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Thursday, May 14, 2015

tax free zone for a period of ten years giving incentives to those who wanted to establish industries in that region. Pursuant thereto, the Notification dated July 08, 1999 was issued granting new industrial units that had commercial production on or after December 24, 1997 and certain types of industrial units that increased their installed capacity after that date, exemption on goods cleared from units located in growth centres and integrated infrastructure centres.“The amendment does not seek to touch on the periods of limitation provided in the Act, and in the absence of such express provision or clear implication, the legislature clearly could not be taken to intend that the amending provisions authorizes the Income Tax Officer to commence proceedings which before the new Act came into force, had, by the expiry of the period provided become barred". In the present case Section 154(4) specifically and expressly allows amounts to be recovered within a period of thirty days from the day Finance Bill, 2003 received the assent of the President. It cannot but be held therefore that the period of six months provided under Section 11-A would not apply.” 40A) In the aforesaid scenario, when the Court was conscious of the principle laid down in J.K. Cotton (supra) and explained the same in a particular manner while deciding the appeal in R.C. Tobacco (supra), it cannot be argued that the judgment in R.C. Tobacco (supra) runs contrary to J.K. Cotton (supra).

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                  CIVIL APPEAL NOS.      4458-4459 OF 2015
              (ARISING OUT OF SLP (C) NOS. 37108-37109 OF 2012)


|M/S. DHARAMPAL SATYAPAL LTD.               |.....APPELLANT(S)            |
|VERSUS                                     |                             |
|DEPUTY COMMISSIONER OF CENTRAL EXCISE,     |.....RESPONDENT(S)           |
|GAUHATI & ORS.                             |                             |


                               J U D G M E N T

A.K. SIKRI, J.
                 Leave granted.

Union of India, vide Memorandum dated December  24,  1997,  unveiled  a  new
industrial policy for the North-Eastern region.   In  the  said  policy,  in
order to give stimulation to the development  of  industrial  infrastructure
in the North-Eastern region, the said region was made tax free  zone  for  a
period of ten years giving incentives  to  those  who  wanted  to  establish
industries in that region.  Pursuant thereto, the  Notification  dated  July
08, 1999 was issued  granting  new  industrial  units  that  had  commercial
production on or after December 24, 1997 and  certain  types  of  industrial
units that increased their installed capacity after that date, exemption  on
goods  cleared  from  units  located  in  growth  centres   and   integrated
infrastructure centres.

The aforesaid Notification was issued under the provision of Central  Excise
Act, 1944  as  well  as  Additional  Duties  of  Excise  (Goods  of  Special
Importance) Act, 1957 and Additional Duties of Excise (Textiles and  Textile
Articles) Act, 1978.  However, on December 31,  1999,  another  Notification
was issued whereby exemption of central excise was withdrawn in  respect  of
goods falling under Chapter 21.06 (pan masala) and Chapter 24  (tobacco  and
tobacco substitutes, including cigarettes, chewing tobacco etc.).

This withdrawal Notification was challenged by the appellant by  filing  the
writ petition in the High  Court  of  Gauhati.   The  learned  Single  Judge
dismissed the writ petition.  However, appeal  preferred  by  the  appellant
was allowed by the Division Bench vide judgment  dated  December  03,  2012.
In nutshell, the High Court held that the principal of  Promissory  Estoppel
shall apply and once a promise was given by  the  Union  of  India  assuring
that no such duty would be charged for a period of ten  years,  it  was  not
open for  the  Union  of  India  to  withdraw  the  same.  Challenging  that
judgment, Union of India filed  petitions  for  special  leave.   Leave  was
granted and the petitions were registered as Civil Appeal Nos. 8841-8844  of
2003.

After the filing of the aforesaid appeals, certain  subsequent  events  took
place.  It so happened that vide  Section  154  of  the  Finance  Act,  2003
(hereinafter referred to as the 'Act of 2003'), withdrawal  of  the  benefit
was effected from retrospective effect. Effect thereof was to  withdraw  the
benefit given under the Notification issued earlier.   Validity  of  Section
154 was questioned and the issue  was  considered  by  this  Court  in  R.C.
Tobacco Private Ltd. & Anr. v. Union of India & Anr.[1]  This  Court  upheld
the constitutional validity of the  aforesaid  provision  and  repelled  the
challenge so laid.  The effect was to disentitle  the  appellant  and  other
similarly situated from getting any such benefit by virtue  of  Section  154
of the Act of 2003 and knocking down the basis of the judgment of  the  High
Court, which lost its validity on the aforesaid ground.

So far so  good.   The  grievance  of  the  appellant  and  other  similarly
situated industries for not extending  the  benefit  of  Notification  dated
July 08, 1999 is buried down.  However, after notifying Section 154  of  the
Act of 2003, which had nullified the effect of Notification No. 32  of  1999
retrospectively thereby annulling the effect thereof altogether,  respondent
No.1 herein passed recovery order dated June 03, 2003 for recovery of a  sum
of ?2,93,43,244 (rupees two crores ninety three lakhs forty  three  thousand
two hundred and forty four only) from the appellant, which was  the  benefit
that had been drawn by the appellant  for  the  period  November  1999  till
February 2001 in terms of the Notification  No.  32  of  1999.   By  another
order dated June 06, 2003 issued  by  respondent  No.1,  the  appellant  was
directed to pay the excise duty for the said period for  which  the  benefit
had been availed.  He also rejected the pending  claim  of  refund  for  the
period from March 2001 till  May  31,  2003.   These  recovery  orders  were
challenged by  the  appellant  by  filing  appeal  before  the  Commissioner
(Appeals).  Along with the appeal, the appellant also filed  an  application
for  interim  order  seeking  stay  against  the   pre-deposit.    On   this
application, orders dated March 31, 2004 were  passed  by  the  Commissioner
(Appeals) directing the appellant to deposit entire  duty  amount  within  a
period of thirty days.  This order of  pre-deposit  was  challenged  by  the
appellant by filing four writ petitions in the High Court of  Gauhati.   The
learned Single Judge of  the  High  Court,  however,  dismissed  these  writ
petitions vide orders dated May 18, 2004.  The appellant carried this  issue
of pre-deposit to a higher forum in the form  of  writ  appeals  before  the
Division Bench of the said Court.  Interim orders dated June 11,  2004  were
passed in the writ appeals  directing  the  Commissioner  (Appeals)  not  to
dismiss the appeals preferred by the appellant before  him  for  non-deposit
of the duty amount.  In other words, interim stay  against  the  pre-deposit
was given.  The Commissioner (Appeals) heard  the  appeals  and  passed  the
orders dated June 15, 2005 deciding the appeals in favour of the  appellant.
 He held that issuance of show-cause notice was  mandatory  before  a  valid
recovery of demand could be made from the appellant and, thus, remitted  the
matter to the adjudicating authority.  After this final order was passed  by
the Commissioner  (Appeals),  writ  appeals  of  the  appellant  before  the
Division Bench were disposed of as infructuous in view of the fact that  the
Commissioner (Appeals) had passed an order  on  merits  and,  therefore,  no
cause survived which required further adjudication in those appeals.

