Mukunda Flexi Pack vs. The Appellate Joint Commissioner (State Tax)
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The petitioner filed a writ petition challenging an appellate order dated August 17, 2024, passed by the 1st Respondent (Appellate Joint Commissioner). The petitioner contended that the appellate order failed to consider the grounds raised in their statutory appeal against an unsigned assessment order issued by the 2nd Respondent (Assistant Commissioner) under Section 73 of the CGST/SGST Acts, 2017. The assessment order, dated December 27, 2023, demanded SGST of Rs. 47,83,710, CGST of Rs. 47,83,710, and IGST of Rs. 51,73,150, along with penalties. The petitioner also challenged an unsigned DRC-01 notice dated December 29, 2023, and a Garnishee Notice dated January 7, 2024, issued by the 2nd Respondent to the 6th Respondent (State Bank of India), seeking to freeze the petitioner's bank account. The petitioner sought a direction to the 1st Respondent to dispose of a rectification application filed under Section 161.
Held
The High Court held that the impugned appellate order dated August 17, 2024, could not sustain judicial scrutiny. The Court found substance in the petitioner's argument that the grounds raised in the appeal memo were not considered by the appellate authority. Citing the Supreme Court's judgment in Kranti Associates (p) Ltd. v. Masood Ahmed Khan, the Court reiterated that quasi-judicial authorities must record reasons in support of their conclusions to ensure justice is not only done but also appears to be done, and to prevent arbitrary exercise of power. The Court concluded that the appellate order, by failing to deal with the grounds and assign reasons for rejection, was deficient. Consequently, the appellate order was set aside. The petitioner was directed to appear before the appellate authority on February 27, 2025, at 11:30 AM, for a rehearing and a fresh order in accordance with the law. The Garnishee Notice, if it led to the attachment of the petitioner's bank account, was to be provisionally lifted, subject to the final outcome of the appeal. The Court explicitly stated that no opinion was expressed on the merits of the case.
Key Issues
1. Whether the appellate order dated August 17, 2024, passed by the 1st Respondent is legally sustainable, considering it allegedly lacks discussion on the grounds raised by the petitioner in their statutory appeal against the assessment order dated December 27, 2023, issued by the 2nd Respondent under Section 73 of the CGST/SGST Acts, 2017. Petitioner's arguments: The petitioner argued that the appellate order was passed with a predetermined mind, without considering the documentary evidence submitted and the grounds of appeal. They contended that the absence of discussion on their grounds rendered the appellate consideration a mere formality, violating principles of natural justice and statutory provisions. They relied on the Supreme Court's decision in Kranti Associates (p) Ltd. v. Masood Ahmed Khan, emphasizing the necessity of reasoned orders in quasi-judicial and administrative decisions. Revenue's arguments: The learned Special Government Pleader for State Tax raised a formal objection.
Sections Cited
Section 73, Section 161
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Cause title — parties, addresses and appearances
The Court made the following: ORDER
THE HON'BLE THE ACTING CHIEF JUSTICE SUJOY PAUL AND THE HON'BLE SMT. JUSTICE RENUKA YARA SrRIT PETITION No.4446 of 2025 ORDER (Per the Hon'bte tLrc Acting Chief Justice S,tjog paul): Sri T.S. Murthy, learned counsel for the petitioner; Sri Swaroop Oorilla, learned Special Government pleader for State Tax, for respondent Nos. I to 4 and Sri Dominic Fernandes, learned Senior Standing Counsel for CBIC, for respondent No.S.
The appellate order dated 17.08.2024 is subject matter of chaJlenge in this petition.
The singular ground raised by learned counsel for the petitioner is that against the basic order, the petitioner preferred a statutory appeal which is running in almost seven pages. The petitioner has mentioned the facts and grounds, on the strength of which, said statutory appeal was preferred. However, the "discussion and findings' paragraph of the impugned appellate order shows that there is no iota of discussion about the groulds raised by the petitioner in its appeal memo. In absence of reasons, the consideration was an empty formality ald therefore, the impugned appellate order may be set aside and the appellate authority may be directed to rehear the petitioner and pass a fresh order. (
2 \ 5 leamed Special Government pleader for State ,lax raised formal objection .
We have examined the "discussion and tindings,,given by the appellate aut rorit5r and we find substa,ce in the ar1:Srment of leamed counsel for the petitioner that the grounds raisr:d by the petitioner in its zrppeal memo have not been considered bv the appellate authorr'ty The .Apex Court in Kranti Associates (p) Ltd. v. Masood Ahmed Khanl opined that the conclusions. In administrative, orders, the reasorLs must be given. thus: reasons are hearl.beat of quasi-judicial and judicial The relative portic,n reads ",12..fhe. necessit5z of giving reason by a bodv or authorir./ in support of-its iecisio; ;;"rli] ;: consider,rtion before this Court- in-'sJJe..f i1".,". Initially -his Court recognised , "; "f d;;;.#,,,r, betrveen administrative- orders ,"a - q"""rr:"jf. ,f :::.:j-"^:ll with the passase of time the distincti:rn u! rw.:c.r rne rwo got blurred ald thinned out altd vrrtua I [y reached a van ishing p"i"t ]"'iir.lr"d?-" .,, of this Ccrurt in A.K. Krat 2 sC<: 2621. tpak v ' Unton of India [( I 96 )) 13...
