M/S.Ma Automation vs. The Appellate Joint Commissioner Of State Tax
Original PDF →Facts
The petitioner, M/s. MA Automation, challenged an appellate order dated 28.11.2024 passed by the Appellate Joint Commissioner of State Tax. The petitioner contended that the appellate authority failed to consider the grounds raised in their appeal and passed the order in a summary manner without assigning any reasons. The petitioner also challenged the show cause notice and order dated 23.04.2024, and subsequent proceedings dated 25.04.2024, issued by the Assistant Commissioner of State Tax, arguing they were not signed and that Form DRC-01A was not issued as required. The tax period in dispute is 2018-19. The petitioner sought to set aside the appellate order and the orders passed by the Assistant Commissioner.
Held
The Court held that the appellate order dated 28.11.2024 was liable to be set aside. It found that the appellate authority had failed to discharge its statutory obligation under Section 107(12) of the CGST/SGST Act, 2017, which mandates that the order of the Appellate Authority shall be in writing, state the points for determination, the decision thereon, and the reasons for such decision. The Court emphasized the necessity of assigning reasons, citing the Supreme Court's decision in Kranti Associates (P) Ltd. v. Masood Ahmed Khan, which highlighted that reasons are indispensable for judicial accountability, transparency, and facilitating judicial review. The appellate authority did not assign reasons for its conclusions, making the order arbitrary and contrary to the principles of natural justice. Consequently, the impugned appellate order was set aside, and the matter was restored to the file of the appellate authority for a rehearing. The petitioner was directed to appear before the appellate authority on 06.03.2025. The Court did not express any opinion on the merits of the case concerning the other grounds raised by the petitioner regarding the orders of the 2nd Respondent.
Key Issues
1. Whether the appellate order dated 28.11.2024 passed by the 1st Respondent is arbitrary, contrary to the provisions of the CGST/SGST Act, 2017, and in violation of the principles of natural justice for failing to consider the petitioner's grounds of appeal and not assigning reasons, as contemplated under Section 107(12) of the CGST/SGST Act, 2017? 2. Whether the show cause notice dated 14.11.2021, order dated 23.04.2024, summary of order in Form GST DRC-07 dated 23.04.2024, and proceedings dated 25.04.2024, issued by the 2nd Respondent, are invalid in the eye of law due to lack of signatures (physical or digital)? 3. Whether the action of the 2nd Respondent in not issuing Form DRC-01A before passing orders, as contemplated under Rule 142(1A) of the CGST/SGST Act, 2017, amounts to invalidity? 4. Whether the action of the 2nd Respondent in not generating verifiable DIN in the notices and orders renders them invalid? Petitioner's Arguments: The petitioner argued that the appellate order was passed summarily without considering their grounds of appeal and without assigning reasons, violating Section 107(12) of the CGST/SGST Act, 2017, and principles of natural justice. They also contended that the orders and notices from the 2nd Respondent were invalid due to lack of signatures, non-issuance of Form DRC-01A, and absence of verifiable DIN. Revenue's Arguments: The judgment records that the other side (respondents) had no objection to the petitioner's prayer for a rehearing by the appellate authority.
Sections Cited
Section 107(12), Rule 142(1A)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
The Court made the following: ORDER l
THE HON'BLE THE ACTING CHIEF JUSTICE SUJOY PAUL AND THE HON'BLE SMT. JUSTICE RENUKA YARA WRIT PETITION No.5147 of 2o25 ORDER (Per the Hon'ble the Ading Chief Justice Sujog Paul); Sri Shaik Jeelani Basha, learned counsel for the petitioner; Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, for respondent Nos.l to 3; Sri B. Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, for respondent No.4 ald Ms. Pravalika, learned counsel representing Sri Dominic Fernandes, learned Senior Standing Counsel for CBIC, for respondent No.5. 2 With the consent, finally heard.
The singular attack to the impugned appellate order dated 28.1 1.2024 is on the ground that grounds raised in the appeal (page No.73) have not been considered by the appellate authority. No reasons are assigned as to why grounds taken in the appeal memo did not hnd favour with the appellate authority. Thus, the impugned appellate order may be set aside and the appellate authority may be directed to rehear the petitioner and pass a fresh order in accordance u'ith law. n /
2 4 The other side has no objection to this innocuous prayer. 5 Section 1O7 (12) of the Central Goods and Sen.ices Tax Act, 2017 reads thus: Section 107. Appeals to Appellate Authority. (1) to (11) xxx (i 2) The order of the Appellate Authority disposing of the appeaj shall be in writing and shall state the pnint"-fo. determination, the decision thereon and the reasons for such decision.
In the light of the statutory mandate ingrained in aforesaid section, it is obligatory for the appellate authority to determine the point of determination and reach to a conclusion bv assigning adequate reasons. The appellate authority has failed to discharge aforesaid statutory obligation and did not assign reasons for the cohclusions reached by it.
