Gujarat Gas Co. Ltd v. Jt. Commissioner Of Income - Tax (Assesment

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 3138 of 1999 For Approval and Signature: Hon'ble MR.JUSTICE B.C.PATEL and Hon'ble MR.JUSTICE K.M.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- GUJARAT GAS CO. LTD.Versus JT. COMMISSIONER OF INCOME - TAX (ASSESMENT) -------------------------------------------------------------- Appearance: MR JP SHAH for Petitioner MR MANISH R BHATT for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE B.C.PATEL and MR.JUSTICE K.M.MEHTA Date of decision: 18/04/2000 C.A.V. JUDGEMENT (Per Patel, J.). 1.�The petitioner-Gujarat Gas Co is a Public Limited Company having its registered office at Ahmedabad. In the present matter the petitioner has challenged the order of assessment dated 31.3.1999 passed by the Joint Commissioner of Income Tax (Assessment) Special Range-8, Ahmedabad.The Assessing Officer after relying upon the circular No.549, para 5.12 dated 31.10.1989 issued by the Central Board of Direct Taxes(hereinafter referred to as "CBDT") has held that the petitioner's total income is Rs.2,11,81,620/-, however, as the assessee has filed return of Rs.5,13,86,320/- he shall have to pay the tax on the returnable income in view of the instructions contained in the aforesaid circular. The petitioner has prayed for writ of certiorari quashing and setting the said assessment order and also prayed for writ of mandamus for refund of Rs.1,69,80,360/- with interest at the rate of 15% p.a. from 1.4.99 till the date of refund. FACTS: 2.�In this case, we are concerned with the assessment year 1996-97. The petitioner has filed return on 30.11.1996 showing taxable income of Rs.5,13,86,320/-. The return was processed under section 143(1)(a) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") after making some primafacie adjustment on 7.10.97. Thereafter, notices under sections 143(1) and 142(2) of the Act came to be issued and the petitioner came to be assessed under section 143(3) of the Act by order, dated 31.3.1999. The Assessing Officer by his order has held that though the total income of the assessee was Rs.2,11,81,620/-, the assessee was liable to pay tax on the total income of Rs.5,13,86,320/- on the ground that in accordance with circular No.549, para 5.12 dated 31.10.1989 the assessed income shall not be less than returned income. STATUTORY BACKGROUND: 3.�Before we appreciate the contentions raised, we take into consideration the relevant statutory provisions in this behalf: Section 119 of the Act reads as follows: "119. Instructions to Subordinate Authorities: (1)�The Board may, from time to time, issue such orders, instructions and directions to other Income Tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: �Provided that no such orders, instructions or directions shall be issued-- (a)�so as to require any income tax authority returned income. STATUTORY BACKGROUND: 3.�Before we appreciate the contentions raised, we take into consideration the relevant statutory provisions in this behalf: Section 119 of the Act reads as follows: "119. Instructions to Subordinate Authorities: (1)�The Board may, from time to time, issue such orders, instructions and directions to other Income Tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: �Provided that no such orders, instructions or directions shall be issued-- (a)�so as to require any income tax authority to make a particular assessment or to dispose off a particular case in a particular manner; or (b)�so as to interfere with the discretion of the Deputy Commissioner (appeals) or the Commissioner (Appeals) in the exercise of his appellate functions. (2)�Without prejudice to the generality of the foregoing power,-- (a)�the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time,(whether by way of relaxation of any of the provisions of sections 143, 144, 147, 148, 154, 155, 210, 271 and 273 or otherwise) general or special orders in respect of any class of incomes or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other income tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of the opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information; (b)�the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases by general or special order, authorise any income tax authority, not being a Deputy Commissioner (Appeals) or Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law". �Section 143 provides for "Assessment" 3(A)�Sections 143(2), (3) and (4) of the Act read as under: Section 143(1) ... ... (2)�Where a return has been made under section 139, or in response to a notice under subsection (1) of the section 142, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated in the income or has not computed excessive loss or has not underpaid the tax in any manner, served on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return; Provided that no notice under this subsection shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. (3)�On the day specified in the notice issued under subsection (2) or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make the assessment of the total income or loss of the either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return; Provided that no notice under this subsection shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. (3)�On the day specified in