Allowed

Faridabad Complex Admn. Faridabad v. M/S I.O.C.L. and Anr.

Punjab & Haryana HC6 Jul 2012CWP/7416/1994

Case brief

AI extract

What is this about?

The Court allowed a writ petition quashing two impugned orders as being devoid of reasons and indicative of non-application of mind. It directed the appellate authority to decide the underlying appeal by passing a reasoned order within three months.

What did the court decide?

Quashed the impugned orders; directed the Commissioner to decide the appeal by passing a reasoned order within three months.

Faridabad Complex Admn. Faridabad Vs M/S… — Writ and Judicial Review | Punjab & Haryana HC (2012)

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CWP No. 7416 of 1994

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IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH

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CWP No. 7416 of 1994 Date of Decision:- July 06, 2012

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Faridabad Complex Administration

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..............PETITIONER(S)

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vs.

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M/s. Indian Oil Corporation Limited and others ...........RESPONDENT(S)

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CORAM:- HON'BLE MR. JUSTICE G.S. SANDHAWALIA

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Present:Mr. Manoj Kumar Sood, Advocate, for the petitioners.

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Ms. Aakanksha Sawhney, DAG, Haryana, for respondents no. 1 to 3.

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Mr. A.S. Chadha, Advocate, for respondent no. 4.

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G.S. SANDHAWALIA (J.)

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The present writ petition has been filed under Article 226 of the Constitution of India for issuance of a writ in the nature of certiorari for quashing of order dated 22.09.1992 (Annexure P-6) passed by respondent no. 2 and the order dated 05.10.1993 (Annexure P-9) passed by respondent no. 3 on the ground that the said orders are non-speaking and not reasoned.

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The pleaded case of the petitioner is that respondent no. 1-M/s. Indian Oil Corporation Limited imported a scientific equipment known as the “Climatic Chamber” in tumble down condition in 14 trucks into the octroi limits of Faridabad Complex Administration vide bill of entry dated 09.02.1990 and invoice dated 18.01.1990. The total value of the consignment including custom duty and freight was `7,49,58,680. That at

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the octroi barrier, the staff of the petitioner demanded an octroi amount of 29,98,347.20 ps. at the rate of 2% plus sur charge 100% under item no. 76 of the octroi schedule and the same was disputed by respondent no. 1 and the entire consignment of 14 trucks was taken to the Central Octroi Office and on 29.03.1990, the octroi Superintendent passed an assessment order (Annexure P-3) whereby, he demanded the said amount. Respondent no. 1 filed an appeal before the Commissioner, Gurgaon Division and during the pendency of the appeal on 22.02.1991, another consignment of spares for the climatic chamber amounting to 23,13,244, which included the custom duty, was imported into the octroi limits and at the octroi barrier, the officials of respondent no. 1 made a wrong declaration that the consignment consisted of machinery parts and paid octroi tax of 159.40 ps. The consignment was, however, intercepted on its way from the octroi barrier to the site by the Inspector and on inspection of the bill of entry, it was found that the consignment contained spares for the climatic chamber and the Inspector impounded the consignment and brought it to the Central Office where it was calculated that the octroi tax and sur charge was payable on the consignment to the tune of 92,529.76 ps. The office of the petitioner then sent the papers to the Chief Administrator with recommendation that a composition fee 10 times the octroi tax evaded amounting to 9,23,701.60 ps. be imposed. The Chief Administrator approved the recommendation of the office and the respondent became liable to pay the total amount of 10,16,071.76 ps. for the release of the consignment vide order dated 07.03.1991.

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Respondent no. 1, however, filed a miscellaneous application against the order of the Chief Administrator dated 07.03.1991 in the

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pending appeal before the Commissioner, Gurgaon Division, Gurgaon, which was against the assessment order dated 29.03.1990. The Commissioner, Gurgaon accepted the appeal of respondent no. 1 vide order dated 22.09.1992 and did not pass any separate order on the miscellaneous application whereby, respondent no. 1 was directed to deposit a sum of `10,16,071.76 ps., which included composition fee on the consignment of spares of climatic chamber imported into the octroi limits on 22.02.1991. Against the order of the Commissioner, the petitioner filed two separate revision petitions to the Commissioner and Secretary to the Government of Haryana, Local Government Department under Section 100-A of the Haryana Municipal Act, 1973 (hereinafter referred to as the Act), one regarding the assessment order dated 29.03.1990 regarding the import of climatic chamber and the other with respect to the assessment order dated 07.03.1991 with respect to the consignment of spares of climatic chamber imported on 22.02.1991. Respondent no. 3, however, also dismissed both the two revision petitions by one order dated 05.10.1993. 4. Respondent no. 1, in its written statement, took the stand that in order to test the efficiency of motor vehicles including cars, buses, trucks etc. in different atmospheric conditions and temperatures, the company had placed an order on M/s. B.B.C. York West Germany, a leading manufacturer of plant and machinery required for the purposes of creating atmospheric conditions in a big room to be erected at Faridabad at desired temperature, wind velocity, humidity etc. Accordingly, the said machinery consisted of compressors, blowers, heat exchangers, condensers, copper pipes copper tubes, thermostats, insulation, bolts, nuts, angle iron, exhaust fans etc. were unloaded at Navashiva Port at New Bombay and the Custom

