R. Basant, J.:— Is the decision contemplated under S. 59A of the Kerala General Sales Tax Act an institutional decision or a personal one? Can the hearing under S. 59A be held by someone other than the Commissioner of Commercial taxes and the decision be rendered by the Commissioner? These questions of importance arise for consideration in this appeal.
2. The fact scenario is simple. S.R.O No. 1729/93 deals with reduction in rate of tax to industrial units. Small, medium and large scale industries are eligible for certain concessions. This notification was later modified as per S.R.O.170/95. C1.6A was added to the notification. We extract below the said C1.6A
“6A. In the case oflarge scale industrial units started production after 23rd September 1991 and which purchase coconut or copra for producing coconut oil and coconut oil cake within the State, there shall be a reduction in respect of the tax payable by such units under the Kerala General Sales Tax Act, 1963 on the turnover of coconut or copra purchased and used for production of coconut oil and coconut oil cake from 3% to 1% for a period of seven years from the date of commencement of commercial production subject to the condition that the reduction in purchase tax shall be applicable to such quantity of oil produced by them that is sold outside the State of Kerala and that the total of such concession availed of by a unit shall not exceed 100% of the fixed capital investment of the unit.”
(emphasis supplied)
3. The appellant is a large scale industrial unit using coconut/copra as raw material. Coconut/copra is consumed and oil and oil cakes are produced. The oil is sold as such within the State and outside. Some of the oil is sent to the neighbouring State by branch transfer. Some portion of such oil is not sold as such but is used as raw material for manufacture of some other products by the appellant himself. In assessment proceedings the Assessing Officer took the stand that the benefit of C1.6A extracted above will be available only if the oil is sold outside the State of Kerala. The benefit will not be available if there is only a transfer of such oil to a branch for the purpose of such oil being consumed in the production of another product in the neighbouring State. The appellant in these circumstances wanted a decision to be rendered by the Commissioner of Commercial Taxes under S. 59A of the Kerala General Sales Tax Act.
4. Notice of hearing was issued. The appellant's representative appeared at the hearing. The hearing was not conducted by the Commissioner of Commercial Taxes. Instead, a subordinate of his heard the representative of the appellant. The representative took part in the hearing without demur. Two statements/argument notes explaining the contentions of the appellant were filed before the Officer who conducted the hearing.
5. The officer who conducted the hearing along with his notes submitted the draft order for consideration of the Commissioner of Commercial Taxes. The Commissioner of Commercial Taxes approved the draft order and proceeded to pass the impugned order under S. 59A of the Kerala General Sales Tax Act. It was held that the benefit of Cl. 6A extracted above is not available for the appellant in respect of such quantities of oil which are transferred to the branch of the appellant outside the State and used up for manufacture of other products. Unless the sale of such oil takes place outside the State, the benefit of Cl. 6A was not available, it was held.
6. The learned counsel for the appellant and the learned Government Pleader (Taxes) have advanced their arguments. The following points arise for consideration:-
i. Whether there has been violation of principles of natural justice as embodied in R. 59A by the procedure followed by the Commissioner of Commercial Taxes in leaving the hearing to a subordinate official?
ii Whether the impugned order warrants interference on merits?
7. It is one of the accepted fundamental rules of natural justice that “the one who decides must hear”. The salutary rule of natural justice of audi alterum partem will be violated in substance and content if the person who hears does not render the decision. It is possible to conclude that this is not an invariable and rigid rule of universal application. It is possible to And circumstances where this rule cannot be applied rigidly and with rigour. In an institutional hearing it is not essential that the person who hears must also decide. Our attention has been drawn to various decisions having a bearing on this question. Our attention has been specifically drawn to the decisions reported in Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation (AIR 1959 SC 308), Thomas Mathew v. Secretary to Government (1999 (3) KLT 275), Katherine v. Secretary to Government (2002 (1) KLT 882) and Union of India v. Andrew (1996 (1) KLT 133). A valid institutional decision after institutional hearing may not be impossible under the Indian Law also. In that view of the matter it may be possible in an appropriate case for a body like the Government, board, department or a specified head of a department to render an institutional decision after institutional hearing (and not persona] hearing) without offending the rule of audi alterum partem. But the nature and quality of the hearing contemplated and the nature and texture of the decision to be rendered must be carefully and alertly considered to answer the question whether in the given case the hearing/decision contemplated is an institutional one where the golden rule that the one who hears must also render the decision, can be deviated from.
8. It is in these circumstances essential that we consider the statutory provision. S.59A(1) enumerates the nature of disputes that are to be resolved under S.59A We extract S.59A(1) below:-
“59A. Power of Commissioner of Commercial Taxes to issue clarification. - (l)If any dispute arises, otherwise than in a proceedings before any appellate or revisional authority or in any court or Tribunal, as to whether, for the purpose of this Act,-
(a) any person is a dealer; or
(b any. transaction is a sale; or
(c) any particular dealer is required to be registered; or
(d) any tax is payable in respect of any sale or purchase, or if tax is payable, the point and the rate thereof; or
(e) any activity carried out in any goods amounts to or results in the manufacture of goods;
such dispute shall be decided by the Commissioner of Commercial taxes on application by a dealer or any other person.”
