14th May, 2015: The Supreme Court of India : Dharampal Satyapal Ltd Vs Dy Commr of C.Ex.:
The Hon’ble Supreme Court carves out certain exceptional situations where even if the principles of natural justice have been violated, remitting the case back to the authority to issue a notice first before recovery will not serve any useful purpose.
This case involves the withdrawal of area exemption (North East Region) for certain tobacco products granted in Nov 1999. An amendment through Finance Act in 2003, also withdrew the exemption retroactively. The retroactive amendment was challenged. But the Supreme Court upheld it as constitutionally validity. This resulted in a demand of Rs 29.4 mil raised allegedly without issuing a notice and came to be is challenged as violating the principles of natural justice. The entire case of the appellant is that a demand has to be preceded by a notice and therefore a fresh notice should be issued before a recovery.
Supreme Court’s reasoning and conclusions:
The Hon’ble Supreme Court citing extensively has concluded that :
“non- issuance of notice before sending communication dated June 23, 2003 has not resulted in any prejudice to the appellant and it may not be feasible to direct the respondents to take fresh action after issuing notice as that would be a mere formality.”
The reasoning provided by the Apex Court is that even if it is assumed that there was an infraction of the principles of natural justice, no useful purpose will be served by sending the case back for issuing a fresh notice as it would be a mere formality. Relevant excerpts for the judgment read as under :
"there may be situations wherein for some reason – perhaps because the evidence against the individual is thought to be utterly compelling – it is felt that a fair hearing 'would make no difference' – meaning that a hearing would not change the ultimate conclusion reached by the decision-maker – then no legal duty to supply a hearing arises. Such an approach was endorsed by Lord Wilberforce in Malloch v. Aberdeen Corporation, who said that a 'breach of procedure...cannot give (rise to) a remedy in the courts, unless behind it there is something of substance which has been lost by the failure. The court dos not act in vain'. Relying on these comments, Brandon LJ opined in Cinnamond v. British Airports Authority that 'no one can complain of not being given an opportunity to make representations if such an opportunity would have availed him nothing'. In such situations, fair procedures appear to serve no purpose since 'right' result can be secured without according such treatment to the individual. In this behalf, we need to notice one other exception which has been carved out to the aforesaid principle by the Courts. Even if it is found by the Court that there is a violation of principles of natural justice, the Courts have held that it may not be necessary to strike down the action and refer the matter back to the authorities to take fresh decision after complying with the procedural requirement in those cases where non-grant of hearing has not caused any prejudice to the person against whom the action is taken."
"Therefore, every violation of a facet of natural justice may not lead to the conclusion that order passed is always null and void. The validity of the order has to be decided on the touchstone of 'prejudice'. The ultimate test is always the same, viz., the test of prejudice or the test of fair hearing."
“Keeping in view the aforesaid principles in mind, even when we find that there is an infraction of principles of natural justice, we have to address a further question as to whether any purpose would be served in remitting the case to the authority to make fresh demand of amount recoverable, only after issuing notice to show cause to the appellant. In the facts of the present case, we find that such an exercise would be totally futile having regard to the law laid down by this Court in R.C. Tobacco (supra)."
"Therefore, on the facts of this case, we are of the opinion that non- issuance of notice before sending communication dated June 23, 2003 has not resulted in any prejudice to the appellant and it may not be feasible to direct the respondents to take fresh action after issuing notice as that would be a mere formality."