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Authorities under tariff item no. 84.79.89 treating it as the machinery under the Custom Tariff Act, 1975 cleared the machinery after its landing on 05.03.1990 after verifying the nature of goods from its packing list. The manufacturers had given the machinery a composite name as “Climatic Chamber” which was in fact neither a chamber nor any individual, equipment, apparatus or instrument which could be classified as Climatic Chamber, or scientific instrument and/or equipment. The said machinery was transported from Bombay to Faridabad by road in 14 big containers and the machinery weighed 140 tons and was brought in the limit of Faridabad and 8 truck loads were cleared from the octroi barrier charging the goods as electrical goods or under the Residuary Head to the octroi Schedule as applicable to the Faridabad Complex Administration and when the remaining consignments of the goods reached the octroi limits of Faridabad Complex, the same were detained at the Central octroi Barrier treating the goods as scientific equipments although invoice, packing list, nature of goods and the goods in fact were placed before the petitioner for inspection and they were lying with them and it was pleaded that the goods were nothing but parts of machinery for creating air conditioning atmosphere in a big hall. The Corporation had passed the order dated 29.03.1990 assessing the goods and an appeal had been filed on 30.03.1990, in which interim stay was granted before the Commissioner and the Corporation was likely to release the goods and charge octroi under residuary item at the rate of 5.60 per 100 kg. of weight. The goods in question were released and the respondent paid the octroi charges at the rate of 5.60 per 100 kgs of weight and the goods were treated under the residuary item of octroi Schedule and not a scientific equipment. The Corporation had filed an appeal before the

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Commissioner and projected that the provisions of Rule V.63 of the Municipal Accounts Code were applicable and the appeal should have been first filed before the Chief Administrator and the Commissioner had vacated the stay ex parte on 23.04.1990. Respondent no. 1 then filed civil writ petition before this Court which came up for hearing on 03.05.1990 and the order vacating the stay was set aside and it was directed that the matter be decided after hearing both the parties. Thereafter, the Commissioner had held that the appeal should have been filed before the Chief Administrator vide order dated 21.07.1990 and the said order was again challenged by respondent no. 1 by filing Civil Writ Petition No. 12591 of 1990 and the order was set aside and it was directed that the Commissioner would decide the appeal on merits. Eventually vide order dated 22.09.1992, it was held that the goods were not scientific equipment and were meant for controlling the air conditioning and controlling the climate in a particular room and, therefore, the appeal of the respondent was allowed and the petitioner was directed to refund the extra octroi already charged and the remaining goods which had arrived in the octroi limits of the petitioner on 22.02.1991 had not been released and vide order dated 19.04.1991, the Commissioner had directed to furnish bank guarantee of the octroi amount and the consignment of the said goods was released on furnishing of bank guarantee which were in the nature of spare parts. It was admitted that the petitioners had filed the revision petition before the appropriate government against the order allowing the appeal by the Commissioner and both the parties were called upon to file written submissions and the answering respondent filed detailed submissions and factual and legal submissions were made explicit and after the perusal of the written submissions, the Secretary to the Government did

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not consider proper to interfere with the order of the learned Commissioner, Gurgaon Division and the revision petition was dismissed vide order dated 05.10.1993.

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Accordingly, on merits, it has been pleaded that mere use of the word “Climatic Chamber” would not convert machinery into the scientific equipment and that since the Custom Authorities had cleared the goods under the Customs Tariff Act, 1975 as machinery, and the goods were part of machinery, it was wrongly being assessed under the heading of scientific equipment.

