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Introduction to writ petition in relation to taxation matter

ANIL KUMAR BEZAWADA 
on 20 September 2012

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As per Article 226 of Constitution of India every High Court can issue any direction or order or writ to enforce for enforcement of rights which are in the nature of fundamental rights. The Court while exercising the ‘WRIT’ jurisdiction will not act as appellate authority but just act an authority to correct the error of Law or fact. The High Court in its extra ordinary jurisdiction cannot entertain a petition either for specific performance of contract or for damages.  The main aim of the article is give an introduction about the writ petition in relation to taxation matters.

The Court may exercise ‘writ jurisdiction’ where in it feels that the order or judgment was passed under following circumstances.

1. The authority acting under a Law does not have power to issue the order.

2. The order issued by concerned authority is not warranted.

3. The order passed by the breach of the provisions of a particular statute.

4. The person against whom the order is passed is not person to whom the order is directed.

5. Where the authority failed in exercising the power granted under statute.

6. Where the authority exceeded his powers while passing the order.

7. Where the authority exercised his powers dishonestly.

8. Where the authority has not applied his mind while passing the orders.

9. Where the order passed by the authority by violation of principles of natural justice.

10. Order passed after arriving at a conclusion without any supporting evidence

11. Authority passed the order in failing to take relevant considerations into account.

12. Order passed in defiance of the fundamental principles of judicial procedure.

13. Authority has passed the order by resorted to invoke the provisions which are repealed.

Generally the writ petition shall not be allowed when the petitioner has an alternative remedy provided in the respective act by way of filing of an appeal against the order of quasi judicial authority. The petitioner can raise all the grounds which are raised in writ petition can raise before the lower appellate forums. Petitioner shall not use writ jurisdiction as to bypass the appeal machinery created under particular statute. In such situation writ court will direct the petitioner to file an appeal before appellate forum by granting the additional time. But alternative remedy is not an absolute bar on High Court to reject the writ petition. In exercise of its powers under Article 226 of the Constitution of India, has a vast power to decide any question that may arise under any of the provisions of the Act. If the order passed under any of above 13 circumstances notwithstanding the fact that petitioner has alternative remedy the writ court can entertain the writ jurisdiction but subjected self imposed restrictions.    

In central excise even when the petitioner has an alternative remedy by way of filing appeal against the order of Respondent the High Court allowed the writ petition when the petitioner had questioned the vires of Notification issued by CBEC.

It is settled position of the law that once the petitioner availed the remedy given under the act by the way of filing of an appeal before Appellate Authority and proceedings were pending before CESTAT, he is debarred from filing the writ application on the same order before HC. 2011 (272) E.L.T 0034 Madras HC 

Conversion of writ petition in to main appeal

It is quite often in some cases writ court converts the writ petition in to the main appeal if time limit for filing the appeal before High Court has not elapsed as per relevant statute. For instance CESTAT has passed the order in favor of Central Excise Department since the Assessee has filed in complying the Stay Order (i.e pre deposit of duty). The Assessee went directly before the HC and prayed the writ jurisdiction of HC. High Court held that since the assessee has an alternative remedy by the way of appeal before HC against the order of CESTAT under Section 35G of Central Excise Act, 1944 not allowed the writ petition. But Court converted that Writ application in to the main appeal under Section 35G of the Central Excise Act, 1944 as the petitioner filed the writ petition within 180 days from date of order. 2011 (273) E.L.T 183 Madras H.C    

‘Writ’ is basically of 5 types. They are writ of:

A. Habeas corpus

B. Mandamus

C. Prohibition

D. Quo warranto

E. Certiorari

We will amylase each type of writ with regard to taxation and allied matters.

Habeas Corpus:

This writ jurisdiction confined primarily to challenge the orders of detention and preventive detention orders passed under various statutes.

As per Section 132 of Customs Act, 1962 if any person makes wrong declaration to Custom authorities, it is an offence punishable under the said act. As per Section 104(1) of Customs Act, 1962 officer of Customs can arrest any person who makes wrong representation as contained in Section 132. As per Article 22 of the Constitution that the person who is detained must be not only put on notice, but also he should have got the clear knowledge of the basic facts constituting the ‘grounds’ on which he is actually detained. Therefore detaining authority should serve detaining order with grounds on which detention order was passed.

Facts of the Case

One person let us called ‘X’ arrived to Chennai airport from foreign country. An enquiry was made whether the person was having any foreign currency, and he replied in the negative. Thereafter, entertaining suspicion, the Officers examined his baggage containing flowers and betel leafs. During the course of the search of the person, it was noticed by the authorities that he was found in possession of different foreign currencies. He was not in possession of any license or permits to carry the foreign currency. He was arrested for the alleged violation of the Customs Act.         

