MIS. DHARAMPAL SATYAPAL LTD. versus DEPUTY COMMISSIONER OF CENTRAL EXCISE, GAUHATI & ORS.

Citation: [2015] 6 S.C.R. 437 · Decided: 14-05-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Dismissed

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Judgment (excerpt)

[2015] 6 S.C.R. 437 
MIS. DHARAMPAL SATYAPAL LTD. 
v. 
DEPUTY COMMISSIONER OF CENTRAL EXCISE, 
GAUHATI & ORS. 
(Civil Appeal Nos.4458-4459 of 2015) 
MAY 14, 2015 
A 
B 
[A.K. SIKRI AND ROHINTON FALi NARIMAN, JJ.] 
Central Excise Act, 1944 - s. 11A - Finance Act, 2003 ~ s. c 
154- Initiation of recovery proceedings without show cause 
notice - Exemption of excise duty for certain tobacco 
products to new industrial units in North-Eastern region -
Said exemption withdrawn - Withdrawal challenged by 
assessee - Subsequently, vide s. 154, withdrawal of benefit D 
effected from retrospective effect - In R. C. Tobacco's case 
this Court upheld the constitutional validity of s. 154 -
Thereafter, recovery order passed by the Department against 
assessee for the benefit drawn by the assessee - Said order 
passed without issuing notice - Challenge to, on the ground E 
of violation of principles of natural justice - Held: Every 
violation of a facet of natural justice may not lead to the 
conclusion that order passed is always null and void- Validity 
of the order has to be decided on the touchstone of 'prejudice' 
- Ultimate test is always the same, viz., the test of prejudice F 
or the test of fair hearing- On facts, issuance of notice would 
be an empty formality and the case stands covered by 
'useless formality theory' - Thus, non-issuance of notice 
before sending communication did not result in any prejudice G 
to assessee and it may not be feasible to direct the 
Department to take fresh action after issuing notice as that 
would be a mere formality. 
Natural justice - Concept and doctrine of - ExplaiRed and 
discussed. 
H 
437 
438 
SUPREME COURT REPORTS 
[2015] 6 S.C.R. 
A 
Dismissing the appeals, the Court 
HELD: 1.1 The principles of natural justice have 
sound jurisprudential basis. Since the function of the 
judicial and quasi-judicial authorities is to secure justice 
B with fairness, these principles provide great humanising 
factor intended to invest law with fairness to secure 
justice and to prevent miscarriage of justice. The 
principles are extended even to those who have to take 
administrative decision and who are not necessarily 
C discharging judicial or quasi-judicial functions. The 
principles of natural justice are grounded in procedural 
fairness which ensures taking of correct decision and 
procedural fairness is fundamentally an instrumental 
good, in the sense that procedure should be designed 
D to ensure accurate or appropriate outcomes. In fact, 
procedural fairness is valuable in both instrumental and 
non-instrumental terms. It is on the said jurisprudential 
premise that the fundamental principles of natural 
justice, including audi alteram partem, have developed. 
E It is for this reason that the courts have consistently 
insisted that such procedural fairness has to be adhered 
to before a decision is made and infraction thereof has 
led to the quashing of decisions taken. In many statutes, 
F provisions are made ensuring that a notice is given to a 
person against whom an order is likely to be passed 
before a decision is made, but there may be instances 
where though an authority is vested with the powers to 
pass such orders, which affect the liberty or property of 
G an individual but the statute may not contain a provision 
for prior hearing. But what is important to be noted is 
that the applicability of principles of natural justice is 
not dependent upon any statutory provision. The 
principle has to be mandatorily applied irrespective of 
H the fact as to whether there is any such statutory 
MIS. DHARAMPAL SATYAPAL LTD. v. DY. COMMNR. OF 439 
CENTRAL EXCISE, GAUHATI 
provision or not. [Para 22, 24, 25] [455-D-F; 457-H; 458-
A 
A-F] 
1.2 It becomes clear that the opportunity to 
provide hearing before making any decision was 
considered to be a basic requirement in the Court B 
proceeding. Later on, this principle was applied to other 
quasi-judicial authorities and other tribunals and 
ultimately it is now clearly laid down that even in the 
administrative actions, where the decision of the 
authority may result in civil consequences, a hearing C 
before taking a decision is necessary. Therefore, there 
was a requirement of issuance of show-cause notice by 
the Deputy Commissioner before passing the order of 
recovery, irrespective of the fact whether s. 11A of the 
Act is attracted in the instant case or not. [Paras 27, 29] D 
[462-8-C; 463-F] 
1.3 Even if it is found by the Cou

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