The Supreme 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 Khanl. The relevant portion reads as under:
"
The rrecessity of giving reason by a body or authority in support of its decision came up for consideration befc,re ihis Court in several cases. Initially this Court recognised a sort of demarcation between administrative orders- and quasi_ judicial orders but with the passage of time the distinction ' lzoro; s scc +so 3 between the two got blurred and thinned out and virtually reached a vanishing point in the judgment of this Court in A.K. Kraipakv. Union of Indial(19691 2 SCC 2621. 13...
The expression "speaking order" was hrst coined by l,ord Chancellor Earl Cairns in a rather strange context. The Lord Chancellor, while explaining the ambit of the writ of certiorari, relerred 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.
This Court always opined that the face of an order passed by a quasi-judicial authorit5z or even an administrative authorit5r affecting the rights of parties, must speak. It must not be like the "inscrutable face of a sphinx".
Summarising the above discussion, this Court holds: (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (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 operates as a vaiid 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. (f Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies.
4 (9) Reasons facilitate the superior courts. process of judicial revlew by '",a (h). The- ongoing judicial trend in all countries commltted to rule of law and constitutionai governance is in lavour of reasoned decisions based on relevant facts. This is virtually the iifeblood of judicia-l decision_making justilying thl principle that reason is the soul ofjustice. (z) Judicial or even quasi-judicial opinions these dar.s can be as. diflerent as the judges and authorities who d.lii,.. il;;. All these decisions serve one common purpose wh ich is to demonstrate by reason that the relevant factors hrave been objectively considered. This is important for sustarning the litigants' faith in the justice delivery system. fu) Insistence on reason is a requirement for both judicial accountability and transparency. (/c) Il .a judge or a quasi-judicial authorig is nor candid enough about his/her decision_making pricess tf.,.en it is impossible to know whether the person i."ial"g is faithful to the doctrine of precedent or to principles of incrEmentalism. (l) Reasons in support of decisions must be cogent, clear and succinct. .{ pretence of reasons or ,,rubber_stairp rea.sons,, is not to be equated with a valid decision_making proces". -(m) It cannot be doubted tha t transparency is the sine qua non of restraint on abuse ofjudicial po*..". Transpa rency in decision-making not only makes the judges ;;d';;;;;i"; makers less prone to errors but also -"t.]" tn.- . sr: bject to broader- s<:rutiny. (See David Shapir o in Oe1"n"e of Juclicial Candor [(1987) 1OO Harvard Law Rlview 23137] .) (n) Since the requirement to record reasons emanales from the broad doctrine of fairness in decision-mat<ing, tfre saia requirement is now virtually a component of human rights and ^was_ considered part of Strasbourg Jurispmdeice. See R11z Toija.v. Spain[(19941 19 EHRR sES; oHRn. at sOZ y1r_a.19 andAngav. tlniuersitg of Oxford [2001 EWCA Civ 405 (CA)l , wherein the Couri ..f....d to Article 6 of the European Convention of Human Rights which rcquires, "adequate and intelligent reasons -r"1 b. given for udicial decision s".
5 To (o) In all common law juri ictions 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 virtually a part of "due process." 8 In this view of the matter, the impugned appellate order dated 28.11.2024 is Set aside. The matter is restored in the file of the appellate authority. The petitioner shall appear before the appellate authority or\ 06.03.2025 at 11:30 A.M. for which no separate notice will be required to be issued. The appellate authority shall rehear the petitioner and pass a fresh order in accordance with law
With aforesaid and without expressing any opinion on merits of the case, this Writ Petition is disposed of. No costs. Interlocutory applications, if any pending, shall also stand closed. '. K.AM AJI ASSISTANT REGTS R ,T// SECTION OFFICER
One CC to SRI. SHAIK JEELANI BASHA Advocate IoPucl -'100 001. 7. Two CCs to SPECIAL GP FOR STATE TAX, High Court for the State of Telangana, at HYderabad [OUT] B. Ohe CC to SRI. DOMINIC FERNANDES, SENIOR SC FOR cBlc [oPUCI One CC to SRI. GAD
The Appellate Joint Commissioner of State Tax' Hyderabad Rural Division' ' uvieiibao' ^ --'oner of state Tax, Mehdipatnam-l circle' charminar' I ifie Assistant Commlssl ; +il3eJilalpal secretary' Revenue (cr) Department' relansana secretariat' .. ihttji,"Jgf:'nion or lndia'Ministry or Finance' North Block' New Delhi - ;t***un",.iLl',1,T#""Ji:$:?tEtr"?:3:x3it"#'?'ll*i"''*'#"n' o alA{olipal " - -,-n lr^^i^a IPRAVEE N KUMAR, DY. SOLICITOR GENERALOF \ G
ttt I HIGH COURT DATED:21 10212025 ORDER WP.No.S147 of 2025 DISPOSING OF THE WRIT PETITION WITHOUT COSTS ,,..' ../ ... : t, - zt rir i025 .\ -r_\ i' rl "r\r .t::..-.,., \
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.