Insofar as the order of the Commissioner (Appeals) is  concerned,  both  the
appellant as well as the Revenue felt aggrieved thereby. The  appellant  was
not satisfied with the order of remand and  the  nature  of  relief  granted
even after accepting  that  issuance  of  show-cause  notice  was  mandatory
before passing a valid recovery of demand.  The respondents  were  aggrieved
of the order passed on merit holding that show-cause notice  was  mandatory.
Therefore,  both  the  appellant  as  well  as  the  Revenue  filed  appeals
aggrieved against the order dated June 15, 2005 passed by  the  Commissioner
(Appeals).  The Customs Excise & Service Tax Appellate Tribunal  (for  short
'CESTAT') decided these appeals vide common order dated  My  28,  2007.   It
reversed the  orders  of  the  Commissioner  (Appeals),  which  resulted  in
allowing  the  appeal  filed  by  the  Revenue  and  dismissing  the  appeal
preferred by the appellant.       A perusal of the judgment  of  the  CESTAT
would reveal that it has primarily referred to the judgment  of  this  Court
in R.C. Tobacco and held  that  the  matter  stood  concluded  by  the  said
judgment.  The appellant challenged the order of CESTAT  by  filing  Central
Excise Tax Reference No. 1 of 2008 before the High Court of  Gauhati.   This
Reference was dismissed by the High  Court  on  December  01,  2011  on  the
ground of res judicata holding that orders dated May 18, 2004 passed by  the
Single Judge dismissing the writ petitions of  the  appellant  had  attained
finality.  The appellant preferred Review Petition  seeking  review  of  the
said order, which has also been dismissed by the  High  Court  on  June  05,
2012.  In the present appeals, the appellant has challenged both the  orders
dated December 01, 2011 passed in the Tax Reference as  well  as  the  order
dated June 05, 2012 passed in the Review Petition.

From the brief narration of the background  facts  mentioned  above,  it  is
apparent that the frontal attack  of  the  appellant  against  the  recovery
orders passed by the respondents is  premised  on  the  plea  that  no  such
recovery proceedings could be initiated without a  show-cause  notice  under
Section 11-A of the Excise Act. The appellant  has  also  taken  a  plea  in
these appeals that order of the Single Judge at pre-deposit stage could  not
operate as res judicata on merits  and,  therefore,  dismissal  of  the  Tax
Reference by the High  Court,  and  consequently  the  Review  Petition,  is
clearly erroneous and the High Court should have gone  into  the  merits  of
the issue decided by CESTAT.

As noted above, CESTAT has decided the case against  the  appellant  on  the
ground that issue now raised is covered by the judgment  of  this  Court  in
R.C. Tobacco (supra).  As pointed out, in R.C. Tobacco (supra),  this  Court
has already upheld the validity of Section 154 of the Act  of  2003  thereby
taking away the benefit of  Notification  No.  32  of  1999  retrospectively
insofar  as  excisable  goods  falling  under  Chapter  24  are   concerned.
Conscious of the position that judgment in R.C. Tobacco  (supra)  stares  at
the face of the appellant, Mr. Soli Sorabjee,  learned  senior  counsel  who
appeared for the appellant, has also made an  endeavour  to  show  that  the
said judgment in R.C. Tobacco (supra) is  in  clear  conflict  with  earlier
three Judge Bench judgment of this Court in M/s. J.K.  Cotton  Spinning  and
Weaving Mills Ltd. v. Union of India[2].  Thus, following three issues  have
arisen for consideration in these appeals:
(a)   Whether order of the Single Judge at pre-deposit stage can operate  as
res judicata on merits?
(b)   Whether recovery  proceedings  can  be  initiated  without  show-cause
notice under Section 11A of the Excise Act, which is mandatory?
(c)   Whether there is a conflict between the three Judge Bench judgment  in
J.K. Cotton (supra) and R.C. Tobacco (supra)?

                 First issue is the basis  for  the  judgment  of  the  High
Court.

For answering this issue, it would be necessary to  take  into  account  the
complete implication thereof  with  reference  to  the  nature  of  recovery
orders passed by respondent No.1, challenge thereto before the  Commissioner
(Appeals) and interim  order  of  pre-deposit  passed  by  the  Commissioner
(Appeals) on March 31, 2004 as also the nature of challenge which  was  laid
by the  appellant  against  the  said  order  of  pre-deposit  in  the  writ
petitions filed in the High Court,  which  were  dismissed  by  the  learned
Single Judge on May 18, 2004.

By virtue of Notification dated July 08, 1999,  the  appellant  was  granted
refund of the duty  deposited  in  cash  up  to  February  2001.  After  the
enactment of Section 154 of the Act of 2003, recovery order dated  June  03,
2003 was passed  for  recovery  of  the  aforesaid  amount  which  had  been
refunded to the appellant. Simultaneously,  another  order  dated  June  06,
2003 was issued asking the appellant to pay duty on  the  ground  that  such
goods were no more exempted from payment of  duty.   In  the  appeals  which
were filed by the appellants before the Commissioner  (Appeals)  challenging
the aforesaid orders, the Commissioner passed  interim  orders  dated  March
31, 2004 directing  the  appellants  to  pay  the  amount  demanded  by  the
aforesaid orders. This order  dated  March  31,  2004  of  the  Commissioner
(Appeals) reflects that the Commissioner went into various issues raised  by
the appellant on the basis of which it was pleaded by the appellant that  it
had a good case on  merits  and,  therefore,  condition  of  pre-deposit  be
waived.  Apart from the contention  that  no  show-cause  notice  was  given
before passing  those  orders,  it  was  even  argued  that  by  making  the
retrospective amendment in the form of Section 154 of the Act of  2003,  the
only effect was to validate the earlier actions but no demand of  refund  of
any amount could be made and no refund of the amount already paid  could  be
claimed.  It was also argued that the matter  of  recovery  of  amounts  was
pending consideration of Central Board of Excise and Customs (CBEC) as  well
as in the Gauhati High Court.  All  these  issues  were  considered  by  the
Commissioner (Appeals), who gave his prima facie  view  thereupon  observing
that the  appellants  did  not  have  strong  prima  facie  case  on  merits
resulting into the direction to deposit  the  entire  amount  within  thirty
days.