the notice issued under subsection (2) or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make the assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment. (4)�Where a regular assessment under subsection (3) of this section or section 144 is made,-- (a)�any tax or interest paid by the assessee under subsection (1) shall be deemed to have been paid towards regular assessment; (b)�if no refund is due on regular assessment or the amount refunded under subsection (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of the Act shall apply accordingly. (5)�The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988) shall apply to and in relation to any assessment for the assessment year commencing on the Ist day of April, 1988 or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year. (Explanation-- An intimation sent to the assessee under subsection (1) or subsection (1B shall be deemed to be an order for the purpose of Section 246 and 264). �Relevant portion of the circular No.549, dated 31.10.1989, F.No.131/39/89-TP on which reliance is placed reads as under: Procedure for assessment: New Scheme of Assessment: "5.12.�Since under the provisions of subsection (1) of the new section 143, an assessment is not to be made now, the provisions of subsections (2) and (3) have also been recast and are entirely different from the old provisions. A notice under subsection (2) which will be issued only in cases picked up for scrutiny, is now issued only to ensure that the assessee has not understated his income or has not computed excessive loss or has not underpaid the tax in any manner while furnishing his return of income. This means that, under the new provisions, in assessment order passed under section 143(3) in a scrutiny case, neither the income can be assessed at a figure lower than the returned income, nor loss can be assessed at a figure higher than the returned loss, nor a further refund can be given except what was due on the basis of the returned income, and which would have already been allowed under the provisions of section 143(1) (a)(ii)." different from the old provisions. A notice under subsection (2) which will be issued only in cases picked up for scrutiny, is now issued only to ensure that the assessee has not understated his income or has not computed excessive loss or has not underpaid the tax in any manner while furnishing his return of income. This means that, under the new provisions, in assessment order passed under section 143(3) in a scrutiny case, neither the income can be assessed at a figure lower than the returned income, nor loss can be assessed at a figure higher than the returned loss, nor a further refund can be given except what was due on the basis of the returned income, and which would have already been allowed under the provisions of section 143(1) (a)(ii)." 3(B)�The Section 119 of the Act provides that the highest Executive Authority is the Central Board of Direct Taxes which is constituted under the Central Boards of Revenue Act 1963. Its powers of administration, supervision and control extend over the whole Department: it has power to make rules and to issue orders, instructions and directions to all officers and persons employed in the execution of this Act with two exceptions: (a) it can not interfere with the discretion of the CIT(A) or Dy.CIT(A) in the exercise of his appellate functions (proviso (b) to Sec.119(1) and (b) it can not direct any income tax authority to make a particular assessment or to dispose of a particular case in a particular manner. The later principle was implicit in Sec.119 prior to its amendment. However, the Board has the power to issue general circulars which are binding on the department. In other words, the quasi judicial functions of an Income Tax authority can not be controlled by the Board in a particular case, but they can be so controlled to the extent that general directions are issued by the Board. 3(C)�Under section 143, as amended from 18.9.90, procedure of assessment has been stated. Under section 143(2) the Assessing Officer should issue notice and after issuing notice regular assessment order should be made under section 143(3) of the Act. The assessment has to be made on all relevant materials and on evidence and the assessee ordinarily has the fullest right to inspect the records and all documents and materials that is to be used against him. The proceedings before the Assessing Officer are "judicial proceedings" and all the incidents of such judicial proceedings have to be observed before the result is arrived at. In other words, the assessee would have a right to inspect the records and all relevant documents before he is called upon to lead evidence in rebuttal. The quasi-judicial proceedings must conform to the rules of natural justice. The Assessing Officer must proceed without bias and give sufficient opportunity to the assessee to place his case before him, he must conduct the proceedings in accordance with principles of justice, equity and good conscience. SUBMISSION OF PETITIONER: 4.�The petitioner in para 6 of his petition pointed out that for abundant caution, the petitioner is going to prefer an appeal before the C.I.T. (Appeals), but the word of Board has tremendous weight on the Executive Officer and he had no hope that the appeal will be an effective remedy. He further pointed out that the petitioner is not liable to pay any tax and there is no 4.