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It was further pleaded in the written statement that the order dated 07.03.1991 was never communicated to the answering respondents and since the matter was already subjudice, the recovery of octroi demanded by the petitioner in terms of the earlier assessment order had already been stayed and the judgment of the Commissioner would cover the entire class of goods forming part of the consignment and once it was held by the Commissioner that the goods did not fall under item no. 76, there was no need to file any separate appeal pertaining to the second consignment. The goods brought were to be fitted in connection with erection of a climatic chamber in the factory and the machinery brought into octroi limit was basically an air conditioning plant which had the facility of controlling the atmospheric conditions in a hall including the temperature from minus 30 degrees to plus 50 degrees with humidity ranging from 25% to 85% and bringing the wind velocity of 120 Kms. per hour and thus, goods were nothing but the parts of air conditioning plant. Reliance was placed upon the judgment of this Court in Dr. Bishan Chandra vs. Municipal Committee, Bhiwani reported in 1986 Municipality and Corporation

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CWP No. 7416 of 1994

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Cases, page 179 and M/s. Hindustan Syringes Private Ltd. vs. State of Haryana, AIR 1991 Punjab & Haryana 207. Reliance was also placed upon Commissioner of Income Tax, Madras vs. Mir Mohammad Ali, AIR 1964 SC 1693 to plead that parts of machinery in combination with each other would generate power by mechanical operation for effecting a definite and specific result namely creating the atmospheric condition and/or bring the desired temperature and accordingly, the impugned orders were justified. It was further alleged that the revision petitions were not maintainable under Section 100-A of the Act but still the matter was considered at length and was argued before the learned Secretary to the Government and the same was dismissed as there was no scope for interference and accordingly it was pleaded that the writ petition be dismissed.

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That from the above sequence of events, it would be clear that the whole issue basically just revolves around regarding the nature of goods and as to whether they are to be assessed as simple machinery or scientific equipment and accordingly octroi is to be levied on that basis. It is in such circumstances the impugned orders have to be examined with a view to see whether the authorities below have applied their mind to this aspect or not. The reasoning given by the Commissioner in his impugned order dated 22.09.1992 reads as under:-

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“4. I have heard both the parties and also perused the records carefully and come to the conclusion that the goods imported through the Customs department as machinery received under the Customs Act to that effect an affidavit was also filed. I do not think that imported goods

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should have been considered as in the shape of scientific goods or for its use for scientific purpose. The goods imported by the appellant are being used in the Chamber to control the air from environment, therefore, I do not think that there is any force in the arguments of Asstt. Distt. Attorney. Therefore, the octroi duty recovered by the Administration under serial No. 76 is illegal. Thus, the appeal filed by the appellant is accepted and it is ordered that octroi duty be recovered on the imported goods under serial No. 145. The amount excess recovered earlier be refunded to the appellant.

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Announced Sd/- Commissioner, Gurgaon Div. Dated:22.2.92 Camp Faridabad.”

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8. Similarly, the order passed by the Commissioner and Secretary to Government dated 05.10.1993 reads as under:-

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“This is a revision application under Section 100-A of the Haryana Municipal Act, 1973 filed by the Faridabad Complex Administration against an order dated 2.9.92 passed in appeal, by the Commissioner Gurgaon Division, Gurgaon, in connection with import of spare parts of Climatic Chamber on 22.2.1991.

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I have gone through the papers and heard both the parties and find no sufficient reasons to interfere with the orders of the Commissioner, Gurgaon Division.”

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9. A perusal of the above said orders goes on to show that both the authorities have not taken into consideration any of the documents

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placed before it to hold that whether the equipment which was imported into the municipal limits was scientific in nature or was a plain machinery and would fall under the residuary head for the purposes of assessment.

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Counsel for the petitioner has vehemently argued that before the Commissioner, the respondent no. 1 had described the climatic chamber as a sophisticated machinery to contend that it would not fall under Sr. No. 76 vide which the octroi would have to be levied on the basis of value and it would fall under Sr. No. 100 or Sr. No. 145. This exercise of assessing the type of equipment was to be done by the authorities but neither the appellate authority nor the revisional authority has given any reasons.

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On the contrary, counsel for respondent no. 1 contended that since the customs have assessed the goods as machines under Custom Tariff No. 84.79, therefore, the goods should have been assessed under Sr. No. 100 or 145 and supports the order of the authorities below. 12. The orders under challenge have already been reproduced above. A perusal of the orders goes on to show that both the orders passed by the Commissioner, Faridabad and the revisional authority are berefit of any reasons. The Hon'ble Apex Court has time and again said that a reasoned order is necessary when the authorities are applying its mind to show that the decision taken is on proper application of mind and whether the orders can be sustained. Reliance can be safely placed upon the judgment of the Apex Court rendered in Harbhajan Singh Dhalla vs. Union of India, AIR 1987 SC 9 wherein it was held that while the observance of the principles of nature justice are required but there should be reasons which should support the decision even if it is an administrative order. The relevant paragraph reads as under:-

