Bench terms action arbitrary; cites service providers not liable for pollution in State
PANAJI
In a major relief to South West Port Limited (SWPL) and JSW Infrastructure Limited, the High Court of Bombay at Goa has quashed the show-cause notices issued by the State Tax Officer of the Commercial Tax Department, holding that the notices suffer from the vice of arbitrariness.
The Division Bench of Justice Bharati Dangre and Justice Nivedita Mehta observed that the petitioners ‘service providers’, are not responsible for polluting substances brought into the State.
“It is evidently clear to us that, as far as the Green Cess, 2013 is concerned, it has imposed the cess by prescribing the transactions on which the levy shall be paid and has also set out the maximum rate at which the cess shall be collected, leaving only the manner of assessment to be worked out by the executive, and specifically providing that, in the absence of any specific provision, recourse may be taken to the provisions of the Act and the Rules,” reads the order.
The SWPL had moved the High Court challenging the show-cause notices issued on February 13, 2025, and May 23, 2025, initiating proceedings under the Green Cess Act.
The Bench observed that the show-cause notices issued to the petitioners suffer from the vice of arbitrariness, firstly on the ground that the petitioners do not fall within the ambit of Section 4 of the Act, 2013, read with Rule 3 of the Rules of 2014, as they are merely service providers and have neither brought nor caused to be brought goods or substances that have caused pollution into the State on its handling.
“Secondly on the ground that the power of reassessment attempted to be exercised is not based on principles of satisfaction being reached on a reasonable belief and in fact neither of the show-cause notice display any ‘reason to believe’ nor have those reasons be placed before us except stating that since there was stay operating in the proceedings raising challenge to the validity of the statute and the Court had restrained any coercive action being taken, the Green Cess was not collected,” the Court observed, stating that this reason, however, failed to convince the Court about the action on the part of the Commissioner to reopen the assessment proceedings in the form of reassessment by issuing show-cause notices.
On the ‘reason to believe’ aspect, the Court further observed that the notices are evidently deficient and provide no clue on this aspect. “Since we find that reassessment is a more serious venture, once the assessment is complete it cannot be merely reopened for the sake of an officer’s opinion but the exercise of this power is manifestly circumscribed by existence of certain conditions and expression ‘reason to believe’ postulate the belief and existence of reasons for that belief and the expression do not cover the subjective satisfaction of the particular officer but it must be a belief of an honest and reasonable person based upon reasonable ground and tangible material and not merely pretence.”
As a result, the Court quashed and set aside the show-cause notices. However, it stated that the challenge to Rule 3 of the Goa Cess on Products and Substances Causing Pollution (Green Cess) (Functions and Duties of the Competent Authority, Assessment, Levy and Collection of Cess) Rules, 2014, on the ground of being ultra vires the Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013, has no merit and substance, and hence this challenge was dismissed.