�The petitioner in para 6 of his petition pointed out that for abundant caution, the petitioner is going to prefer an appeal before the C.I.T. (Appeals), but the word of Board has tremendous weight on the Executive Officer and he had no hope that the appeal will be an effective remedy. He further pointed out that the petitioner is not liable to pay any tax and there is no chance of the appeal being heard even in near future and will be heard after a period of 4 years. The petitioner under these circumstances submitted that in the facts and circumstances of the case, when the interpretation of section is not correctly understood by the Assessing Officer in view of circular of C.B.D.T., it would be in the fitness of things to entertain this petition more particularly the remedy which is provided under the statute is not an efficacious alternative remedy. He orally also submitted that in any view of the matter, the CIT (Appeals) who has jurisdiction to hear the appeal is bound by the instructions contained in the Circular No.549, dated 3.10.1989 issued by the CBDT, so remedy provided by way of appeal is futile. The Division Bench (Coram: R. Balia & A.R.Dave, JJ) issued rule which was made returnable on 3.5.99. After the long delay, on behalf of respondent one Sushilkumar Agarwal, JCIT Spl.Rg.8 has filed affidavit wherein in para 2 it has been contended as under: "2.�I submit that in view of Circular No.549 dated 31.10.1989, a copy of which is annexed hereto and marked Annexure-1, the petitioner is not entitled to the reliefs prayed for in the petition. I submit that the Assessing Officer has acted as per the circular issued by the CBDT, under Section 119 of the Income Tax Act. In the humble submission of the deponent a writ can not be issued so as to direct the Assessing Officer to do an act which is in contravention of the circular." It was further contended that the petitioner has already availed of the alternative remedy by way of filing an appeal before the Commissioner of Income Tax (Appeals), and therefore the present petition is not maintainable. appeal before the Commissioner of Income Tax (Appeals), and therefore the present petition is not maintainable. Nothing more is stated than extracted above by the respondent. 5.�The learned counsel for the petitioner-Mr.J.P.Shah has stated that sometimes an authority entrusted with a power does not exercise that power but acts under the dictation of a superior authority. Here an authority invested with the power purports to act on its own but "in substance" the power is exercised by another. The authority concerned did not apply its mind and take action on its own judgment, even though it was so intended by the statute. In law, this amounts to non-exercise of power by the authority and the action is bad. The learned counsel for the petitioner Mr.J.P.Shah has stated that in this case the Assessing Officer has not exercised his jurisdiction independently and has relied upon the Board circular No.549, dated 31.10.89, particularly para 5.12 which we have extracted earlier. 6.�In support of the above submission, Mr.Shah Ld.counsel for the petitioner, relied upon the following authorities: 6(A)�COMMISSIONER OF POLICE, BOMBAY vs GORDHANDAS BHANJI reported in AIR 1952 SC 16. In this case the the Commissioner of police granted licence for construction of cinema theatre but later on the permission was cancelled wherein the Commissioner has observed as follows: "I am directed by the Government to inform you that the permission to erect a cinema at the above site granted to you under this office Officer has not exercised his jurisdiction independently and has relied upon the Board circular No.549, dated 31.10.89, particularly para 5.12 which we have extracted earlier. 6.�In support of the above submission, Mr.Shah Ld.counsel for the petitioner, relied upon the following authorities: 6(A)�COMMISSIONER OF POLICE, BOMBAY vs GORDHANDAS BHANJI reported in AIR 1952 SC 16. In this case the the Commissioner of police granted licence for construction of cinema theatre but later on the permission was cancelled wherein the Commissioner has observed as follows: "I am directed by the Government to inform you that the permission to erect a cinema at the above site granted to you under this office letter.... dated 16th July, 1947 is hereby cancelled". Therefore, the Supreme Court in paras 17 and 24 has observed as follows: "17.�It is clear to us from a perusal of these rules that the only person vested with the authority to grant or refuse a licence for the erection of a building to be used for the purpose of public amusement is the Commissioner of Police. It is also clear that under Rule 250 he has been vested with the absolute discretion at any time to cancel or suspend any licence which has been granted under the rules. But the power to do so is vested in him and not in the State Government and can only be exercised by him at his discretion. No other person or authority can do it. 24.