The appellant had filed writ petitions against the aforesaid  order  of  the
Commissioner  (Appeals)  with  the  prayer  that  the   direction   of   the
Commissioner (Appeals) to deposit the entire amount within  thirty  days  be
set aside and the prayer of pre-deposit of the appellant  be  accepted.   No
doubt, while arguing for this  relief,  the  appellant  had  raised  various
contentions on the merits of the case in its endeavour to  demonstrate  that
it had a good case on merits.  It is also borne from  the  record  that  the
learned Single Judge, while dismissing the writ petition, dealt  with  these
issues, which touched upon the merits  of  the  main  issue.   That  is  the
reason that the order dated  May  18,  2004  of  the  learned  Single  Judge
dismissing  the  writ  petition  of  the  appellant  runs  into  37   pages.
Nevertheless, we find that the observations which were made by  the  learned
Single Judge on the issues raised were only prima facie in  nature  and  the
prime focus of the judgment rested on the core issue,  namely,  whether  the
direction of the Commissioner (Appeals)  directing  the  appellant  to  make
deposit of the amount as a pre-condition  for  hearing  of  the  appeal  was
sustainable or not.  The writ petition  was  dismissed  affirming  the  said
order.  Therefore, any observations made by the learned Single Judge,  which
were tentative in nature, could not  be  taken  into  consideration  by  the
Division Bench in the impugned judgment, thereby dismissing  the  Reference,
invoking the principle of res judicata.  The order  of  the  learned  Single
Judge dismissing the writ petition was challenged before the Division  Bench
and the Division Bench passed interim orders in  the  writ  appeals  not  to
dismiss the appeals preferred by the appellant for non-deposit of the  duty.
 In this backdrop, appeals were heard and appellant even  partly  succeeded.
After the order of the Commissioner (Appeals) dated June 15,  2005  deciding
the appeals partly in favour of the appellant, the writ appeals  which  were
pending before the Division Bench had become infructuous and disposed of  as
such without going into the merit of the order passed by the learned  Single
Judge.  This is yet another reason to hold that the  order  of  the  learned
Single Judge could not be treated as res judicata.

Having regard to the aforesaid position, we  heard  the  instant  appeal  on
merits, namely, on the issue as to whether it was mandatory to  issue  show-
cause notice making an order of recovery.  The  Commissioner  (Appeals)  has
held it to be mandatory and this order of  the  Commissioner  (Appeals)  has
been set aside by the CESTAT.  The Reference petition against the  order  of
CESTAT, though wrongly is dismissed on  the  ground  of  res  judicata,  the
impugned order shows that it has mentioned that such show-cause  notice  was
not mandatory as held by the learned Single Judge by  order  dated  May  18,
2004.

Learned senior counsel appearing  for  the  appellant  as  well  as  learned
Attorney General agreed that in this situation this  Court  may  decide  the
aforesaid issue finally.  It is for this reason that we have  heard  counsel
for the parties at length on this aspect of the matter.

The neat submission made by Mr. Soli Sorabjee on  behalf  of  the  appellant
was that the impugned demand  of  the  Assistant  Commissioner  was  in  the
nature of adjudication whereby the amount demanded in the order  dated  June
06, 2003 was crystallized and, therefore, there could not have  been  demand
for recovery  of  the  stipulated  amount  without  issuing  notice  to  the
appellant and giving  the  appellant  herein  right  of  hearing.   He  also
submitted that merely because vires of Section 154 of the Act of  2003  were
upheld by this Court in R.C. Tobacco  (supra)  could  not  be  a  ground  to
dispense with the aforesaid mandatory requirements of principles of  natural
justice.  His further submission was that 'no prejudice'  principle  adopted
by the CESTAT amounted to erroneous approach.  He  sought  to  draw  a  fine
distinction in this behalf by contending  that  the  Authority  passing  the
order could not presume that prejudice would  not  be  caused  to  a  person
against whom the action is contemplated and  on  that  presumption  dispense
with the mandatory requirement of issuance  of  the  notice.   According  to
him, such a doctrine could be applied only by the courts while dealing  with
such issues where  it  is  found  that  the  action  of  the  Authority  was
violative of principles of natural justice, the  Court  could  still  choose
not to remit the case back to the concerned Authority if it  finds  that  it
will be a futile exercise.

As a pure principle of law, we find substance and  force  in  the  aforesaid
submission of Mr.  Sorabjee.   No  doubt,  the  Department  was  seeking  to
recover the amount paid by virtue of Section 154 of the Act  of  2003  which
was enacted retrospectively and the  constitutional  validity  of  the  said
Section had already been upheld by this Court in  R.C.  Tobacco  (supra)  at
the time of issuance of notice for recovery.  Further, no doubt, the  effect
of the said amendment retrospectively was to take  away  the  benefit  which
was granted earlier.  However, the question is whether before  passing  such
an  order  of  recovery,  whether  it  was  necessary  to  comply  with  the
requirement of show-cause notice?  The  appellant  wanted  to  contend  that
Section 11A of the Excise Act was applicable, which requires this  procedure
to  be  followed.   Even  if  that  provision  is  not  applicable,  it   is
fundamental  that  before  taking  any  adverse  action  against  a  person,
requirement of principles of natural  justice  is  to  be  fulfilled.   This
Court in Collector of Central Excise, Patna  &  Ors.  v.  I.T.C.  Limited  &
Anr.[3] has held that show-cause and personal hearing  is  necessary  before
saddling an assessee with additional demand.  It is also trite that  when  a
statute is silent, with no positive words in the Act or Rules  spelling  out
need to hear the party whose rights or interests are likely to be  affected,
requirement to follow fair procedure before taking a decision must  be  read
into statute, unless the statute provides otherwise.

What is the genesis behind this  requirement?   Why  it  is  necessary  that
before an adverse action is taken against a person he is to be given  notice
about the proposed action and be heard in the matter?  Why is it treated  as
inseparable and inextricable part of the doctrine of principles  of  natural
justice?

Natural justice is an expression of English Common Law.  Natural justice  is
not a single theory – it is a family of views.  In one  sense  administering
justice itself is treated as  natural  virtue  and,  therefore,  a  part  of
natural justice.  It is also called  'naturalist'  approach  to  the  phrase
'natural justice' and is related to 'moral  naturalism'.   Moral  naturalism
captures the essence of commonsense morality – that  good  and  evil,  right
and wrong, are the real features of the natural world that human reason  can
comprehend.  In this sense, it  may  comprehend  virtue  ethics  and  virtue
jurisprudence in relation to justice as all these are attributes of  natural
justice.  We are not addressing ourselves with this connotation  of  natural
justice here.

