Facts of the Case

M/s. Naga Phyto Chem (P) Limited, a registered company dealing in raw materials for manufacturing Instant Tea Product, held a Certificate of Registration as a buyer under the Tea (Marketing) Control Order, 2003, and a tea waste licence under the Tea Waste (Control) Order, 1959, both issued by the Tea Board of India. This is not a GST matter — it concerns compliance obligations under these Tea Board regulatory orders. On inspection on 20.02.2020 and 10.03.2020, Tea Board officials issued two show cause notices dated 06.03.2020 and 20.03.2020 alleging three deviations: failure to intimate arrival of tea waste consignments within 24 hours, manipulation of sales invoices, and a mismatch between purchase invoices and portal records, with about 30 tonnes of tea waste extract found unaccounted for. The petitioner submitted explanations, denying deliberate manipulation and stating it had regularly filed Form 'F' returns. The Tea Board nonetheless passed an adverse order dated 06.07.2020, which the petitioner challenged before the Madurai Bench of the Madras High Court.

Issues Involved

  1. Whether the impugned order dated 06.07.2020 passed by the Tea Board was sustainable given the petitioner's explanations on record.
  2. Whether the enquiry conducted disclosed the material and documents relied upon by the Tea Board before passing the adverse order.

Petitioner's Arguments

  • The delayed intimation practice had continued unchallenged since the licence was issued in 2004 and no prior instructions required otherwise.
  • Monthly returns in Form 'F' were regularly filed for all purchases and sales without deviation.
  • Detailed purchase and sales documents were furnished to explain the alleged discrepancies, yet the respondents proceeded on a mistaken understanding of the facts.

Respondent's Arguments

  • The inspection revealed non-intimation of consignment arrivals, manipulated sales invoices, and unaccounted stock of tea waste extract, justifying action under the Tea Waste (Control) Order, 1959.

Court Order / Findings

  • The Court found merit in the petitioner's contention and quashed the impugned order dated 06.07.2020.
  • The matter was remitted back to the respondents for a de novo enquiry.
  • The respondents were directed to furnish all documents relied upon in the transactions with the National Bio Fertilizer, and the petitioner was permitted to furnish supporting documents for any material purchased from Kodnadu.
  • The respondents were directed to conduct the enquiry afresh and pass a fresh, speaking order, and were also directed to examine and take action against National Bio Fertilizer.

Important Clarification

This order has no bearing on any GST question — it deals entirely with licensing compliance under Tea Board regulatory orders. It is a useful reminder, in the general regulatory-enquiry context, that an adverse order must disclose the material relied upon and give the affected party a genuine opportunity to respond before penal action is taken; a fresh, speaking order was required precisely because that was found wanting here.

Sections Involved

  • Tea (Marketing) Control Order, 2003
  • Tea Waste (Control) Order, 1959
  • Constitution of India, Article 226

Decision – In Favour of

Decided in favour of the petitioner to the extent that the impugned order was quashed and the matter remitted for a fresh, reasoned enquiry; the ultimate outcome of the licensing dispute remains to be determined afresh by the Tea Board.

Case Details

  • Court: Madurai Bench of the Madras High Court
  • Case Number: W.P.(MD) No. 7861 of 2020 with W.M.P.(MD) Nos. 7333 & 7334 of 2020
  • Coram: Justice S. Srimathy
  • Date of Order: 28.08.2023

Link to Download the Order

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