9. Disputes which partake the character of a lis between the parties will necessarily have to be resolved under S.59A(1). Whether any person is a dealer, whether any transaction is a sale, whether any particular dealer is required to be registered, whether any tax is liable to be paid in respect of any purchase, what if any is the tax payable, the point and rate thereof, whether any activity carried out in any goods amounts to or results in the manufacture of goods are all disputes falling within the ambit of S. 59A(1). The nature of disputes clearly have the colour of a lis between an individual and the authorities. It is not only general questions relating to interpretation of the statutory provisions, rules and notifications that are likely to arise for consideration in proceedings under S.59A The indications certainly suggest that the decisions contemplated under S.59A are not merely institutional ones. In addition to cold interpretations of the statutory provisions, rule and notifications, live questions of sifting, weighing and appreciation of evidence tendered will have to be resolved. Ascertainment of facts as also interpretation of statute, rule and notifications and application of such interpretation to the facts so ascertained will have to be done by the authority under S.59A It is not a decision exclusively of the head or the heart It has to be one of both.
10. We now come to sub-s. 2 of S. 59A which deals with the reasonable opportunity which must be conceded to the parties and the nature of hearing to which they are entitled, S. 59A(2) reads as follows:-
“(2) The Commissioner of Commercial Taxes shall decide the question after giving the parties to the dispute a reasonable opportunity to put forward their case and produce evidence and after considering such evidence and hearing the parties.”
(emphasis supplied)
11. S.59A(2) insists that the Commissioner of Commercial Taxes must decide the question after giving the parties to the dispute a reasonable opportunity to put forward their case. It is further asserted that an opportunity must be given to the parties to produce evidence also in support of their respective assertions. It is made obligatory that such evidence must be considered by the Commissioner of Commercial Taxes. After insisting that the parties must be given a reasonable opportunity to put forward their case and to produce evidence, it is further made clear that the parties must be heard also. Definitely therefore what is contemplated is a personal hearing before the specified authority. The rule of audi alterem partem is woven into the statutory provision in S.59A(2) and made explicit. It is also of crucial significance that the hearing is to be held that the decision is to be rendered not by a body like the Government or the Board of Revenue. The decision is to be rendered by the Commissioner of Commercial Taxes, a specified named official/authority. This again, according to us, does point to the fact that the hearing and the decision contemplated under S.59A are not institutional but personal. It is also of crucial significance that there are no statutory rules or rule of procedure which entitle or enable the Commissioner of Commercial Taxes to permit a subordinate officer of his to conduct the hearing.
12. The argument that the Commissioner of Commercial Taxes is not a court and that he has other functions-administrative and supervisory to perform under other provisions of the statute cannot militate against the clear implied mandate of the statutory stipulations in S. 59A(1) and (2) that the hearing and decision contemplated are personal and not institutional ones. The said conclusion appears to be inevitable from the language of S. 59A(1) and (2) as also from, the absence of statutory rules or rules of procedure permitting or authorising such a course.
13. The argument that the Commissioner of Commercial Taxes may not find the time to hear and dispose of all cases cannot also be reckoned as sufficient to conclude that the hearing/decision contemplated under S. 59A is institutional and not personal. Sufficient number of Commissioners can be appointed if the volume of work warrants or the Joint Commissioners etc. can be invested with authority under law to hear and decide disputes under S.59A
14. It follows from the above discussion that the Commissioner of Commercial Taxes erred in abdicating his duty to hear and in proceeding to sign the order in a matter in which he had not recognised the right of the party to be heard before him personally under S. 59A(2). The impugned order does in these circumstances warrant interference.
15. In view of our above conclusion, we are not proceeding to consider the latter question raised before us. We are of the opinion that the question deserves to be decided by the Commissioner of Commercial Taxes after following the procedure prescribed under S.59A(2) scrupulously. The mere fact that the appellant has been given an opportunity to be heard at the appellate stage cannot according to us cure the | material defect in the impugned order passed by the Commissioner of Commercial Taxes under S.59A The question raised deserve to be decided by the Commissioner afresh with the advantage of his hearing the appellant personally as contemplated under S.59A Nor are we prepared to accept the contention of the State that the alleged infraction can be ignored for the reason that the decision does not suffer from any vice and the decision could not have been otherwise. The contention that the decision could not have been rendered otherwise and that in these circumstances the alleged infraction should not persuade us to set aside the impugned order cannot be accepted. We repeat that the matter deserves to be considered in detail and resolved by the Commissioner.
16. 15.In the result
(a) This appeal is allowed. The impugned order is set aside.
(b) The Commissioner of Commercial Taxes shall dispose of the matter afresh in accordance with the provisions of S .59A of the Kerala General Sales Tax Act.
(c) The parties are directed to suffer their respective costs.