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“26. In this case there is no provision of any appeal from the order of the Central Government in either granting or refusing to grant sanction under section 86 of the Code. This sanction or lack of sanction may, however, be questioned in the appropriate proceedings in court but inasmuch as there is no provision of appeal, it is necessary that there should be an objective evaluation and examination by the appropriate authority of relevant and material factors in exercising its jurisdiction under section 86 by the Central Government. There is an implicit requirement of observance of the principles of natural justice and also the implicit requirement that decision must be expressed in such a manner that reasons can be spelled out from such decision. Though this is an administrative order in a case of this nature, there should be reasons. If the administrative authorities are enjoined to decide the rights of the parties, it is essential that such administrative authority should accord fair and proper hearing to the person to be affected by the order and give sufficiently clear and explicit reasons. Such reasons must be on relevant material factors objectively considered- There is no claim of any privilege that disclosure of reasons would undermine the political or national interest of the country.

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Similar view has been taken in Union of India and others vs.

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Jai Prakash Singh and another, AIR 2007 SC 1363. Relevant paras read

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as under:-

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“ 7. Reasons introduce clarity in an order. On

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plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons has rendered the High Court's judgment not sustainable.

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8. Even in respect of administrative orders Lord Denning M.R. in Breen v. Amalgamated Engineering Union 1971 (1) All E.R. 1148 observed "The giving of reasons is one of the fundamentals of good administration". In Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 LCR 120 it was observed: "Failure to give reasons amounts to denial of justice". Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at". Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a.

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speaking out. The "inscrutable face of a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance.

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Both the orders which are under challenge do not give any reasons as to how the goods imported fall under Sr. No. 145 and why the assessment under Sr. No. 76 was illegal. The Assessing Authority has specifically noticed that the Corporation has not produced before it the purchase order which would describe the machinery in question. The revisional authority has also not given any reason or even dealt with the subsequent revision of appellant regarding the subsequent spare parts which were imported for the climatic chamber which further goes on to show that there has been total non-application of mind by the authorities below. The respondent itself, in its written statement, has specifically averred that written submissions were filed before the revisional authority and the detailed submissions regarding factual and legal submissions were made explicit but the perusal of the order of the revisional authority does not show any such discussion. The Illustrated Dictionary of Electronics, 3^rd Edition by Rufus P. Turner & Stan Gibilisco describes the climatic chamber as under:-

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“ Climatic Chamber A test chamber which provides

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accurately controlled temperatures (and sometimes humidities and pressures as well) for evaluating the performance of electronic components and circuits. Also called environmental test chamber.”

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Admittedly, the chamber is used for the purposes of testing the fuel efficiency of vehicles under various different atmospheric conditions wherein temperatures vary from minus 30 degrees to plus 50 degrees and

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wind conditions can also be varied alongwith the humidity factor.

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In such circumstances, it cannot be prima facie accepted that a climatic chamber is not a scientific instrument and only because it had come in a tumble down condition, it could not be classified as simple machinery. The submission of the counsel of respondent no. 1 that the Customs Authorities had treated it as machinery under the Customs Tariff Act, 1975, would also have to be examined by the authorities, which exercise has not been carried out. The judgments relied upon by the counsel for the respondents have also not been taken into consideration by the authorities below and the authorities were under bounden duty to take into consideration the said binding precedents and take a decision on the said issue after applying their mind as to whether the said decisions were applicable to the facts and circumstances of the case but they have failed to carry out this exercise.

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In such circumstances, in the absence of reasons, the order dated 22.09.1992 (Annexure P-6) passed by respondent no. 2 and the order dated 05.10.1993 (Annexure P-9) passed by respondent no. 3 cannot be upheld and accordingly have to be quashed. The petition is accordingly allowed. The Commissioner, Gurgaon Division, Gurgaon is directed to decide the appeal filed by respondent no. 1 by passing a reasoned order after taking into consideration all material which is placed before it and come to a conclusion as to under which entry the goods would fall. Since the issue in question is relating to the year 1992, the Appellate Authority shall decide the appeal within a period of three months from the date of receipt of certified copy of the judgment. Anything said hereunder is not an expression on merits and the authorities shall consider the issue in its

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correct perspective after taking into consideration all the material placed

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before it.

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06.07.2012 (G.S. Sandhawalia) shivani Judge

Faridabad Complex Admn. Faridabad v. M/S I.O.C.L. and Anr.

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Faridabad Complex Admn. Faridabad v. M/S I.O.C.L. and Anr.

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