Thomas Mathew vs. The State Tax Officer (Ib)-I

Facts

The appellants, K.E. Agro Products (P) Ltd., Lillykutty Mathew, and Thomas Mathew, are assessees under the CGST/SGST Act, 2017, engaged in the outward supply of rice and bran. During an enquiry, a director of K.E. Agro Products (P) Ltd. appeared before the State Tax Officer and gave a statement. The appellants subsequently applied for copies of these recorded statements and for the transfer of enquiry files. Their requests were rejected with the remark 'cannot be considered' without specific reasons. The appellants challenged these rejections before the High Court. The respondents, in their counter-affidavit, argued that the information was crucial and sensitive, and disclosure would prejudicially affect the investigation. The learned Single Judge noted that the rejection orders lacked sufficient reasons and directed the officer to reconsider the applications for copies of statements, while the request for file transfer was not pressed by the appellants.

Held

The High Court held that the rejection orders, which merely stated 'cannot be considered' without providing specific reasons, were unsustainable. The Court affirmed the principle that an affidavit filed subsequently cannot cure the defect of an order lacking proper reasoning at the time of its issuance. The Court found that the learned Single Judge had rightly exercised jurisdiction in setting aside the rejection orders and directing the first respondent to re-consider the applications for copies of statements. The High Court further directed that the re-consideration must be done independently, untrammeled by any observations made by the learned Single Judge in the impugned judgment. The Court also noted that the first respondent should take into account the present stage of the investigation, given that the impugned judgment was passed more than six months prior.

Key Issues

1. Whether the rejection of the appellants' applications for copies of statements recorded during an investigation, based solely on the remark 'cannot be considered' without providing specific reasons, is legally sustainable under the CGST/SGST Act, 2017? Petitioner's Argument: The appellants contended that the rejection orders were arbitrary and lacked proper justification. They argued that the respondents failed to provide valid reasons for denying them copies of their statements. They relied on the principles laid down in Commissioner of Police, Bombay v. Gordhandas Bhanji and Mohinder Singh Gill v. Chief Election Commissioner, New Delhi, asserting that an affidavit cannot supplement reasons absent in the original order. Revenue's Argument: The respondents argued that Section 67(5) of the Act empowers the officer to deny issuance of copies if it is prejudicial to the investigation. They contended that the information gathered was sensitive and its disclosure could hamper the ongoing enquiry.