High Court · 2025

Judgment

1. Union of lndia, Ministry of Finance, Represented by its Secretary' North Block New Delhi 110001 dh;ffi ,-i.B Staaium' noao, Basheerbagh, Hvdt '$Iffi S!3i{:l:,"",9f W'^[l,i3[ldll"fS,lI'iT:i6*,iffi?%F[1?:33+ 3- Deoutv Commissioner of Central Tax, Begum Bazar GST Division' - HfreraOaO, GST Commissionerate, Hyderabad ...RESPONDENTS

Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleasedtoissuewritofcertioraritocallfortherecordsoforderinAppealno.HYD- GST-HYC-APP 1-118-24-25 ADC dated 3O'O8'2o24 on the file of the Commissioner of Customs and Central Tax appeals-1 Hyderabad Commissionerate(i.e.,AdditionalCommissionerofAppeals-l)whichconfirmedthe orders of primary authority Order in Original No' 9t2O22'23 Adjn (DC)-GST dated m.02.?f)23 and consequently seGaside the same as illegal' contrary to law and !udicial precedents. a THE HONOURABLE THE ACTIITG CHIEF WSTICE SU.'OY PAUL AITD THE HONOURABLE SMT. JUSTICE RENUKA YARA WRIT PETITION Nos. 135 and 168 of2O25 COMMON ORDER (Orall: (Per Hon'ble Tte Ading Chief Justice) Sri J.C. [rrancis, learned counsel representing Sri Ravish Kedia, learned r:ounsel for the petitioners in both cases; Sri Dominic Fernandes, learned Senior Standing Counsel for CBIC, for respondent Nos.2 and 3 in both the cases and Sri B' Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deput5' Solicitor General of India, for responde:nt No.1 in both the cases. 2 Regard being had to the similitude of the questiorrs involved, the joint request, these matters are analogously heard and decided by this common order.

3. The challenge is mounted in these petitions to the Appellate Orders in appeal Nos.HYD-GST-HYC-APP1-Ll8-24-25 and HYD- GST-HYC-APPI-I17-24-25, both dated 30.08.2024 passed by respondent Nc'.2 in both the cases. The facts are t-aken from W.P.No.135 of 12025. 4 . The prin,:ipral contention of the learned counr;el for the ,\ petitioners is thal. the petitioners filed an elaborate app*:al runnihg 2 \ into almost 2O pages. By taking this Court to the appeal memos (Annexure P-7), it is submitted that apart from giving factual details of tax components etc., statement of facts are given in paragraph Nos. 1 to 6. Thereafter, 'grounds' were introduced subject-wise such as: 1. 'incompleteruess of irutestigation";

2. "failure of 'due process' of disclosure of inuestigatiue mateial"; 3. "adjudtcation sans disclosure of inuestigatiue material ts incomplete, presumptiue and. illegal"; 4. "Issue (A) Demand for Penaltg on 'Carousel Tfading'"- 'Dropping of demarud for reuersal of input tax credit entails acceptance of bona ftd,e inutard and outtuard supplies', 'AdjudicatirLg Authoritg 'acting und"er dictation' ts illegal, l uiolatiue of pinctples of nnhral justice and results in noru- application of mind in o.djudication proceedings', 'Appeal limited to ualiditg of Impugned Order and limitations in Impugned Order incurable in appellate proceeding s', 'Demand for penalty uithout showing the ingredients i:s illegal'; 5. "Issue (B) Demand for mismatch of input tox credit"- 'Interest not applicable uthen output tox discharged stand.s appropriated' and 6. "Issue (C) Demand for output tox oft cash transactions"-'Inl.erest not applicable when output tax discharged stands oppropriated', 'Demand for penaltg tuithout shawing tlrc irqredients i.s illegal'. (1 ) ,l

5. Under every tread', the petitioners raised facts and grounds on the strength of which said 'I'reads'were highlighted. By taking this court to the: 'findings and discussion', learned counsel for the petitioners submits that the frndings are nothing, but ipse-dixit of the learned Appellate Authority. tearned Appellate Arrthority is under a statutorv obligation and need to assign reasor s for each of his conclusions. He passed a cryptic order without dealing with each of the discussions which were duly highlighted in the appeal memos. The orders are cryptic and non-speaking in nature.

6. Sri Dominic Fernandes, learned Senior Standing Oounsel for CBIC, supported the impugned order and submitted that in case the grounds on u,hich the impugned order is passed are not found to be satisfacton/ by this Court, the impugned order rnay be set aside by reserving, the liberty to the learned Appellate A.uthority to pass a fresh orrler.