�Taking the second first, it is evident from the rules that there is no specific law which requires the Commissioner to grant a licence on the fulfillment by the petitioner of certain conditions. He is vested with a discretion to grant or to refuse a licence and all that the law requires is that he should exercise that discretion in good faith. But that he has done. In the exercise of that discretion he granted a licence and that licence still holds good because, on the view we have taken there has been no valid order of cancellation." and thereby the Honourable Court has allowed the 6(B).�Mr.J.P.Shah, learned advocate for the petitioner relied upon the judgment of the Supreme Court in the case of B.RAJAGOPALA NAIDU vs THE STATE TRANSPORT APPELLATE TRIBUNAL reported in AIR 1964 SC 1573. 6(C)�The Supreme Court in para 19 of the judgment observed as follows: "19.�In reaching this conclusion, we have been certain conditions. He is vested with a discretion to grant or to refuse a licence and all that the law requires is that he should exercise that discretion in good faith. But that he has done. In the exercise of that discretion he granted a licence and that licence still holds good because, on the view we have taken there has been no valid order of cancellation." and thereby the Honourable Court has allowed the 6(B).�Mr.J.P.Shah, learned advocate for the petitioner relied upon the judgment of the Supreme Court in the case of B.RAJAGOPALA NAIDU vs THE STATE TRANSPORT APPELLATE TRIBUNAL reported in AIR 1964 SC 1573. 6(C)�The Supreme Court in para 19 of the judgment observed as follows: "19.�In reaching this conclusion, we have been influenced by certain other considerations which are both relevant and material. In interpreting S. 43A, we think, it would be legitimate to assume that the legislature intended to respect the basic and elementary postulate of the rule of law, that in exercising their authority and in discharging their quasi-judicial function the Tribunals constituted under the Act must be left absolutely free to deal with the matter according to their best judgment. It is of the essence of fair and objective administration of law that the decision of the Judge or the Tribunal must be absolutely unfettered by any extraneous guidance by the executive or administrative wing of the State. If the exercise of discretion conferred on a quasi-judicial tribunal is controlled by any such direction, that forges fetters on the exercise of quasi-judicial authority and the presence of such fetters would make the exercise of such authority completely inconsistent with the well-accepted notion of judicial process. It is true that law can regulate the exercise of judicial powers. It may indicate by specific provisions on what matters the tribunals constituted by it should adjudicate. It may by specific provisions lay down the principles which have to be followed by the Tribunals in dealing with the said matters. The scope of the jurisdiction of the Tribunals constituted by statute can well be regulated by the statute and principles for guidance of the said tribunals may also be prescribed subject of course to the inevitable requirement that these provisions do not contravene the fundamental rights guaranteed by the Constitution. But what law and the provisions of law may legitimately do cannot be permitted to be done by administrative or executive orders. This position is so well established that we are reluctant to hold that in enacting S. 43A the Madras Legislature intended to confer power on the State Government to invade the domain of the exercise of judicial power. In fact, such had been the intention of the Madras Legislature and had been the true effect of the provisions of S. 43A. S.43A itself would amount to an unreasonable contravention of fundamental rights of citizens and may have to be struck down as unconstitutional. That is why the Madras High Court in dealing with the validity of S. 43A had expressly observed that what S. 43A purported to do was to clothe the Government with authority to to confer power on the State Government to invade the domain of the exercise of judicial power. In fact, such had been the intention of the Madras Legislature and had been the true effect of the provisions of S. 43A. S.43A itself would amount to an unreasonable contravention of fundamental rights of citizens and may have to be struck down as unconstitutional. That is why the Madras High Court in dealing with the validity of S. 43A had expressly observed that what S. 43A purported to do was to clothe the Government with authority to as unconstitutional. That is why the Madras High Court in dealing with the validity of S. 43A had expressly observed that what S. 43A purported to do was to clothe the Government with authority to issue directions of an administrative character and nothing more. It is somewhat unfortunate that though judicial decisions have always emphasised this aspect of the matter, occasion did not arise so long to consider the validity of the Government order which on the construction suggested by the Respondent would clearly invade the domain of quasi-judicial administration. 