Bcl Industries LTD. vs. Union Of INDIA And Ors.

Held

The Court allowed the writ petition, setting aside the communication dated 05.11.2018 by the Chief Commissioner, CGST, Chandigarh, which refused to transfer the petitioner's appeal. The Court held that there was a reasonable apprehension of bias in the mind of the petitioner due to the familial relationship between the Commissioner who directed the filing of the appeal and the Commissioner (Appeals) who was to decide it. Citing the principles of natural justice, particularly the maxim that justice must not only be done but must also be seen to be done, the Court found that the situation created a suspicion of improper interference with the course of justice. The Court emphasized that bias can arise from personal relationships and that the extent and nature of the interest must be considered. Therefore, the appeal of the petitioner was transferred from the Commissioner (Appeals), Ludhiana, to the Commissioner (Appeals), Jalandhar, who was directed to decide the same afresh after hearing the parties in accordance with law. The Court explicitly stated that its observations were not to be taken as an expression of opinion on the merits of the controversy.

Facts

The petitioner, BCL Industries Limited, manufactures refined oil and related products. The respondent department issued show cause notices demanding Central Excise Duty on fatty acids, waxes, and gums, which the petitioner claimed were waste products exempt from duty. The Tribunal had previously ruled in favour of manufacturers, holding these items as waste. However, the Commissioner (Appeals), Ludhiana, repeatedly ruled against the petitioner, holding them liable for duty. A separate issue involved a show cause notice for wrongly availed CENVAT credit and clandestine clearance, which the Assistant Commissioner dropped. The Commissioner, GST Commissionerate, Ludhiana, reviewed this order and directed the Assistant Commissioner to file an appeal before the Commissioner (Appeals). This appeal is pending before Mrs. Charul Baranwal, who is the wife of the Commissioner who directed the filing of the appeal. The petitioner requested the Chief Commissioner, CGST, Chandigarh, to transfer the appeal due to this conflict of interest, but the request was denied. The petitioner then filed a writ petition seeking to quash the refusal to transfer and to restrain the Commissioner (Appeals) from deciding the appeal.

Key Issues

1. Whether the communication dated 05.11.2018, whereby the Chief Commissioner, CGST, Chandigarh, refused to transfer the petitioner's appeal from Commissioner (Appeals), Ludhiana, to another Commissioner (Appeals), is liable to be quashed? 2. Whether the Commissioner (Appeals), Ludhiana, is restrained from deciding the pending appeal due to a reasonable apprehension of bias? The petitioner argued that there is a clear conflict of interest and violation of the principles of natural justice because the appeal pending before Mrs. Charul Baranwal, Commissioner (Appeals), was filed pursuant to a review order passed by her husband, the Commissioner. They contended that the husband is effectively the appellant (by directing the appeal) and the wife is the appellate authority, creating a reasonable apprehension of bias and a lack of trust in a fair and unbiased decision. The petitioner relied on the principles of natural justice and the judgment in R. v. Sussex Justices, ex p McCarthy, and Bhajan Lal, Chief Minister, Haryana vs. M/s Jindal Strips Limited, to support their claim of bias. The respondents argued that the Commissioner (Appeals) is an independent quasi-judicial authority bound to decide appeals without bias. They also contended that the proviso to the exemption notification dated 18.5.1995 disentitled the petitioner from the benefit as they were also manufacturing excisable goods (plastic and tin containers) which were captively consumed.