In Common Law, the concept and doctrine  of  natural  justice,  particularly
which is made applicable in the  decision  making  by  judicial  and  quasi-
judicial bodies, has assumed different connotation.  It  is  developed  with
this fundamental in mind that those  whose  duty  is  to  decide,  must  act
judicially.  They must deal with the question  referred  both  without  bias
and they must given to each of the parties to adequately  present  the  case
made.  It is perceived that the practice of  aforesaid  attributes  in  mind
only would lead to doing justice.  Since these  attributes  are  treated  as
natural or fundamental, it is known as 'natural  justice'.   The  principles
of natural justice developed over a period of time and  which  is  still  in
vogue and valid even today were: (i) rule against bias, i.e. nemo  iudex  in
causa sua; and (ii) opportunity of being heard to the concerned party,  i.e.
audi alteram partem.  These are known as principles of natural justice.   To
these principles a third principle is added, which is of recent origin.   It
 is duty to give reasons in  support  of  decision,  namely,  passing  of  a
'reasoned order'.

Though the aforesaid principles of natural justice are known to  have  their
origin in Common Law, even in India the principle is prevalent from  ancient
times, which was even invoked in Kautilya's 'Arthashastra'.  This  Court  in
the case of Mohinder Singh Gill & Anr. v. The Chief  Election  Commissioner,
New Delhi & Ors.[4] explained the Indian origin of these principles  in  the
following words:
“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,
recognised from earliest times and not  a  mystic  testament  of  judge-made
law.   Indeed  from  the  legendary  days  of  Adam  –  and  of   Kautilya'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”.


Aristotle, before the era of Christ, spoke of such principles calling it  as
universal law.  Justinian in the fifth and sixth Centuries  A.D.  called  it
'jura naturalia', i.e. natural law.

The principles have sound jurisprudential basis.  Since the function of  the
judicial and quasi-judicial authorities is to secure justice with  fairness,
these principles provide great humanising  factor  intended  to  invest  law
with fairness to secure justice and to prevent miscarriage of justice.   The
principles are extended even  to  those  who  have  to  take  administrative
decision and who are not necessarily discharging judicial or  quasi-judicial
functions.  They are a kind of code of fair  administrative  procedure.   In
this context, procedure is not a matter of secondary  importance  as  it  is
only by procedural fairness shown  in  the  decision  making  that  decision
becomes acceptable.  In its proper sense, thus, natural justice  would  mean
the natural sense of what is right and wrong.

This aspect of procedural fairness, namely, right to a fair  hearing,  would
mandate what is literally known as 'hearing the  other  side'.   Prof.  D.J.
Galligan[5] attempts to provide what he calls  'a  general  theory  of  fair
treatment' by exploring what it is that  legal  rules  requiring  procedural
fairness might seek to achieve.  He underlines the  importance  of  arriving
at correct decisions, which is not possible without adopting  the  aforesaid
procedural fairness, by emphasizing that taking of correct  decisions  would
demonstrate that the  system  is  working  well.   On  the  other  hand,  if
mistakes are committed leading to incorrect decisions, it  would  mean  that
the system is not working well  and  the  social  good  is  to  that  extent
diminished.  The rule of procedure  is  to  see  that  the  law  is  applied
accurately and, as a consequence, that the social  good  is  realised.   For
taking this view, Galligan  took  support  from  Bentham[6],  who  wrote  at
length about the need to follow such principles of natural justice in  civil
and criminal trials and insisted that the said theory developed  by  Bentham
can be  transposed  to  other  forms  of  decision  making  as  well.   This
jurisprudence of advancing social good by  adhering  to  the  principles  of
natural justice and arriving at correct decisions is explained  by  Galligan
in the following words:
“On this approach, the value of legal  procedures  is  judged  according  to
their contribution to general  social  goals.   The  object  is  to  advance
certain social goals, whether through administrative processes,  or  through
the civil  or  criminal  trial.   The  law  and  its  processes  are  simply
instruments for achieving some social good as determined from time  to  time
by the law makers of the society.  Each case is  an  instance  in  achieving
the general goal, and a mistaken decision, whether to  the  benefit  or  the
detriment of a particular  person,  is  simply  a  failure  to  achieve  the
general good in that case.  At this level  of  understanding,  judgments  of
fairness have no place, for all that matters is whether the social good,  as
expressed through laws, is effectively achieved.”

                 Galligan also takes the idea of fair treatment to a  second
level  of  understanding,  namely,  pursuit  of  common  good  involves  the
distribution of  benefits  and  burdens,  advantages  and  disadvantages  to
individuals (or groups).  According to him, principles of  justice  are  the
subject matter of fair treatment. However, that aspect need not be dilated.

Allan[7], on the other hand, justifies the procedural fairness by  following
the aforesaid principles of  natural  justice  as  rooted  in  rule  of  law
leading to good governance.  He supports Galligan in this respect  and  goes
to the extent by saying that it is same as ensuring dignity of  individuals,
in respect of whom or against whom the decision is taken, in  the  following
words:
“The instrumental value of procedures  should  not  be  underestimated;  the
accurate application of authoritative  standards  is,  as  Galligan  clearly
explains, an  important  aspect  of  treating  someone  with  respect.   But
procedures also have intrinsic value in acknowledging a  person's  right  to
understand his treatment,  and  thereby  to  determine  his  response  as  a
conscientious citizen, willing to make reasonable sacrifices for the  public
good.  If obedience to law ideally entails  a  recognition  of  its  morally
obligatory character, there must  be  suitable  opportunities  to  test  its
moral credentials.  Procedures may also be though to  have  intrinsic  value
in so far as they constitute a fair balance between the demands of  accuracy
and  other  social  needs:  where  the  moral  harm  entailed  by  erroneous
decisions is reasonably assessed and fairly distributed, procedures  express
society's commitment to equal concern and respect for all.”

                 It, thus, cannot  be  denied  that  principles  of  natural
justice are grounded in procedural fairness which ensures taking of  correct
decision and procedural fairness is fundamentally an instrumental  good,  in
the  sense  that  procedure  should  be  designed  to  ensure  accurate   or
appropriate outcomes.  In fact, procedural  fairness  is  valuable  in  both
instrumental and non-instrumental terms.

