Important Judgment: Penalty u/s 29 (8), not w/o hearing opportunity

23-Feb-2012

“Penalty u/s 29 (8) , not without hearing opportunity ”

“Penalty u/s 29 (8) , not without hearing opportunity ”

In case of Sanjay Dresses (WP No. 1705 of 2010 dated 6-8-2010) Hon’ble Bombay High Court held that penalty u/s 29 (8) of MVAT Act, 2002 for delay in filing return cannot be levied without giving hearing opportunity and reasoned order is required to be passed. However, in spite of above, the department understood the said order as relating to only M/s Sanjay Dresses and in other cases passed the orders without hearing opportunity. A Writ Petition was filed in case of M/s. Vasu Enterprises (W. P. No. 1451 of 2011). Hon’ble High Court has now decided the said issue; vide judgment dated 8-9-2011. The judgment is reproduced below for ready reference.


“IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARYY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 1451 OF 2011.”


Mukesh R. Bhayani

Proprietor of M/s Vasu Enterprises         …………Petitioner

Vs.

The State of Maharashtra & Ors.         …………Respondents

Mr. C.B. Thakar for the Petitioner.

Mr. Vinay A. Sonpal, A. Panel Counsel for the respondents.

CORAM: DR D.Y.CHANDRACHUD AND
A.A. SAYED, JJ
DATE: 8 SEPTEMBER, 2011.


P.C.

  1. The attention of the court has been drawn to an order passed by a Division Bench of this Court on 6 October, 2010 in the case of M/s. Sanjay Dresses vs. State of Maharashtra (Writ Petition No. 1705 of 2010).

    Counsel appearing on behalf of the petitioner and the respondents state that this petition would also be governed by the same order, which is as follows:

    “Mr. Sonpal, during the course of hearing, urged that the impugned order levying penalty be set aside and the matter be remitted back for consideration afresh so as to enable the department to comply with the requirement of principles of natural justice. He further submits that fresh notice will be issued to the petitioner indicating the grounds on which the department proposes to levy penalty. That the petitioner would be given an opportunity to reply the same and after considering the reply and affording personal hearing to the petitioner a reasoned order would be passed dealing with all the contentions raised by the petitioner.

    In the above view of the submission, learned counsel for the petitioner seeks permission to withdraw this petition reserving his right to challenge adverse order on the grounds as may be available in law including the grounds raised in this petition. All contentions of the parties on merits are kept open.”

  2. In order to obviate further litigation on the same issue, we would expect the department to comply with the statement which has been made in the aforesaid terms in other cases involving the same issue, pertaining to the imposition of a penalty under section 29(8) of the MVAT Act, 2002 involved in the present case.

  3. Accordingly, we dispose of the Petition.

(A.A. SAYED, J.)                                     (DR. D.Y.CHANDRACHUD, J.)

Now Hon’ble High Court has made clear that hearing is required in all the cases involving penalty u/s 29 (8).

In the cases where already orders are passed without hearing opportunity, the aggrieved dealers can file Rectification Applications in Form 307 and ask for withdrawal of the orders, being not in accordance with law as laid down by Hon’ ble High Court.

Shri Kishore Lulla, Advocate and other members from outstation actively participated in pursing the matter once again.



Judgment for Reference

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 1705 OF 2010

M/s. Sanjay Dresses         .... (Petitioner)
V/s.
The State of Maharashtra         .... (Respondent)

C.B.Thakar for the petitioner

V.A.Sonpal, `A’ Panel Counsel for the respondent

CORAM : V.C.DAGA AND S.J.KATHAWALLA, JJ.

DATED : 6th August 2010.

P.C. :

Perused petition.

Heard learned counsel for the petitioner and Mr. Sonpal, learned counsel for the respondent.

  1. Mr.Sonpal, during the course of hearing, urged that the impugned order levying penalty be set aside and the matter be remitted back for consideration afresh so as to enable the department to comply with the requirement of principles of natural justice. He further submits that fresh notice will be issued to the petitioner indicating the grounds on which the department proposes to levy penalty. That the petitioner would be given an opportunity to reply the same and after considering the reply and affording personal hearing to the petitioner a reasoned order would be passed dealing with all the contentions raised by the petitioner.

  2. In the above view of the submission, learned counsel for the petitioner seeks permission to withdraw this petition reserving his right to challenge adverse order on the grounds as may be available in law including the grounds raised in this petition. All contentions of the parties on merits are kept open.

  3. Petition stands disposed of as withdrawn in terms of this order with no order as to cots.p



(S.J.KATHAWALLA, J.)                                    (V.C.DAGA J.)



Therefore even before levying penalty u/s. 29(8) hearing is required to be given. In case of orders already passed the dealers can file Form 307 (Rectification) and ask for hearing. The other challenges are kept open to be dealt with in appropriate case.

It can further be said that though the penalty is interpreted as mandatory, it cannot be so. Reference can be made to the judgment in case of Rajesh Metal Manufacturing Co. (S. A. No.7 of 2007 Dt.12-10-07) wherein the quantum of penalty u/s 29(8) is reduced in spite of interpretation of the department that the quantum is a fixed amount. This shows that the authorities, including appellate authorities, have power to reduce and in deserving cases not to levy, even if the section is mandatory. Therefore, the dealers will be fully entitled to plead there Cases for non-levy of penalty.

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