6(D)�In the case of Orient Paper Mills Ltd vs Union of India reported in AIR 1969 SC 48 the appellant was carrying on business, interalia, of manufacturing and sale of various kinds of paper at its factory. In particular it manufactured "packing and wrapping paper" "printing and writing paper" and "machine glazed paper" popularly known as "M.G.Poster Paper". Upto February 28, 1961, the date on which Finance Bill of that year was introduced in Parliament, the printing and wrapping paper were subject to excise duty at the rate of 22 NP per Kilogram though the former was chargeable under item 17(3) and the later under item 17(4) of the First Schedule to the Act. The Finance Act, 1961 raised the excise duty payable under item 17(4) to 35 NP per Kilogram with effect from March 1, 1961. From March 1, 1961 to August 1, 1961 the excise officers levied duty on "M.G.Poster Paper" under item 17(3) at the rate of 22 NP per Kilogram. In other words, during that period the excise authorities treated "M.G.Poster paper" as "printing and writing paper". Subsequently, the excise authorities began to treat this paper as "packing and wrapping paper" and insisted on the appellant paying duty thereon under item 17(4). The appellant paid duty at that rate under protest and thereafter applied to the Assistant Collector for refund on the ground that the duty on that paper should have been levied under item 17(3) and consequently the duty collected was in excess of that leviable under law.The Assistant Collector rejected that claim. Consequently, the appellant went up in appeal to the Collector of Central Excise who rejected its appeal. The Collector rejected the appeal with the "The crucial point in appeal is whether the paper declared as "M.G.Poster paper" should be assessed as "packing and wrapping paper", other sorts under tariff item 17(4) or as "printing and writing paper, other sorts under tariff item 17(3). The Central Board of Revenue have already made it clear that all types of poster paper of whatever colour including white should not be treated as "Printing and Writing paper" but as "packing and wrapping paper". As such the poster paper has not been wrongly assessed" Then the matter was taken up in revision and the Government declined to interfere with the order in appeal. Said order was challenged in the Supreme Court. The Supreme Court in para 7 of the judgment has observed as under: "The crucial point in appeal is whether the paper declared as "M.G.Poster paper" should be assessed as "packing and wrapping paper", other sorts under tariff item 17(4) or as "printing and writing paper, other sorts under tariff item 17(3). The Central Board of Revenue have already made it clear that all types of poster paper of whatever colour including white should not be treated as "Printing and Writing paper" but as "packing and wrapping paper". As such the poster paper has not been wrongly assessed" Then the matter was taken up in revision and the Government declined to interfere with the order in appeal. Said order was challenged in the Supreme Court. The Supreme Court in para 7 of the judgment has observed as under: "There is hardly any doubt that the power exercised by the appellate authority, i.e. the Collector under section 35 is also a quasi judicial power. He is designated as an appellate authority, before him there was a lis between the appellant which had paid the duty and the Revenue, and his order is subject to revision by the Central Government. Therefore, it is obvious that the power exercised by him is a quasi judicial power". After considering the fact that the Collector has relied upon Board's instructions the Supreme Court in para 12 observed as under: "That apart, we are clearly of the opinion that even if the question of the legalityof the directions issued by the Board had not been taken before the authorities under the Act, as that direction completely vitiates the proceedings and makes a mockery of the judicial process. We think we ought to consider the legality of that direction. For the reasons already mentioned we hold that that direction was invalid and the same has vitiated the proceedings before the Collector as well as the Government". The Supreme Court has set aside the order of the Collector, Government of India and allowed the petition. 6(E)�In STATE OF U.P. AND OTHERS vs MAHARAJA DHARMENDER PRASAD SINGH reported in (1989) 2 SCC 505 certain independent powers were exercised by the Govt in cancelling the permission. Said cancellation was challenged before the High Court . High Court allowed the petition and the matter came before the Supreme Court. In para 55 of the said judgment the Supreme Court after relying on passage from wellknown book of De Smith on "Judicial Review of Administrative Action" has held as follows: "It is true that in exercise of powers of revoking or cancelling the permission is akin to and partakes of a quasi judicial complexion and that in exercising of the former power the authority must bring to bear an unbiased mind, consider impartially the objections raised by the aggrieved party and decide the matter consistent with the principles of natural justice. The authority can not permit its decision to be influenced by the dictation of others as this would amount to abdication and surrender of its discretion. It would then not be the authority's discretion that is exercised but someone else's. If an authority "hands over its discretion to another body it acts ultra vires". Such an interference by a person or body extraneous to the power would plainly be contrary to the nature of the power conferred upon the authority. De Smith sums up the position thus: The relevant principles formulated by the courts may be broadly summarised as follows. The authority in which a discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general a discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it: it must not act under the dictation of another body or disable itself from If an authority "hands over its discretion to another body it acts ultra vires". Such an interference by a person or body extraneous to the power would plainly be contrary to the nature of the power conferred upon the authority. De Smith sums up the position thus: The relevant principles formulated by the courts may be broadly summarised as follows. The authority in which a discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general a discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it: it must not act under the dictation of another body or disable itself from exercising a discretion in each individual case. In the purported exercise of its discretion it must not do what it has been forbidden to do, nor must it do what has not been authorised to do. It must act in good faith, must have regard to all relevant considerations, and must not be swayed by irrelevant considerations, must not seek to promote purpose alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. Nor where a judgment must be made that certain facts exist can a discretion be validly exercised on the basis of an erroneous assumption about those facts. These several principles can conveniently be grouped in two main categories; failure to exercise a discretion, and excess or abuse of discretionary power. The two classes are not, however, mutually exclusively". 6(F).�In ANIRUDHSINHJI KARANSINHJI JADEJA vs STATE OF GUJARAT reported in AIR 1995 SC 2390 offence was committed under Terrorists and Disruptive Activities (Prevention) Act (TADA for short) the District Superintendent of Police did not give prior approval on its own but at the request of Additional Chief Secretary to grant approval under the Act which was granted. The Supreme Court after setting aside the order stated that "the dictation came on the prayer of the DSP will not make any difference to the principle". 6(G)�In MANSUKHLAL VITHALDAS CHAUHAN vs STATE OF GUJARAT reported in (1997) 7 SCC 622 the Government did not grant sanction for prosecution of the appellant(public servant). The petition was filed in the High Court and the High Court directed the authorities to grant sanction the prosecution of the appellant. The Supreme Court after setting aside the judgment observed that "by issuing a direction to the Secretary to grant sanction, the High Court closed all other alternatives to the Secretary and compelled him to proceed only in one direction and to act only in one way, namely, to sanction the prosecution of the appellant. The Secretary was not allowed to consider whether it would be feasible to prosecute the appellant; whether the complaint of Harshadrai of illegal gratification which was sought to be supported by trap was false and whether the prosecution would be vexatious particularly as it was in the knowledge of the Government that the firm had been blacklisted once and there was demand for some amount to be paid to the Government by the firm in connection with the contract. The discretion not to sanction prosecution was thus taken away by the High Court. 6(H)�It was further observed (on page 636) by the Supreme Court that "the High Court put the secretary in a piquant situation. While the Act gave him the discretion 6(H)�It was further observed (on page 636) by the Supreme Court that "the High Court put the secretary in a piquant situation. While the Act gave him the discretion to sanction or not to sanction the prosecution of the appellant, the judgment gave him no choice except to sanction the prosecution as any other decision would have exposed him to an action in contempt for not obeying the mandamus issued by the High Court. The High Court assumed the role of sanctioning authority, considered the whole matter, formed an opinion that it was a fit case in which sanction should be granted and because it itself could not grant sanction under the Act, it directed the Secretary to sanction the prosecution so that the sanction order may be treated to be the order passed by the Secretary and not that of the High Court. This is a classic case where a brand name is changed to give a new colour to the package without changing the contents thereof. In these circumstances, the sanction order can not but be held to be wholly erroneous having been passed mechanically at the instance of the high Court. 6(I)�The Supreme Court further observed (page 637) that "From the notings of the Secretariat file, contained in Exh.70 as also the conflicting statements made by the Secretary and the Under-Secretary, it is not possible to hold as to who actually granted the sanction. The Gujarat High Court has held that the sanction was granted by the Deputy Secretary, Shri Lade (PW8) ignoring the fact that the file was also placed before the Secretary and he has also put his signature thereon. The file had, admittedly, been sent to the office of the Chief Minister from where it was received back on 30.1.1985 and as such it is not understandable as to how the sanction could be granted on 23.1.1985. This confusion also appears to be the result of the order passed by the High Court that the sanction must be granted within one month. The Secretary being the head of the department stated on oath that he had granted the sanction, particularly, as the mandamus was directed to him and he had complied with that direction. The Deputy Secretary, who actually issued the order of the sanction, had signed it and, therefore, he owned the sanction and stated that he had sanctioned the prosecution. Both tried to exhibit that they had faithfully obeyed the mandamus issued by the High Court and attempted to save their skin, destroying in the process the legality and validity of the sanction which constituted the basis of appellant's prosecution with the consequence that the whole proceedings stood void ab initio". 