‘X’ declared to authorities that he had studied up to 2nd standard only and he was not conversant with any other language except Tamil. Copy of detention order was served in Tamil and in English also. But authority failed to translate the grounds on which detention order was passed from English to Tamil language. Some of facts were conflicting between English detention order and Tamil detention order. ‘X’ on challenging the order of detention filed ‘writ of ‘habeas corpus’ before the High Court.

Defense taken by ‘X’ was detention authority failed in giving the opportunity of effective representation, violation of fundamental right.

The High Court allowed the writ of ‘habeas corpus’ since the authority failed to give chance to the petitioner to take the defense thereby violated the fundamental right. The fact of conflicting facts between detention order of Tamil and English indicates the non application of mind on part of detention authority.   2008 (232) E.L.T 26 (Mad)

Facts of Case: Importer ‘X’ made an undervaluation in the import of apples from various countries, Customs authorities came to know that the importer has committed the offence of undervaluation in the import of apples and the total customs duty evasion is to the tune of Rs. 1.75 crores and thus he has consciously evolved a modus operandi to evade payment of appropriate customs duty by producing two sets of invoices, one showing lesser value for customs and another with actual value, which is the final loading invoice and therefore it is necessary to detain him under the provisions of COFEPOSA with a view to prevent him from indulging in smuggling of goods in future, further ordering confiscation of apples so imported under Section 111(m) of the Customs Act, 1962. Detention Authorities failed to supply the relied upon documents to detention order. The said order of detention has been challenged on various grounds in this Habeas corpus Petition.    

Defense taken by Petitioner:

Detention order relied so many documents but no such documents were furnished to the detenu and therefore, it has caused much prejudice to the detenu in making effective representation to the authorities. Without following the procedure prescribed under Valuation Rules and Appeal procedures how the authority passes detention order.

Judgment:

Assessing officer has not followed the procedure prescribed under valuation rules i.e declaration of value by the importer, rejection of that value, value of goods as per procedure prescribed under Rule 4 to Rule 10. Rule 12 gave the power to proper officer to reject value declared by importer and furnishing the grounds on which he is rejecting value can issue the SCN and based on the reply officer can pass the speaking order. Thereafter the appeal procedures will start. Since the procedure prescribed under relevant statute was not followed while valuing the imported goods and passing the detention order Court allowed the writ of habeas corpus. 2010 (251) E.L.T 187 (Mad)

From the above two judgments it is clear that while passing the detention order the authority has to follow the principles of natural justice by supplying the relied upon documents to detention order, has to follow the procedure prescribed under relevant statute, has to apply the mind before reaching the conclusions.

Apart from the above the detention authority has to consider the representation made by the detenu, security of state, interest of general public, maintenance of public order, personal liberty, disruption of national economic discipline, national security.

If a person is illegally detained, his personal liberty will be at jeopardy and accordingly in a fit case it will be open for the Writ Court to issue writ quashing the detention order when the order of detention has not been served on the concerned person. One need not wait till he is detained to challenge the order of detention and to ask for a writ of habeas corpus. He may, before his actual detention, move the Court for appropriate writs and/or order in the nature of Mandamus, Certiorari and Prohibition.         

Writ of Mandamus

This writ will issued when the public authority has

1. failed to exercise discretion or

2. has wrongly exercised discretion conferred on him by statute or

3. has exercised such discretion malafide or

4. has exercised such discretion on irrelevant considerations or

5. has exercised such discretion ignoring the relevant considerations or

6. has exercised such discretion such a manner to frustrate the object of conferring such right.

Apart from above, a Writ of Mandamus can be granted only in case where there is a statutory duty imposed upon the officer concerned and there is failure on the part of the officer to discharge the statutory obligation. The chief function of the writ is to compel performance of public duties prescribed by statute and to keep subordinate tribunals and officers exercising public functions within the limit of their jurisdiction. Therefore, in order that a mandamus may issue to compel the authorities to do something, it must be shown that there is a statute which imposed a legal duty and the aggrieved party has a legal right under the statute to enforce its performance. ‘Writ of mandamus’ lies on the principle “request and denial”, which means, there should be a request by an individual and subsequent denial by the statutory authorities. Writ jurisdiction is meant for enforcement of existing rights and not for determining the rights and thereafter for enforcing it.

If the authority was not performing any statutory duty imposed upon them and it cannot be said that there is failure on the part of the officer to discharge the statutory obligation. A writ of mandamus, therefore, cannot be issued.

