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Judgment
Heard Sri Devi Pal learned Senior Adv. assisted by Sri Pushkar Mehrotra learned Counsel for the petitioners and Sri G.R. Gupta learned Counsel for the respondents.
The petitioner No. 1 is a Public Liability Company, the petitioner No. 2 is a shareholder and a Director. They are challenging the order dated 4199 and 28199 which are collectively annexed as AnnexureG to the petition issued by the respondent No. 1 under Section 90(1) of the Finance Act, 1998 in respect of Kar Vivad Samadhan Scheme, 1998 and the orders dated 6499 and 19499 of respondent No. 2 contained in the letter of respondent No. 3 dated 9499.
The facts of the case are that on 4196 the Central Excise Officers visited the Company''s factory purporting to carry out stock verification and allowing discrepancy in the seized/detained goods. Pursuant to the Company''s request for provisional release of the seized finished goods the Central Excise Authorities required it to furnish a bond and security, which was duly furnished by the Company and accepted by the Excise Authorities Accordingly the said finished goods were provisionally released to the Company after the payment of appropriate Central Excise duty. In this connection copies of the bond and bank guarantee and letter dated 2296 of the Central Excise Authorities accepting the same have been annexed collectively as AnnexureA to the petition.
On 3496 the Commissioner of Central Excise issued a show cause notice to the petitioner and the notice proposed inter alia to confiscate the seized goods and demand duties and also proposed penalties. Copy of the same has been annexed as AnnexureB. The matter was adjudicated by the authority concerned on 171196 but that order was set aside by the Tribunal on 203 98 on the ground of violation of natural justice and the matter remanded to the Commissioner for fresh adjudication. The Commissioner again adjudicated the matter by means of order dated 281098 by that order the Commissioner confiscated certain goods and confirmed the demand duty and imposed penalty. Being aggrieved the petitioner filed an appeal alongwith the application before the Tribunal, which were pending but learned Counsel for the petitioner states that in view of the payments it made under the Kar Vivad Samadhan Scheme the said appeals will be treated as having been withdrawn.
The Kar Vivad Samadhan Scheme contains provisions for quick and easy settlement of the Tax dues. For availing the benefit of the Scheme it is necessary that the duty, interest, fine or penalty should be outstanding and the dispute in respect of the same should be pending on the specified date. The petitioner decided to avail of the Scheme and on 221298 filed a declaration under the Scheme before the respondent No. 1. True copy of the declaration and certain letters are annexed as AnnexureD to the petition. The petitioner also filed a separate declaration in respect of penalty as demanded by the authority.
In paragraph 3 (1) of the petition it is stated that petitioner received three certificates of intimation under Section 90(1) of the Finance Act. The certificates in respect of the Company''s said Officers were both dated 4199 and require them to pay 50% of the penalty imposed on each of them. The certificate in respect of the Company required it to pay a sum of Rs. 8,34,481/ on account of duty and Rs. 25,000/ as redemption fine. True copies of the three Certificates are annexed as AnnexureG to the petition. Thereafter the petitioners made the payment as directed in the said certificates vide AnnexureH to the petition. Thereafter certain correspondence took place between the petitioner and the authorities, copies of which are AnnexureI to P annexed to the petition. The petitioner prayed that the authority should not invoke the Bank Guarantee given by it.
In paragraph 5 of the petition it is stated that respondent No. 1 did not accept the declaration as filed by the Company and determined a much higher amount than that stated by the Company. It is alleged that opportunity of hearing should have been given to the petitioner before issuing the impugned declaration. In paragraph 6 of the petition it is state that the purported certificate dated 28199 was passed in violation of the principles of natural justice. In paragraph 7 to 11 of the petition it has been alleged that the petitioners are not liable to pay the amount in question. In paragraph 12 it is alleged that respondents are not entitled to invoke the Bank Guarantee or collect any money against the same from the Bank. It is further alleged that petitioner is not required to pay any fine or penalty.
In our opinion this petition can be disposed of on a short point, namely that opportunity of hearing was not given to the petitioner before passing the impugned order. Since the decision of the Supreme Court in State of Orissa v. Bina Pani Deh, (AIR 1967 SC1267) it is settled law even if the statute does not specifically provide for opportunity of hearing yet opportunity of hearing must be given, if an order has civil consequences. In other words, the Rules of natural justice have to be read into the Statute whenever an order is passed which affect rights or liability. The same view has been taken by the Supreme Court in C.B. Gautam v. Union of India, (1993(199) ITR 530.
In the present case it is not disputed that the impugned orders were passed without giving opportunity of hearing to the petitioner. Hence in our opinion the matter should be remanded to the respondent No.1 pass a fresh order after giving opportunity of hearing to the petitioner.
The impugned orders dated 4199 and 28199 are quashed, but it is open to the respondent No. 1 to pass a fresh order within two months from today after giving an opportunity of hearing to the petitioner and by passing a speaking order. The Bank Guarantee given by the petitioner shall not be enforced till the fresh determination by the respondent No. 1 and for further period of one month thereafter. If found that the petitioner has paid any amount in excess the same will be refunded.
The petition is allowed. No orders as to costs.