High Court Quashes Excise Orders Passed in Violation of Prior Directions; Remands Case to Excise Commissioner

The petitioner, a registered company engaged in the manufacture and bottling of liquor, approached the High Court assailing the orders dated 04.05.2022 and 07.11.2023 passed by the Excise authorities. It was argued that this was the second round of litigation since, in an earlier case, the Court had specifically directed the respondents to provide the report of inspection and other materials upon which they relied prior to any further action being taken. The petitioner alleged that the authorities did not follow those instructions in letter and spirit, but rather issued a new notice with only a tabulated questionnaire without giving any of the documents mentioned in the inspection report. It was further argued that since the petitioner had not been given access to the material used against it, there was a clear violation of the earlier Court order and the principles of natural justice, as the petitioner was deprived of the opportunity to submit an effective rebuttal.

The respondents, through learned counsel, defended the initiation of proceedings on the ground that the petitioner was involved in the transportation of liquor without payment of excise duty, as revealed during a joint survey. It was submitted that the statement of the vehicle driver indicated malpractices committed by the petitioner.

Issue Raised: Whether the Excise authorities could proceed with adjudication and sustain the impugned orders when the inspection report and materials relied upon were not furnished to the petitioner despite the earlier judicial direction mandating such disclosure.

HC’s Ruling: The Court directed that the previous direction given in Writ Tax No. 738/2021, dated 05.01.2022, ordering the Excise Department to make available the materials upon which reliance was placed, had not been followed. It noted that the respondent authorities were obligated to make available all the materials sought to be used against the petitioner to allow it to submit an effective rebuttal before any prejudicial order was passed. The Bench emphasised that carrying on without furnishing such documents was against the doctrine of natural justice and contempt of court order. The record showed that only a questionnaire had been furnished to the petitioner and not copies of the inspection report, statements, or other documents on which the show-cause proceedings were initiated. Lacking these documents, the impugned orders could not be upheld in law. Thus, the High Court set aside the orders of 07.11.2023 and 04.05.2022 and referred the case back to the Excise Commissioner for reconsideration.

It ordered the Excise Commissioner to furnish each document or material sought to be used against the petitioner and receive receipt acknowledgement within fifteen days of production of the certified copy of this order. The petitioner shall then be allowed to file its reply or rebuttal within twenty days thereafter. The Court also ordered that a reasoned and speaking order has to be given after affording an opportunity of personal hearing promptly and preferably within a period of three months from the date of filing of the reply. The Court made it clear that if the proposed material is not furnished to the petitioner as directed, the proceedings shall be deemed to have been dropped. Therefore, the writ petition was allowed.

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