It  is  on  the  aforesaid  jurisprudential  premise  that  the  fundamental
principles  of  natural  justice,  including  audi  alteram   partem,   have
developed.  It  is  for  this  reason  that  the  courts  have  consistently
insisted that such procedural  fairness  has  to  be  adhered  to  before  a
decision is  made  and  infraction  thereof  has  led  to  the  quashing  of
decisions taken.  In many statutes, provisions  are  made  ensuring  that  a
notice is given to a person against whom an order is  likely  to  be  passed
before a decision is made, but  there  may  be  instances  where  though  an
authority is vested with the powers to pass such orders,  which  affect  the
liberty or property of an individual but  the  statute  may  not  contain  a
provision for prior hearing.  But what is important to be noted is that  the
applicability of principles of natural jsutice is  not  dependent  upon  any
statutory  provision.   The  principle  has  to   be   mandatorily   applied
irrespective of  the  fact  as  to  whether  there  is  any  such  statutory
provision or not.
                 De Smith[8] captures the essence thus -  “Where  a  statute
authorises interference with properties or other rights  and  is  silent  on
the  question  of  hearing,  the  courts  would  apply  rule  of   universal
application and founded on plainest principles of natural justice”.
                 Wade[9] also emphasizes that principles of natural  justice
operate  as  implied  mandatory  requirements,   non-observance   of   which
invalidates the  exercise  of  power.   In  Cooper  v.  Sandworth  Board  of
Works[10] the Court laid down that: '...although there is no  positive  word
in the statute requiring that the party  shall  be  heard,  yet  justice  of
common  law  would  supply  the  omission   of   Legislature”.    Exhaustive
commentary explaining the varied contours of this principle  can  be  traced
to the judgment of this Court in Managing Director, ECIL, Hyderabad  &  Ors.
v. B. Karunakar & Ors.[11], wherein the Court discussed plenty  of  previous
case law in restating the aforesaid principle,  a  glimpse  whereof  can  be
found in the following passages:
“20.  The origins of the law  can  also  be  traced  to  the  principles  of
natural justice, as developed in the following cases: In A.  K.  Kraipak  v.
Union of India, (1969) 2 SCC 262 : (1970) 1 SCR 457, it was  held  that  the
rules of natural justice operate in areas not covered by any  law.  They  do
not supplant the law of the land but supplement it. They  are  not  embodied
rules and their aim is to  secure  justice  or  to  prevent  miscarriage  of
justice. If that is their purpose, there is no reason why  they  should  not
be made applicable to administrative proceedings also especially when it  is
not easy to draw the line  that  demarcates  administrative  enquiries  from
quasi- judicial ones. An unjust decision in an  administrative  inquiry  may
have a more  far  reaching  effect  than  a  decision  in  a  quasi-judicial
inquiry. It was further observed that the concept  of  natural  justice  has
undergone a great deal of change in recent years. What  particular  rule  of
natural justice should apply to a given case must depend to a  great  extent
on the facts and circumstances of that case, the framework of the law  under
which the inquiry is held and the constitution of the tribunal or  the  body
of persons appointed for that purpose. Whenever a complaint is  made  before
a Court that some principle of natural justice  has  been  contravened,  the
Court has to decide whether the observance of that rule was necessary for  a
just decision on the facts of that case. The rule that inquiry must be  held
in good faith and without bias and not arbitrarily or  unreasonably  is  now
included among the principles of natural justice.

21.  In Chairman, Board of Mining Examination v. Ramjee, (1977) 2  SCC  256,
the Court has observed that natural justice  is  not  an  unruly  horse,  no
lurking landmine, nor a judicial cure-all.  If  fairness  is  shown  by  the
decision-maker to the man proceeded against,  the  form,  features  and  the
fundamentals of such essential processual  propriety  being  conditioned  by
the facts and circumstances of each situation, no breach of natural  justice
can be complained  of.  Unnatural  expansion  of  natural  justice,  without
reference to the administrative realities  and  other  factors  of  a  given
case, can be exasperating. The Courts cannot look at law in the abstract  or
natural justice as mere artifact. Nor can they fit into a  rigid  mould  the
concept  of  reasonable  opportunity.  If  the  totality  of   circumstances
satisfies the Court that the  party  visited  with  adverse  order  has  not
suffered from denial of reasonable opportunity, the Court  will  decline  to
be punctilious or fanatical as if the rules of natural justice  were  sacred
scriptures.

22. In Institute of Chartered Accountants of India v. L. K. Ratna, (1986)  4
SCC 537, Charan Lal Sahu v. Union of India, (1990) 1  SCC  613  (Bhopal  Gas
Leak Disaster Case) and C. B. Gautam v. Union of India,  (1993)  1  SCC  78,
the doctrine that the principles of natural justice must be applied  in  the
unoccupied interstices of the statute unless there is  a  clear  mandate  to
the contrary, is reiterated.”

                 In his separate opinion,  concurring  on  this  fundamental
issue,  Justice  K.  Ramaswamy  echoed  the  aforesaid  sentiments  in   the
following words:
“61.  It is now settled law that the proceedings  must  be  just,  fair  and
reasonable and negation thereof offends Articles  14  and  21.  It  is  well
settled law that principles of natural justice are integral part of  Article
14. No decision prejudicial to a party should be taken without affording  an
opportunity or supplying the material which is the basis for  the  decision.
The enquiry report constitutes fresh material  which  has  great  persuasive
force or effect on the mind of the disciplinary  authority.  The  supply  of
the report along with the final order is  like  a  post  mortem  certificate
with putrefying odour. The failure to supply copy thereof to the  delinquent
would be unfair procedure offending not only Arts. 14, 21 and 311(2) of  the
Constitution, but also, the principles of natural justice.”

Likewise, in C.B. Gautam v. Union of  India  &  Ors.[12],  this  Court  once
again held that principle of natural justice was applicable even  though  it
was not statutorily required.  The Court took the  view  that  even  in  the
absence of statutory provision to this effect, the authority was  liable  to
give notice to the affected parties while purchasing their properties  under
Section 269-UD of the Income Tax Act, 1961.  It was  further  observed  that
the very fact that an imputation of tax evasion arises where  an  order  for
compulsory purchase is made and such an  imputation  casts  a  slur  on  the
parties to the agreement to sell leads to the conclusion  that  before  such
an imputation can be made against the parties concerned they must  be  given
an opportunity to show-cause that the under valuation in the  agreement  for
sale was not with a view to evade tax.   It  is,  therefore,  all  the  more
necessary that an opportunity of hearing is provided.

