Provisional assessment done and demand raised for short payment

PJ/Case Laws/2011-12/1271

Provisional assessment done and demand raised for short payment – without giving hearing to the assessee

Case: BALAJI IMPEX v/s UNION OF INDIA AND OTHERS

Citation: 2011-TIOL-444-HC-MUM-CUS

Issue:- Provisional assessment done and demand raised for short payment – without giving hearing to the assessee – not sustainable as violation of principles of natural justice.

Brief Facts:- Petitioners received communication issued by the Assistant Commissioner Customs (Preventive) by which they have been informed that the Deputy Commissioner, who was nominated by the Commissioner of Customs for finalization of provisional assessments of certain bills of entry, under a special drive had finalized the assessments and passed orders accordingly. The communication contained an annexure setting out the provisional assessments which have now been finalized and called upon Petitioners to pay duty alleged to have been short paid.

Aggrieved by the said communication, Petitioner filed writ petition against the same.

Appellant’s Contention:- Appellant contended that

(i)            No hearing was afforded to them by the Deputy Commissioner of Customs;
(ii)           No speaking order has been passed and
(iii)          Even the elementary principles of natural justice have therefore not been complied with.

Respondent’s Contention:- Revenue argued that Petitioners should have availed the alternative remedy of filing an appeal against the orders passed by the Deputy Commissioner finalizing the assessments. During the course of the hearing, it has been further stated before the Court that the Petitioners were not afforded an opportunity of being heard by the authority which passed the order.

Reasoning of Judgment:- The High Court held that it is a fit and proper case for the exercise of the writ jurisdiction had been made out and there is no reason to relegate the Petitioners to the remedy of an appeal. There is manifestly a failure of compliance of the principles of natural justice.

It was noted that in Automotive Tyre Manufactures Asson v. Designated Authority [2011 (263) ELT 481 (SC)] the Supreme Court had held that if one person hears and another decides, a personal hearing would become an empty formality. An order passed by a quasi judicial authority without complying with the principles of natural justice would therefore be invalid.

It was held that the same principle would govern the present case. Merely because there was a special drive to clear a backlog of matters that would afford no justification for the department not to comply with fundamental principles of natural justice. Efficiency in the disposal of quasi judicial proceedings is important but, that cannot be at the cost of overriding fundamental principles known to the law of the land.

The High Court held that the impugned communication and the consequent assessment orders have to be set aside and a direction would have to be issued to the Deputy Commissioner of Customs to pass fresh orders finalizing the assessments after furnishing to the Petitioners an opportunity of being heard.

Decision:- Rule made absolute.

Comments: - The various methods used by department to finalise the assessment without giving opportunity of being heard are not tenable in law, In the above order, since order was passed without hearing being granted to assessee, High Court has rightly stated that Principles of natural justice are violated and directed the Deputy Commissioner to pass fresh orders after giving assessee opportunity of being heard.

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PJ/Case Laws/2011-12/1271

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