Section 125(1) of the Customs Act has two limbs. No doubt under this section a right is given to the person from whom goods have been confiscated, importer or exporter as the case to pay fine in lieu of confiscation. But it is not correct to state that this right is an unqualified or absolute right available in all cases of confiscation. The power exercised by the officer under Section 125 of the Customs Act is a quasi judicial power. With regard to goods the importation or exportation of which is prohibited under this Act or under any other law for the time being in force the authority has the discretion to give to the owner of the goods or if he is not known the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the Officer thinks fit and as regards other goods i.e., goods not being prohibited, he is bound to give the aforesaid option. The proviso to this Section deals with the upper limit of the fine imposed under this Section and sub-section (2) deals with the additional liability to pay duty and charges. As per Section 126, the property which is confiscated vests in the Central Government upon such confiscation.

In fact, the extracts from judgments of the  Calcutta and Andhra Pradesh High Court relied on by the petitioners also clearly say that there is a discretion with the adjudicating authority to decide whether to give the person, who has imported or exported goods which are prohibited by law, the option to pay fine. Hence it cannot be contended that the authority has an obligation to give the petitioner the option to pay fine and a writ of mandamus must be issued.

Writ of mandamus cannot be issued to allow cross examination of witness including the departmental officers. If the department fails to produce material witnesses, an adverse inference as permissible under law would be drawn against department. It is the choice of the department to produce or not to produce the material witnesses. If the parties are not interested to produce a witness, the Court cannot compel it to produce. Law will take its own course.

Writ of Prohibition:

The object of this writ and the circumstances in which it is issued are:

To prevent the lower Courts or Tribunals or authorities from exercising jurisdiction which does not have or

To prevent them from exceeding the limits of their jurisdiction.

Proceeds to act in violation of the rules of natural justice; or

Proceeds to act under a law which is itself ultra vires or

Proceeds to act under a law which is itself unconstitutional

Writ of prohibition cannot be issued to prevent the authority from performing lawful action in lawful manner.  The Central Excise Officer can issue Summons under Section 14 of CE Act, 1944 to any person whose attendance he considers necessary you cannot say that I am a dealer not a person liable to pay the Excise Duty therefore I am not bound to attend the summons and he cannot ask the Court to give writ of Prohibition to officer of central excise not to issue the summons. As per Section 35B of Central Excise Act, appeal against the order of Commissioner (Appeals) relating to the rebate of Excise Duty paid on goods exported lies to Central Government not to CESTAT. If the CESTAT entertains the appeal against such order may be liable for ‘writ’ from the High Court since the Tribunal not empowered to here such matters.       

Quo warranto:

This writ is issued to determine whether the holder of Public Office has a valid title to hold it. The object of this writ is to remove usurpers from the public office. Because of this ‘Writ’ an enquiry may be conducted to decide an appointment of public office has made according to Law or not. Even a private individual can file a writ and can bring the notice of it to the Court that a person who is disqualified to hold an office is still holding it. Before claiming this ‘writ’, Petitioner has to prove that

The office in question is a public office and

The same held by the person concerned without legal authority

Writ of Certiorari:

This writ is issued when the lower court or quasi judicial authority has no jurisdiction to pass the order but the authority or lower court entertained the jurisdiction and passed the order. In this situation applicant can move before High Court for writ of Certiorari to quash the decision of lower court or the order of quasi judicial authority on the ground want of jurisdiction.

There must be an error apparent on the face of record as the High Court acts merely in a supervisory capacity. While issuing the Writ of Certiorari, the order under challenge should not undergo scrutiny (examining in detail) of an appellate court. It is obligatory on the part of the petitioner to show that a jurisdictional error has been committed by the Statutory Authorities. There must be the breach of principles of natural justice for resorting to such a course.

In one case quasi judicial authority has relied on some documents to issue the Show Cause Notice which were not served to the applicant along with the Show Cause Notice. The Hon’ble High Court held that non furnishing of relied upon documents to the petitioner is a valid ground to issue writ of ‘certiorari’. 2003 (151) E.L.T 0261

In continuing the above case SCN is issued without furnishing relied upon documents. There exists an alternative remedy going for an appeal before Commissioner (Appeal) or CESTAT as the case me. The Hon’ble High Court said that existence of alternative remedy will not debar the applicant to issue the writ particularly when the principles of natural justice grossly violated.      

Conclusion: During my school days and in my college days I used to read in Telugu news paper that one farmer from Krishna District or employee of Trust or Temple or some another person filed a writ petition before Andhra Pradesh High Court. At that time I don’t know exactly what is ‘writ’, in what circumstances it should be filed. As we are all Chartered Accountants and tax practitioners it is very important for us to know the introduction about the writ petition and particularly with reference to the taxation matters.              

Email ID: anilincometax@gmail.com

anil@hiregange.com 




Category Excise
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