7. No other point is pressed.

8. As rightllz pointed out, the appeal memos are rr.rnning in almost 2O pages and 'grounds' are taken under vario us treads'. The 'discussion and hndings'reads thus: I \ 4 'Discussion & Findinss:

8. I have carefully examined the impugned orders, the grounds of appeals, ald the submissions made by the ippellants. The core issue to be decided is whether M/s Om Dhana Laxmi Traders have indutged in availing and passing on irregular ITC as alleged. g. I hnd that a detailed investigation have been conducted covering all the parties involved in the disputed transactions. Statements of the main appellants i.e., Proprietors and Accountants clearly that neither the appellants nor their suppliers ""t^Uli"t had executed any physical supply of goods and ITC availed and passed on by them was irregular.

10. I observe that the appellants have failed to provide any credible evidences to rebut the sPecifrc hndings recorded in the imPugned orders regarding the non- The submissions cenuine nature of the transactions. out arry suPPorting ade are only general denials with m documents. No infirmiW could be pointed out in the rnvestisations or adiudications.

11. The adiudicatins authoriW has exarnined the role and culpability of each person based on the material evidence on record. The impugned orders have elaboratelv dealt with the submiss10ns of the noticee. I hnd that the allegations are based on cogent evidence gathered during investigations and not on mere PresumPtions' The usned order has been Dassed takins into consideration all the relevant facts andisa well-reasoned beyond the SCNs nor one. The frndi suffering from any inf,rrmities. 12. ln view of the above, I hold that M/s Om Dhana Laxmi Traders have availed and passed on ITC irregularly without the underlying supplies- Thus, they are liable for penal actions under relevant provisions' s are neither eoi ln view of the above discussion and findings, I pass the following order: 5 ORDER The appeals hled by M/s Om Dhala Laxmi Traders is disatloweri and the impugned order is upheld'" (EmPhasis suPPted) g. If the aJoresand part of hndings is read in jr:xtaposition to the ,grounds'taken in the appeal memos, it will be clear like cloudless sky that variou s 'grounds' taken by the petitioners elaborately have not been touched upon at all. The order in our opinion is too sketchy, too cryptic and too evasive. l'earned Appellate Authority was under a statu.tory obligation to assign reasons in support of his conclusions. Even otherwise, it is minimum reqrrirement of the principles of natural justice to deal with the 'grounds' taken in the appeal mernos, otherwise the appeat proceedings will reduce into hollow public relation exercise.

10. The Apex Court emphasized the need of assigning reasons in administrative, quasi-judicial and judicial proceedings in the case of Kranti Associates (Pl Ltd. v. Masood Ahmed Khanr' The relevalt portion reads as under: "l2.The necessity of giving reason by a body or authorit5r in support of its decision came up for consideration belbre this Court in ser.eral cases. Initially this Court recognised Ir. sort of demarcation between administrative orders and quasr-judicial orders but vrith the passage of time the distinction behveen the \ ' (20 to) 9 scc 496 6 two got blurred and thinned out and virtually reached a vanishing point in the judgment of this Court in A.K- Kraipakv. Unionof India [(1969) 2SCC262} 13-

14. The expression "speaking order" was first coined by I-ord Chancellor Earl Cairns in a rather strange context- The Lord Chancellor, while explaining the ambit of the writ of certiorari, referred to orders with errors on the face of the record and pointed out that an order with errors on its face, is a speaking order.

15. This Court always opined that tJle face of an order passed by a quasi-judicial authority or even an administrative authorit5r affecting the rights of parties, must speak. It must not be like the "inscrutable face of a sphinx".

