PRINCIPLES OF NATURAL JUSTICE-
"Audi Alteram Partem" and "nemo judex in causa sua"
Tax matters.
Introduction:
The principles of natural justice have their roots in two Latin maxims:"Audi alteram partem" and "nemo judex in causa sua". The first maxim means that a reasonable opportunity of hearing which is sine qua non and imperative for the statutory authority to afford before passing the order or decision and the second maxim means that no-one should be a judge in their own cause. It is a principle of natural justice that no person can judge a case in which they have an interest. The rule is very strictly applied to any appearance of a possible bias, even if there is actually none:
"Justice must not only be done, but must be seen to be done".
When justice is not meted out for the assessees, they approach the High Court without exhausting the remedy of appeal. It is trite law that if the order passed by the original authority is in violation of the fundamental rights guaranteed under the Constitution of India; violation of the principles of natural justice; ultra-vires the provisions of the relevant law; grave error in the order and miscarriage of justice, then the question of waiving the appellate remedy will arise and the Court, under Article 226 and 227 of the Constitution of India, can invoke the Writ jurisdiction and interfere with such order passed by the original authority.
Legal provisions:
Under Article 226 of the Constitution of India, the High Court has vast powers as this Court has under Article 32 of the Constitution of India, and can exercise such powers in those cases where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice. It is a well settled position that where an order has been passed in breach of the principles of natural justice, it would be open for the writ Court to interfere. The principles of natural justice have come to be known as being part of the guarantee contained in Article 14 of our Constitution i.e., "the concept of equality".
In Service Tax, Sec 73 (2) of the Finance Act 1994 provides that Central Excise Officers shall after considering the representation if any made by the person on whom notice is served under sub section 1 determine the amount of service tax due from or erroneously refunded to such person not being in excess of the amount specified in the notice and there upon such person shall pay the amount so determined. On representation from the assessee side, the statutory authorities shall determine the liability. In Central Excise, Section 35Q of the Central Excise Act, 1944 provides for appearance by authorized representative before a central excise officer or Appellate Tribunal in connection with any proceedings. The Adjudicating authority may, if sufficient cause is shown, at any stage of proceeding referred to above, grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing. In Customs, under section 28(2) of the Customs Act, 1962 which reads as follows:
"The proper officer, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), shall determine the amount of duty or interest due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined."
Under Tamilnadu VAT Act, Section 22 (4) provided that before taking action under this sub section, the dealer shall be given reasonable opportunity of being heard. And in Section 25(2) it is stated, provided that before making and enhancement of tax payable the assessing authority shall, give a reasonable opportunity to the dealer to show cause against such enhancement and make such enquiry as it may consider necessary.
Situations of violation of principles of natural justice in taxation laws:
The following situations warrant the assessees to seek the intervention and direction of the High Courts.
a. When Notice itself is not served.
b. When arbitrary orders are passed by the department without granting opportunity of personal hearing.
c. When relied upon documents or copies of seized documents are not provided by the department despite request letter submitted by the assessee.
d. When cross examination is denied.
e. When the written submission for the Notice or for Personal Hearing is not considered.
f. When the request of modification stay application is not considered.
g. When fundamental rights of the petitioner guaranteed under articles 14 & 21 of the Constitution of India are not protected
g. When reasonable time for reply or for adjournment is denied without notice.
h. When the order is passed for new additional demand without issuing revised notice.
h. And among other reasons, when speaking order is not passed. In Ashok Kumar Yadav Vs State of Haryana (1985 SCR Supl (1) 657) The Apex Court held - It is one of the fundamental principles of jurisprudence that no man can be a judge in his own cause and that if there is a reasonable likelihood of bias it is 'in accordance with natural justice and common sense that the justice likely to be so biased should be incapacitated from sitting".
The basic principle underlying this rule is that justice must not only be done but must also appear to be done and this rule has received wide recognition in several decisions of the Supreme Court. D.P. Mahesh Vs Assistant Commissioner (CT) (Addl.), Thiruvanmiyur Assessment Circle, Chennai [2013] 58 VST 434 (Mad). The respondent has passed the impugned assessment order, which amounts to violation of the principles of natural justice. Considering the facts and circumstances of the case and in the interest of justice, the impugned assessment order dated May 18, 2012 is quashed with a direction to the respondent to consider the matter afresh after giving opportunity to the petitioner. Reasonable opportunity was not given to the petitioner since notice itself had not been served on the petitioner.
The order in question was liable to set aside and the assessing authority was to proceed and finalise the assessment in accordance with law after giving the petitioner reasonable opportunity of being heard (In Palaniappa Sago Factory Vs DCTO Attur Assessment Circle (2009) 24 VST 248). Hon'ble Supreme Court in the case of Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851, quoted the following: “Indeed, natural justice is a pervasive facet of secular law where a spiritual touch enlivens legislation, administration and adjudication, to make fairness a creed of life. It has many colours and shades, many forms and shapes and, save where valid law excludes, it applies when people are affected by acts of authority. It is the bone of healthy government, recognized from earliest times and not a mystic testament of judge-made law. Indeed from the legendary days of Adam-and of Kautllya's Arthashastra-the rule of law has had this stamp of natural justice, which makes it social justice. We need not go into these deeps for the present except to indicate that the roots of natural justice and its foliage are noble and not new-fangled. Today its application must be sustained by current legislation, case law or other extant principle, not the hoary chords of legend and history. Our jurisprudence has sanctioned its prevalence even like the Anglo-American system."
Conclusion:
The opportunity of providing a personal hearing or submitting explanation to an assessee is a basic obligation and without considering this requirement the orders are passed by the assessing officers and by appellate forums which is violation of a rule of natural justice results in arbitrariness and in the author’s view it is discrimination. The decisions of the Appellate Forums or other the statutory authority should be specific and speaking orders are to be passed.
They must contain reasons for the decision. Reasons may be elaborate or may be brief. But these are beginning to be considered necessary to ensure fair decision making. This is the crux of the Latin maxim "Audi Alteram partem". In Ridge v. Baldwin and Anisminic Ltd. v. Foreign Compensation Commission the House of Lords in England has made it clear that breach of natural justice nullifies the order made in breach. If that is so then the order made in violation of the principles of natural justice was of no value.
The author can be reached at renga42002@yahoo.co.in R.K RENGARAJ M.COM., MBA.,LL.B. Advocate and Tax Consultant 09244219688
R.K Rengaraj
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