From the aforesaid discussion, it becomes  clear  that  the  opportunity  to
provide hearing before making any decision was  considered  to  be  a  basic
requirement in the Court proceeding. Later on, this  principle  was  applied
to other quasi-judicial authorities and other tribunals  and  ultimately  it
is now clearly laid down that even in the administrative actions, where  the
decision of the authority  may  result  in  civil  consequences,  a  hearing
before taking a decision is necessary.   It  was,  thus,  observed  in  A.K.
Kraipak's case (supra) that if the purpose of rules of  natural  justice  is
to prevent miscarriage of justice, one fails to see how these  rules  should
not be made available to administrative inquiries.  In the  case  of  Maneka
Gandhi v. Union of India & Anr.[13] also the  application  of  principle  of
natural justice was extended to the administrative action of the  State  and
its authorities.  It is, thus, clear that before taking an  action,  service
of notice and giving of hearing to the noticee is required.  In  Maharashtra
State Financial Corporation v. M/s. Suvarna Board  Mills  &  Anr.[14],  this
aspect was explained in the following manner:
“3.  It has been  contended  before  us  by  the  learned  counsel  for  the
appellant that principles of natural justice were  satisfied  before  taking
action under Section 29, assuming that it was necessary to do  so.   Let  it
be seen whether it was so.  It is well settled that natural  justice  cannot
be placed in a straight-jacket; its rules are not embodied and they do  vary
from case to case and from one fact-situation to another.  All that  has  to
be seen is that no adverse civil consequences are allowed  to  ensue  before
one is put on notice that the consequence would follow if he would not  take
care  of  the  lapse,  because  of  which  the  action  as  made  known   is
contemplated.  No particular form of notice is the demand of law:  All  will
depend on facts and circumstances of the case.”

In the case of East India Commercial Company Ltd., Calcutta &  Anr.  v.  The
Collector of  Customs,  Calcutta[15],  this  Court  held  that  whether  the
statute provides for notice or not, it is incumbent upon the  quasi-judicial
authority to  issue  a  notice  to  the  concerned  persons  disclosing  the
circumstances under which proceedings are sought  to  be  initiated  against
them, failing which the  conclusion  would  be  that  principle  of  natural
justice are violated.  To the same effect are the following judgments:
a)  U.O.I. & Ors. v. Madhumilan Syntex Pvt. Ltd. & Anr.[16]

b)  Morarji Goculdas B&W Co. Ltd. & Anr. v. U.O.I. & Ors.[17]

c)  Metal Forgings & Anr. v. U.O.I. & Ors.[18]

d)  U.O.I. & Ors. v. Tata Yodogawa Ltd. & Anr.[19]


Therefore, we are inclined to hold that there was a requirement of  issuance
of show-cause notice by the Deputy Commissioner before passing the order  of
recovery, irrespective of the  fact  whether  Section  11A  of  the  Act  is
attracted in the instant case or not.

But that is not the end of the matter.  While the law on  the  principle  of
audi alteram partem has progressed in the manner  mentioned  above,  at  the
same time, the Courts have also repeatedly remarked that the  principles  of
natural justice are very flexible principles.  They  cannot  be  applied  in
any straight-jacket formula.  It all depends  upon  the  kind  of  functions
performed and to the extent to which a person  is  likely  to  be  affected.
For this reason, certain exceptions to the aforesaid  principles  have  been
invoked under certain circumstances.  For  example,  the  Courts  have  held
that it would be sufficient to allow a person to make a  representation  and
oral hearing may not be necessary in all  cases,  though  in  some  matters,
depending upon the nature of the case, not only  full-fledged  oral  hearing
but even cross-examination of witnesses is treated as necessary  concomitant
of  the  principles  of  natural  justice.   Likewise,  in  service  matters
relating to major punishment by way of disciplinary action, the  requirement
is  very  strict  and  full-fledged  opportunity  is  envisaged  under   the
statutory rules as well.  On the other hand, in those cases where  there  is
an admission of charge, even when  no  such  formal  inquiry  is  held,  the
punishment based on such admission is upheld.  It is  for  this  reason,  in
certain  circumstances,  even  post-decisional  hearing  is   held   to   be
permissible.   Further,  the   Courts   have   held   that   under   certain
circumstances principles of natural justice may even be excluded  by  reason
of diverse factors like time, place, the apprehended danger and so on.

We are not concerned with these aspects in the present  case  as  the  issue
relates to giving of notice before taking action.   While  emphasizing  that
the principles of natural  justice  cannot  be  applied  in  straight-jacket
formula, the  aforesaid  instances  are  given.   We  have  highlighted  the
jurisprudential basis of adhering  to  the  principles  of  natural  justice
which are grounded on the  doctrine  of  procedural  fairness,  accuracy  of
outcome leading to general social goals, etc.  Nevertheless,  there  may  be
situations wherein for some reason – perhaps because  the  evidence  against
the individual is thought to be utterly compelling – it is felt that a  fair
hearing 'would make no difference'  –  meaning  that  a  hearing  would  not
change the ultimate conclusion reached  by  the  decision-maker  –  then  no
legal duty to supply a hearing arises.  Such an  approach  was  endorsed  by
Lord Wilberforce in Malloch v. Aberdeen Corporation[20],  who  said  that  a
'breach of procedure...cannot give (rise to) a remedy in the courts,  unless
behind it there is something  of  substance  which  has  been  lost  by  the
failure.  The court dos not  act  in  vain'.   Relying  on  these  comments,
Brandon LJ opined in Cinnamond v. British Airports  Authority[21]  that  'no
one can complain of not being given an opportunity to  make  representations
if  such  an  opportunity  would  have  availed  him  nothing'.    In   such
situations, fair procedures appear to serve no purpose since 'right'  result
can be secured without according such treatment to the individual.  In  this
behalf, we need to notice one other exception which has been carved  out  to
the aforesaid principle by the Courts.  Even if it is  found  by  the  Court
that there is a violation of principles of natural justice, the Courts  have
held that it may not be necessary to strike down the action  and  refer  the
matter back to the authorities to take fresh decision after  complying  with
the procedural requirement  in those cases where non-grant  of  hearing  has
not caused any prejudice to the person against whom  the  action  is  taken.
Therefore, every violation of a facet of natural justice  may  not  lead  to
the conclusion that order passed is always  null and void.  The validity  of
the order has to be decided on the touchstone of 'prejudice'.  The  ultimate
test is always the same, viz., the test of prejudice or  the  test  of  fair
hearing.