The e:<pression "speaking order, was first coined by l,ord chancellor e^art c.airns in "";;;.':;;.s,. context. l'he Lord Chanceilor, *hil" ;;;il"i"** ,n. ambit of t.-re writ of certioran, reterred to orders wjth errors on the face of the record ."a poi.,t.a J"i ,nr, an order u.ith errors on its face, i";Jp;il;;;;.. e face of arL t5r or even an 'lzoto; s scc +s6 ^15 This ( ourt always opined that th order 1>ass:d by a quasi-judicial authJ I
' 3 administrative authority affecting the parties, must speak. It must not be "inscrutable face of a sphinx". rights of like the 47. 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 valid 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. (fl Reasons have virtually become as indispensable a component of a decision-maling process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the proce_ss of judicial review by superior courts. (t{ The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justi[ring the principle that reason is tJle soul of justice. (f Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one comnon purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the jusllg;e delivery system. b{
t) Insistence on reason is a requiremetr for both 'udicial accountability ard r;r'.-p;;;";:,,, (Il Il .a judge or a quasi._judicial a u rhor ry is not czmdid enough abolt trrsTrre. al"i"i" ll-"L.irg pt'ocess then it is impossible ,. f.".*,*lr=ther the p(.rson deciding is faithful t" ;. i.,,ii,"" .f precedent or to principle" orin"*.rLr,lI .,, l?.X."i:T:#.;:iT.l or decisions must bl) cosent, st.rmp reason"' i" ,,Pttt"tce of reasons or "rubber- d",i;i.;-;;;**r".*!i"1" be equated wittr a valid (m)- It calnot be doubted. that transparenc y is the srne qua non of rer p o \ ye rs. r.u,", "pu..,.,.;," llllldl" r - ",:il, ; r,,r.T t"; fl makes the judges anj decrsion_makers less .rrone to errt>rs but also mak, scnrtiny. (see David "ti^j*-. subject to broader c",,a"i11t' i,iil;,"#Ii,"L.,"!:{f :;i:{iii,:*, (n) ^ S^in-ce . the requirement to record leasons :i?^11t." from the broa{. d."t.i". ;';t.,,,I"S i., oectsron-making, the "{q ..4"i;;;;";"i,,"'.,o* rrrttrally a component ,of f,u.ni_r"i;';;". ,;;; *., (ronsidered part of Stra^sbffi "r";,..iri::;.".. See Ruzz Toijav. soain[(199.41 -re-tilfn".sss1 BXi*,ii.i'3,^l&; !l' ::tt:i", i;,)),,u, .y co,, t'.#.,.a" " Io^ ;fi",10t^ ("1/l .,,.:n:iern the uon\enrion of Human _night""^*hi; i:l,:,,.:J . aoe(luate and intellisen .; udrc Lal decisions,. - tt reasons must be giv en for (o) In all common law iuri ictions judgments :lay a I,:l^::1. in setring rip precedents for the firrure. r neretore, for developm".rt of lu*, ..q"j.._..iii .f i^,lllf '11"ons for rhe decision i" .i*r. "r*"I".li,ira ts vtrtually a part of"due process.. !
If ther impugned appellate order is tested on the envil of principles laid down in Kranti Associates (p) Ltd. (rsupra), it could not sustai, the judiciar scrutiny because it does not deal with , I ' (Zt rr/ r jCC 496 the grounds arld does not assign reasons for rejectirtn.
f'-
Resultantly, the impugned appellate order is set aside. The petitioner sha-ll now appear before the appellate authority on 27.O2.2O25 at 11:3O 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. Consequent upon passing of the impugned appellate order, if the petitioner's balk account is attached, it be provisionally lifted which will remain subject to final outcome of the appeal.
The Writ Petition is disposed of without expressing any opinion on merits of the case. No costs. Interlocutory applications, if any pending, shall a-lso stand closed. .V.KAVITHA ASSISTANT REGISTRAR //// CTION OFFICER To 1. The Appellate Joint Commissioner (State Tax)' Hyderaba ' Fffil.UiC;-nir"r' opp. cindhi Bhavan'.Nampallv' f$ , i'i;Asiisiaii'6;;iniidl;""r(State rax)' Nacharam -2 ci d Rural Division, 5th erabad-500001. rcle,Malkajigiri Division HYderabad. 3 The Comrilissioner -State Tax, Govemment of Telangana'l st Floor' CT " c';;;I#'G6. b-dnoitior'u'in" Nampal lv' Hvderabad-50000 1' 4 The principal Secretary io-n"-uLnre bf bepartment;Sec76fa-n?t Buildings' Hvderabad, State of Telanqana' s. r#"s$Ile?t*i; G;r"-;;"";t, ce.nlrql.B^9a^r9 of lndirect raxes and customs' -' oeia-rtment df Revenue, New Delhi -1 10001' ? fi5"b;;ii M;.ir'g";, Cr'blLi;Lrlriei'nir'-' st"te Bank or lndia' Medchar '' ttt"trJiioiri District, Hyderabad' a iif, iEE'ii, s n*i i.'s. M u nruY, Advocate- toP.u.cl
One CC to SRt SWARotjp'ooiirll"i, siEtiitGovt Pleader for state Tax . 8IJ"% to sRt DoMtNlc FERNANDES, sENloR sc FoR cBlc toPUCl
Two CD CoPies PSK. GJP I
HIGH COURT DATED:17 10212025 ORDER WP.No.4446 of 2025 DISPOSING OF THE WRIT PETITION WITHOUT COSTS oi-( a.- \ 1c- il'4,- r .,'i C, ' r:9 o..l \ -) 'ri (-) 2 2 ,lPR zffi *, ,/4 4.* /4/ ,
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.