6(J)�In this connection, we may also quote relevant paragraph from De Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5th edition (1995), Chapter 11 (Procedural Fairness:Fettering of Discretion): "11-001.�A decision making body exercising public functions which is entrusted with a direction must not, by the adoption of a fixed rule of policy, disable itself from exercising its discretion in individual cases. It may not fetter its discretion. A body that does fetter its discretion in that way may offend against either or both of two grounds of judicial review; the ground of legality and the ground of procedural propriety. It offends against legality by failing to use its powers in the way they were intended, namely, to employ and to utilise the discretion conferred upon it. It offends against procedural propriety by failing to permit affected persons to influence the use of that discretion. By failing to keep its mind 'ajar' by shutting its ears to an application the body in question effectively forecloses participation in the decision making process. rule of policy, disable itself from exercising its discretion in individual cases. It may not fetter its discretion. A body that does fetter its discretion in that way may offend against either or both of two grounds of judicial review; the ground of legality and the ground of procedural propriety. It offends against legality by failing to use its powers in the way they were intended, namely, to employ and to utilise the discretion conferred upon it. It offends against procedural propriety by failing to permit affected persons to influence the use of that discretion. By failing to keep its mind 'ajar' by shutting its ears to an application the body in question effectively forecloses participation in the decision making process. 11-003�The rule against fettering discretion by no means forbids bodies upon which discretionary power has been conferred to guide the implementation of that discretion by means of a policy or a rule. It directs attention to the attitude of the decision maker, who must simply be prepared to make an exception to that rule or policy in a deserving case. Nor does the rule against fettering discretion focus upon the content of the hearing which must be afforded to persons interested in changing the decision maker's mind. The decision maker must allow interested individuals the opportunity to persuade him to amend or deviate from the rule or policy, but, unlike the principle of natural justice or fair hearing, the rule against fettering is not concerned with any particular form of hearing or with any particular technique of making or receiving representations". 6(K).��We may also quote relevant part of Administrative Law by Prof.Wade & Forsyth, 7th Edition (paper back edition of 1995) on page 358: Surrender, Adbication, dictation Closely akin to delegation, and scarcely distinguishable from it in some cases, is any arrangement by which a power conferred upon one authority is in substance exercised by another. The proper authority may share its power with some one else, or may allow some one else to dictate to it by declining to act without their consent or by submitting to their wishes or instructions. The effect then is that the discretion conferred by Parliament is exercised, at least in part, by the wrong authority, and the resulting decision is ultra vires and void. So strict are the courts in applying this principle that they condemn some administrative arrangements which must seem quite natural and proper to those who make them. .... Ministers and their departments have several times fallen foul of the same rule, no doubt equally to their surprise". 6(L).��In AHMEDABAD COTTON MGF CO.LTD vs UNION OF INDIA reported in 18 GLR 714 the petitions were filed by the petitioner-mill companies which were cotton textile units manufacturing blended cotton yarn which became dutiable for the first time under Tariff Item 18-E which was added on March 16, 1972 in the Central Excise and Salt Act, 1944. In all these mills, the duty was charged by the excise authorities under the Tariff Item 18-E on weight basis per kilogram of unsized yarn, that is to say, at the spindle point. However, by the Trade Notice issued by the Deputy Collector of Central Excise dated August 9, 1976 a change of basis has been adopted. 6(M).�In that case the petitioner had also challenged equally to their surprise". 6(L).��In AHMEDABAD COTTON MGF CO.LTD vs UNION OF INDIA reported in 18 GLR 714 the petitions were filed by the petitioner-mill companies which were cotton textile units manufacturing blended cotton yarn which became dutiable for the first time under Tariff Item 18-E which was added on March 16, 1972 in the Central Excise