The Allahabad High Court quashed penalty order imposed by the Commercial Tax Officer and observed that the adherence to the show cause notice ( SCN ) is the fundamental safeguard against arbitrary exercises of power.
The writ petition was filed under Article 226 of the Constitution of India wherein the petitioner is aggrieved by the order dated August 20, 2019, passed in appeal by the Respondent No. 2/Additional Commissioner Grade-II ( Appeal ), Commercial/State Tax and the penalty order dated July 24, 2018, passed by the Respondent No. 3/Assistant Commissioner, State Tax/Commercial Tax.
Upon examination of the order dated August 20, 2019, passed in appeal, it appeared that the plea that had been taken in the show cause notice at the time of detention, that is, that the vehicle was travelling to a destination not mentioned in the invoice, was accepted in appeal by the authorities. However, the appellate authority has imposed penalty on a different ground, that is, that the e-Way Bill had expired though the same was accompanied with goods.
A Single Bench of Justice Shekhar B. Saraf observed that “The issuance of a show cause notice represents a pivotal juncture in administrative proceedings, demarcating the boundaries within which any authority can exercise its powers. By adhering to the confines of the notice, authorities uphold principles of fairness, accountability, procedural regularity, and legal certainty essential for the legitimacy and effectiveness of governance systems. Any attempt to transcend these limits not only violates the rights of the individuals or entities involved but also undermines the rule of law and public trust in the institutions tasked with upholding it.”
The Court held that adhering to the show cause notice is not merely a procedural formality, but a mandatory requirement, beyond the scope of which, no action can be taken. Adherence to the show cause notice is a fundamental safeguard against arbitrary exercises of power, ensuring that authority remains tethered to the principles of justice and the rule of law.
“In the present case, it is evident that the authorities have travelled beyond reasons provided in the show cause notice and imposed penalty on the ground that was never provided to the petitioner in the show cause notice. The petitioner never had any opportunity to defend itself on the said ground, and therefore, the show cause notice is directly in teeth of the principles of natural justice, namely, the principle of audi alteram partem. Therefore, the impugned orders in the instant case, cannot be allowed to stand. Accordingly, a writ of certiorari is issued against the impugned orders dated August 20, 2019 and July 24, 2018. These orders are hereby quashed and set aside” the Court concluded.
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