Jurispruden tiol – Tomorrow's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.General

Adjudication without hearing - exercise of jurisdiction in a wrongful manner cannot result in a nullity - it is an illegality, capable of being cured in a duly constituted legal proceedings: Supreme Court

All irregular or erroneous or even illegal orders cannot be held to be null and void as there is a fine distinction between the orders which are null and void and orders which are irregular, wrong or illegal. Where an authority making order lacks inherent jurisdiction, such order would be without jurisdiction, null, non est and void ab initio as defect of jurisdiction of an authority goes to the root of the matter and strikes at its very authority to pass any order and such a defect cannot be cured even by consent of the parties. However, exercise of jurisdiction in a wrongful manner cannot result in a nullity - it is an illegality, capable of being cured in a duly constituted legal proceedings.

Proceedings for assessment under a fiscal statute are not in the nature of judicial proceedings,

like proceedings in a suit inasmuch as the assessing officer does not adjudicate on a lis between an assessee and the State and, therefore, the law on the issue laid down under the civil law may not stricto sensu apply to assessment proceedings.

General

Order without reason - Failure to give reasons amounts to denial of justice – matter remanded: Supreme Court

MANY Adjudication Authorities feel that they are slightly higher than the Supreme Court and are often too lazy to write speaking orders. The Supreme Court was not amused.

Why a ‘speaking order'?

1. The giving of reasons is one of the fundamentals of good administration.

2. Failure to give reasons amounts to denial of justice.

3. Reasons are live links between the mind of the decision-taker to the controversy in question and the decision or conclusion arrived at.

4. Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision.

5. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before court.

6. Another rationale is that the affected party can know why the decision has gone against him.

7. One of the salutary requirements of natural justice is spelling out reasons for the order made; in other words, a speaking-out. The "inscrutable face of the sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance.

Income Tax

Assessee - 100% subsidiary of UK-based Co - Conversion charges paid for acquiring goodwill of popular brand from another subsidiary of same parent Co - Such a payment not mandated by agreement was for actually hiring production facilities - to be treated as capital expenditure: ITAT

THE dispute is: revenue vs capital expenditure and revenue receipt vs capital receipt. The three players involved in the case are the UK-based parent company and two of its Indian subsidiaries in the healthcare sector. An easy guess, indeed! The parent is M/s Glaxo Smith Kline Plc. And the two subsidiaries are Glaxo Smith Kline Consumers Healthcare Limited and M/s Smith Kline Beecham Asia Ltd. And the entire taxing battle revolves around the fact involving the disallowance of Rs 4.5 Cr payment made for obtaining the right to manufacture and sell of brand name 'ENO' which is a popular antidote for acidity. Although the final verdict has gone against the assessee but let's go through the rigmarole of facts to understand the ratio of this decision.

See our columns Tomorrow for the judgements