3 O R D E R
Petitioner has assailed the orders dated 20.11.2014, 3.11.2014, 3.11.2014 & 22.1.2014 and 22.11.2014 of the Assistant Commissioner of Commercial Taxes (Audit & Recovery), Tiptur, exercising jurisdiction under Section 9(2) of the Central Sales Tax Act, 1956, on the premise, that, they are in violation of the principles of natural justice in not assigning reasons and findings except conclusions.
According to Sri Thirumalesh, learned counsel for the petitioner, the assessing officer did not assign reasons and findings either accepting or rejecting the information/report of the vigilance authority nor reject the grounds urged by the petitioner hence resulted in unfair conclusions.
Learned counsel for the revenue, though points to the orders extracting all the grounds advanced by the
4 petitioners, nevertheless, is unable to point to reasons and findings.
Recording of reasons is a part of fair procedure. Reasons are harbinger between the mind of the maker of the decision in the controversy and the decision or conclusion arrived at. They substitute subjectivity with objectivity, as observed in Alexander Machinery (Dudley) Ltd. V. Crabtree1, followed in M/s. Mangalore Ganesh Beedi Works v. Commissioner of Income Tax, Mysore and another2. In the said decision, it was further observed that failure to assign reasons amounts to denial of justice.
In M/s.Woolcombers of India Ltd. vs. Woolcombers Workers’ Union and another3, it was observed thus :
“The giving of reasons in support of their conclusions by judicial and quasi
1 1974 LCR 120 2 [2005] 2 AIR Kant HCR 756 3 AIR 1973 SC 2758
5 judicial authorities when exercising initial jurisdiction is essential for various reasons. First, it is calculated to prevent unconscious unfairness or arbitrariness in reaching the conclusions. The very search for reasons will put the authority on the alert and minimize the chances of unconscious infiltration of personal bias or unfairness in the conclusions.”
In Commissioner of Police, Bombay v. Gordhandas Bhanji 4, Vivian Bose J., observed thus : “…..Public orders, publicly made in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed
4 AIR 1952 SC 16 (1)
6 objectively with reference to the language used in the order itself. “
In State of Orissa vs. Dhaniram Luhar5, the Apex Court observed that “reason is the heart beat of every conclusion and without the same, it becomes lifeless”.
It is elsewhere observed that: Giving of reasons encourages a careful examination of the relevant issues, the culmination of extraneous considerations and consistency in the decision making. If those entitled to be heard, have no right to know how a Tribunal resolved the issues in dispute at the hearing, they may well regard as an empty ritual their legally conferred opportunity to be heard and to influence the tribunal by producing witnesses and other evidence to establish the relevant facts, advancing arguments on the proper exercise of any discretion and resolution of any legal
5 [2004] 5 SCC 568
7 questions and challenging their opponent’s case. Unless the Tribunal makes findings on disputes as to fact, explains the exercise of discretion (by indicating the considerations that it has taken into account and relevant weightage assigned to them and give its answers to any questions of law, there can be no assurance that the Tribunal discharged its obligations to base its decision upon the material presented at the hearing rather than on extraneous considerations. It was further observed that decision is irrational in the strict sense of that term if it is unreasoned, if it is lacking ostensible logic or comprehensible justification. Absurd or perverse decision may be presumed when no reasons are assigned. Irrational decision to say is in the absence of logical connection between evidence and ostensible reasons for the decision, reasons must be adequate and notably intelligible.
A decision, it is said, may be struck down when an applicant can show substantial prejudice resulting
8 from failure on the part of the decision maker to demonstrate how issues of law had been resolved or disputed issue of fact decided or by demonstrating some other lack of reasoning which raised substantial doubt over the decision making process.
The aforesaid observations must not be confused with a case where essentials are inferred when facts proved justify such inference. Therefore it is held that on one hand the Tribunal must not surmise conjecture or guess but on the other hand it may draw an inference from proved facts so long as it is legitimate inference.
Regard being had to the aforesaid observations and applying the same to the facts of this case, the mere extraction of the contentions advanced by the petitioner before the assessing officer in the orders impugned and rejected by one sentence, however without assigning
9 reasons and findings. The orders tantamount to denial of justice to the petitioner calling for interference.
In the result, these petitions are allowed. The orders impugned, supra are quashed and proceedings remitted for consideration afresh. Sequentially, demand notices, dated much before the orders of assessment must also stand quashed. The Assessing Officer is directed to reconsider the matters afresh after extending reasonable opportunity of hearing to the petitioner and to pass orders strictly in accordance with law and in the light of the observations supra.
Sd/- JUDGE