47. Summarising the above discussion, tJris Court holds: (a) In India the judicial trend reasons, even in administralive affect anyone prejudiciallY. has always been to record decisions, if such decisions (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operat€s as a vdid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations. [J Reasons have virtually become as indispensable a component oi a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. c\ 7 I (g) Reasons facilitate the process of judicial review by superior courts. (h) The ongoirrg .iudicial trend in all countries committed to rule conititutional governance is in favour of reasoned or h* decisions basecl on relevant facts. This is virtually the lifeblood of judicial der:ision-making justifying the principle that reason is tl.e soul of justice. ".rJ (r) Judicial or even quasi-judicial opinions these days cal be as different as the judges and authorities who deliver thr:m' All these decisions serve one common purpose which is to demonstrate by. reason that the relevant factors have been objectively con.sidered. This is important for sustaining the litigants' faitlr in the justice delivery system' () Insistence) on reason is a requirement for both iudicial accountabilit-v and transparency. (k) If a judge or a quasi-judicial authority is not candid enough about his/her clecision-making process then it is impossible to know whether lhe person deciding is faithful to the doctrine of precedent or to principles of incrementalism. (lf Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reas'ons" is not to be equat-ed with a valid decision-making process' (m) It cannol. bt: doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transpart:ncy in decision-mak:ing not only makes the judges and decision- makers less prone to errors but also makes them subject to (See David Shapiro it Defence of Judicial broader Candor [(19S7i 10O Harvard Law Review 731-371 | "c..rti,-ry. (n) Since the requirement to record reasons emanates f::om the Lroad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and wai considererl part of Strasbourg Jurisprudence. 'See RUL Toijav. Spain[(199a) 19 EHRR 5531 EHRR, at 562 para 29 and Angav. Uniuersitg of Oxford [20O[ EWCA Civ a05 (CA)] , wherein thr: oourt referred to Article 6 of the Erropean Convention r:l' Human Rights which requires, "adequrlte and intelligent re asons must be given for judicial decisions". \l \.) 8 (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtuallSr a part of'due process."

11. If the impugned order is tested on the anvil of principles laid down in Kranti Associates (supra), it will be clear like noon day that the impugned order cannot sustain judicial scrutiny. The same is cryptic and does not assign €rny reason in relation to various grounds. It is crystal clear that the order of the learned Appellate Authority is an example of non-application of mind. Learned Appellate Authority has not dealt with each of the points raised by the petitioners in the appeal memos. He passed an order stating that the petitioners have failed to provide any credible evidence to rebut the specific f,rndings. He did not deal with the defence of the Petitioners on the aspect of right to cross- examine the witness. Thereafter, at paragraph No.11, the learned Appellgte Authority opined that in view of the lindings of the adjudicating authority and material on record, since ttre impugned order has elaborately dealt with the submissions of the rroticee, interference was declined. We wonder, when the Order-in-Original was challenged under various 'grounds', how reliance can be placed on the Order-in-Original to reject the contentions of the petitioners. The proper course was to examine the findings of the Order-in-Original on the anvil of grounds taken in the appeal 9 memos and then reach to an independent decision/crtnclusion. Since in the order of the learned Appellate Authority he miserably failed to apply mind and assigrr reasons, we are .rnable to countenance the orders. Hence, both the impugned ordr:rs passed in the appeals are hereby set aside. The petitioners are directed to appear before the learned Appellate Authority on O2.(.t4.2O25 at 11:30 AM. The learned Appellate Authority shall provide them a fresh opportunity of hearing and pass fresh orders in accordance with law.

12. With the a-foresaid and without expressing any opinion on the merits, these Writ Petitions are disposed of. There shall be no order as to costs Miscellaneous applications, if anl' pending, shall stand closed /ITRUE COPYII SD/.N. SRIHARI EPUTY REGISTRAR ,\ P .. SECI'pN OFFICER To,

1. The Secretary, Union of lndia, Ministry of Finance, North Blr:ck New Delhi 110001

2. The ffice of Commissioner of Customs, and Central fax appeals:J - Hvderabad Commissionerate Rep by Additional Commissioner (Appeals-l) 7' F6or, GST Bhavan, L.B Stadium Road, Basheerbagh, Hyderatrad' 500004 3. The Deputy Commissioner of Central Tax, Begum Bazar GST Division' Hyderabad, GST Commissionerate, Hyderabad 4. One CC to SRI RAVISH KEDIA, Advocate [OPUC] 5. One CC to SRI GADI PRAVEEN KUMAR, Deputy Solicitor Cjeneral of lndia loPUcI

6. One CC to SRI PULIMAMIDI SHASHIDHAR REDDY, S.(1. for Central Govemment [OPUC]

7. One CC to SRI DOMINIC FERNANDES, Senior S.C. for CBIC iOPUCI B. Two CD Copies ffi:" MP " if{ HIGH COURT DATED:2410312025 /.\,.: i-r * 138 S T4 c )C 3t] APf, 202 C )t or",-,^ a "'ri.O COMMON ORDER W.P. Nos.135 AND 168 OF 2025 DISPOSING OF THE WRIT PETITIONS WITHOUT COSTS ,/2 4 ,,t ,/o//?/4t