In Managing Director, ECIL (supra), the majority  opinion,  penned  down  by
Sawant, J., while summing  up  the  discussion  and  answering  the  various
questions posed, had to say as under qua the prejudice principle:
“30.  Hence the  incidental  questions  raised  above  may  be  answered  as
follows:

                          xx          xx         xx

(v)  The next question to be answered is what is the effect on the order  of
punishment when the report of the enquiry officer is not  furnished  to  the
employee and what relief should be  granted  to  him  in  such  cases.   The
answer to this question has to be relative to the punishment awarded.   When
the employee is dismissed or removed from service and  the  inquiry  is  set
aside because the report is not furnished to him, in  some  cases  the  non-
furnishing of the report may have prejudiced  him  gravely  while  in  other
cases it may have made no difference to the ultimate punishment  awarded  to
him.  Hence to direct reinstatement of the employee with back-wages  in  all
cases is to reduce the rules of justice to a mechanical ritual.  The  theory
of reasonable opportunity and the principles of natural  justice  have  been
evolved to uphold the rule of law and to assist the individual to  vindicate
his just rights.  They are not incantations to be invoked nor  rites  to  be
performed on all and sundry occasions.  Whether in fact, prejudice has  been
caused to the employee or not on  account  of  the  denial  to  him  of  the
report, has to be considered on the facts and circumstances  of  each  case.
Where, therefore, even after the furnishing  of  the  report,  no  different
consequence would have followed, it would be  a  perversion  of  justice  to
permit the employee  to  resume  duty  and  to  get  all  the  consequential
benefits.  It amounts to rewarding the dishonest and the guilty and thus  to
stretching the concept of justice to illogical and exasperating limits.   It
amounts to an “unnatural expansion of natural justice” which  in  itself  is
antithetical to justice.”


So far so good.  However, an important question posed by Mr. Sorabjee is  as
to whether it is open to the authority, which has to  take  a  decision,  to
dispense with the requirement of the principles of natural  justice  on  the
ground that affording such an opportunity will not make any  difference?  To
put it  otherwise,  can  the  administrative  authority  dispense  with  the
requirement of issuing notice by itself deciding that no prejudice  will  be
caused to the person against whom the action is  contemplated?   Answer  has
to be in the negative.  It is not permissible  for  the  authority  to  jump
over the compliance of the principles of natural justice on the ground  that
even if hearing had been provided it would have served  no  useful  purpose.
The opportunity of  hearing  will  serve  the  purpose  or  not  has  to  be
considered at a later stage and  such  things  cannot  be  presumed  by  the
authority.  This was so held by the English Court way back in the year  1943
in the case of General Medical Council v.  Spackman[22].   This  Court  also
spoke in the same language in the case of  The  Board  of  High  School  and
Intermediate  Education,  U.P.  &  Ors.  v.  Kumari  Chittra  Srivastava   &
Ors.[23], as is apparent from the following words:
“8.  The learned counsel for the  appellant,  Mr.  C.B.  Aggarwal,  contends
that the facts are not in dispute and it is further  clear  that  no  useful
purpose would have been served if the Board had served a show  cause  notice
on the petitioner.  He says that in view of these circumstances it  was  not
necessary for the Board to have issued a show cause notice.  We  are  unable
to accept this contention.  Whether a duty arises in a  particular  case  to
issue a show cause notice before inflicting a penalty  does  not  depend  on
the authority's satisfaction that the person to be penalised has no  defence
but on the nature of the order proposed to be passed.”

In view of the aforesaid enunciation of law, Mr. Sorabjee may also be  right
in his submission that it was not open for the authority  to  dispense  with
the requirement of principles of natural justice on the presumption that  no
prejudice is going to be caused to the  appellant  since  judgment  in  R.C.
Tobacco (supra) had closed all the windows for the appellant.

At the same time, it cannot be denied that as far as Courts  are  concerned,
they are empowered to consider as to whether any purpose would be served  in
remanding the case keeping in mind whether any prejudice is  caused  to  the
person against whom the action is taken.  This was so clarified in the  case
of Managing Director, ECIL (supra) itself in the following words:
“31.  Hence, in  all  cases  where  the  enquiry  officer's  report  is  not
furnished to the delinquent employee in the  disciplinary  proceedings,  the
Courts and Tribunals should cause the copy of the report to be furnished  to
the aggrieved employee if he has not already secured  it  before  coming  to
the Court/ Tribunal and given the employee an opportunity to  show  how  his
or her case was prejudiced because of the  non-supply  of  the  report.   If
after hearing the parties, the Court/Tribunal comes to the  conclusion  that
the non-supply of the report would have made no difference to  the  ultimate
findings and the punishment given, the Court/Tribunal should  not  interfere
with the order of punishment.  The Court/ Tribunal should  not  mechanically
set aside the order of punishment on the ground  that  the  report  was  not
furnished as it regrettably being done at present.  The courts should  avoid
resorting to short cuts.  Since it is the Courts/Tribunals which will  apply
their judicial mind to the question  and  give  their  reasons  for  setting
aside or not setting aside the order of punishment, (and  not  any  internal
appellate or revisional authority), there would be neither a breach  of  the
principles of natural justice nor a denial of  the  reasonable  opportunity.
It is only if the Court/Tribunal finds that the  furnishing  of  the  report
would have made a difference to the result in the case that  it  should  set
aside the order of punishment.”

Keeping in view the aforesaid principles in mind, even  when  we  find  that
there is an infraction of principles of natural justice, we have to  address
a further question as to whether any purpose would be  served  in  remitting
the case to the authority to make fresh demand of amount  recoverable,  only
after issuing notice to show cause to the appellant.  In the  facts  of  the
present case, we find that such an exercise would be totally  futile  having
regard to the law laid down by this Court in R.C. Tobacco (supra).

To recapitulate the events, the  appellant  was  accorded  certain  benefits
under Notification dated July 08, 1999.  This Notification stands  nullified
by Section 154 of the Act  of  2003,  which  has  been  given  retrospective
effect.  The legal consequence of the aforesaid statutory provision is  that
the amount with which the  appellant  was  benefitted  under  the  aforesaid
Notification becomes refundable.  Even  after  the  notice  is  issued,  the
appellant cannot take any plea to retain  the  said  amount  on  any  ground
whatsoever as it is bound by the dicta in R.C.  Tobacco  (supra).  Likewise,
even the officer who passed the order has no choice but to follow the  dicta
in  R.C.  Tobacco  (supra).   It  is  important  to  note  that  as  far  as
quantification of the amount is concerned, it is not disputed  at  all.   In
such a situation, issuance of notice would be an empty formality and we  are
of the firm opinion that the  case  stands  covered  by  'useless  formality
theory'.

In Escorts Farms Ltd. (Previously known  as  M/s.  Escorts  Farms  (Ramgarh)
Ltd.) v. Commissioner, Kumaon Division,  Nainital,  U.P.  &  Ors.[24],  this
Court, while reiterating the position that rules of natural justice  are  to
be followed for doing substantial justice, held that, at the same  time,  it
would be of no use if it amounts to completing  a  mere  ritual  of  hearing
without possibility of any change in the decision of  the  case  on  merits.
It was so explained in the following terms:
“64.  Right of hearing to a necessary party is a valuable right.  Denial  of
such  right  is  serious  breach  of  statutory  procedure  prescribed   and
violation of rules of natural justice.   In these appeals preferred  by  the
holder of lands and some other transferees, we have found that the terms  of
government grant did not permit transfers of land without permission of  the
State as grantor.  Remand of cases of a group of transferees  who  were  not
heard, would, therefore, be of no legal consequence, more so, when  on  this
legal question all affected parties have got  full  opportunity  of  hearing
before the High Court and in  this  appeal  before  this  Court.   Rules  of
natural justice are to be followed for doing  substantial  justice  and  not
for completing a mere ritual of hearing without possibility  of  any  change
in the decision of the case on  merits.   In  view  of  the  legal  position
explained by us above, we, therefore, refrain from remanding these cases  in
exercise of our discretionary powers under Article 136 of  the  Constitution
of India.”

Therefore, on the facts of this case,  we  are  of  the  opinion  that  non-
issuance of notice before sending communication dated June 23, 2003 has  not
resulted in any prejudice to the appellant and it may  not  be  feasible  to
direct the respondents to take fresh action after  issuing  notice  as  that
would be a mere formality.

With this we advert  to  the  last  submission  of  Mr.  Sorabjee  that  the
judgment in R.C. Tobacco (supra) (which is a two Judge  Bench  decision)  is
in conflict with the three Judge Bench  judgment  in  J.K.  Cotton  (supra).
This argument is not even open to the appellant for the simple  reason  that
the judgment in J.K. Cotton (supra)  was  specifically  taken  note  of  and
discussed in R.C. Tobacco (supra).  Paragraph 13 of  the  judgment  in  R.C.
Tobacco (supra) would reflect that the appellant  therein  had  specifically
relied  upon  the  judgment  in  J.K.  Cotton  (supra)  in  support  of  the
submission that retrospectivity was harsh and excessive since there  is,  in
fact, a retrospective imposition of excise duty.  It was  also  argued  that
justification of such retrospective imposition of tax must  be  overwhelming
and no such overriding consideration had  been  disclosed.   The  submission
went to the extent of pleading that if the appellant is called upon  to  pay
the excise duty now it will cripple its unit.  More  pertinent  was  another
submission, which is relevant for our purpose, that  the  demand  which  was
raised could not be sustained as it was made without issuing any  show-cause
notice and was in contravention of Section 11A of the Act.   In  support  of
this view, few judgments, including J.K. Cotton (supra), were  relied  upon.
The Court, however, did not find any merit in the aforesaid submissions  and
dealt with the issue as under, duly taking note  of  the  judgment  in  J.K.
Cotton (supra):
“40. In J.K. Cotton Spg. & Wvg. Mills Ltd. v. Union of India,  (1987)  Supp.
SCC 350, relied upon by the petitioners,  by  virtue  of  the  retrospective
amendment  of  Rules  9  and  49  of  the  Central  Excise  Rules  in  1982,
commodities  obtained  at  an  intermediate  stage  of  manufacture   in   a
continuous process were deemed to have been 'removed' within the meaning  of
Rule 9(1) thereby making such intermediate products dutiable under  the  Act
with effect from the commencement of the Act i.e. 1944. In this context  the
Court held that the amended Rules 9 and 49  would  take  effect  subject  to
Section 11-A. The decision is distinguishable. The  circumstances  in  which
the Court held that the demands for  duty  could  only  be  limited  to  six
months prior to  the  amendment  was  unquestionably  different  from  those
present in the case before us. What we have to consider here is whether  the
benefit granted in 1999 could be withdrawn in 2003. Besides,  the  Court  in
J.K. Cotton Spg. & Wvg. Mills Ltd.  case  rejected  the  contention  of  the
Union of India that Section  51  of  the  1982  Finance  Act  by  which  the
amendments were made to Rules 9 and 49 overrode the  provisions  of  Section
11-A saying: (SCC p. 363, para 32) “if the intention of the legislature  was
to nullify  the  effect  of  Section  11-A,..  the  legislature  would  have
specifically provided for the same.”  Similarly  our  decision  in  National
Agricultural Coop. Marketing Federation of India Ltd.  v.  Union  of  India,
(2003) 5 SCC 23 which dealt with an amendment to Section 80-P(2)(a)(iii)  of
the Income Tax Act, 1961 noted that: (SCC p.35, para 29)

“The amendment does not seek to touch on the periods of limitation  provided
in the  Act,  and  in  the  absence  of  such  express  provision  or  clear
implication, the legislature clearly could not be taken to intend  that  the
amending  provisions  authorizes  the  Income  Tax   Officer   to   commence
proceedings which before the new Act came into force, had, by the expiry  of
the period provided become barred".

In the  present  case  Section  154(4)  specifically  and  expressly  allows
amounts to be recovered within a period of thirty days from the day  Finance
Bill, 2003 received the assent of the  President.  It  cannot  but  be  held
therefore that the period of six months provided under  Section  11-A  would
not apply.”

40A)  In the aforesaid  scenario,  when  the  Court  was  conscious  of  the
principle laid down in J.K. Cotton (supra) and explained the        same  in
a particular manner while deciding the appeal in R.C.   Tobacco (supra),  it
cannot be argued that the judgment in R.C.   Tobacco (supra)  runs  contrary
to J.K. Cotton (supra).

For all these reasons, the appeals are dismissed.


                             .............................................J.
                                                                (A.K. SIKRI)


                             .............................................J.
                                                     (ROHINTON FALI NARIMAN)
NEW DELHI;
MAY 14, 2015.
-----------------------
[1]
      (2005) 7 SCC 725
[2]   (1987) Supp SCC 350
[3]   (1995) 2 SCC 38
[4]   (1978) 1 SCC 405 : AIR 1978 SC 851
[5]   On 'Procedural Fairness' in Birks (ed), the Frontiers of Liability
(Volume One) (Oxford 1994)
[6]   A Treatise of Judicial Evidence (London 1825)
[7]   'Procedural Fairness and the Duty of Respect', (198) 18 OJLS 497
[8]   Judial Review of Administrative Action (1980), at page 161
[9]   Administrative Law (1977), at page 395
[10]  (1863) 14 GB (NS)
[11]  (1993) 4 SCC 727
[12]  (1993) 1 SCC 78
[13]  (1978) 1 SCC 248
[14]  (1994) 5 SCC 566
[15]  AIR 1962 SC 1893
[16]  (1988) 3 SCC 348
[17]  (1995) Supp 3 SCC 588
[18]  (2003) 2 SCC 36
[19]  1988 (38) ELT 739 (SC) :: 1988 (19) ECR 569 (SC)
[20]  (1971) 1 WLR 1578 at 1595
[21]  (1980) 1 WLR 582 at 593
[22]  1943 AC 627
[23]  (1970) 1SCC 121 : AIR 1970 SC 1039
[24]  (2004) 4 SCC 281

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