By TIOL News Service

NEW DELHI , NOV 11, 2016: WHEN the matter in the present case came up before the regular bench, The Tribunal vide its Final Order reported in 2016-TIOL-574-CESTAT -DEL, by adopting the Larger Bench decision in the case of Great Lakes Institute of Management Ltd. (2013-TIOL-1480-CESTAT -DEL-LB), rejected the appeal on merits.

Thereafter, the said order of the Tribunal was appealed against by the appellant before the Supreme Court, who vide their order dated 08.07.2016, granted leave to appeal in the matter. The Supreme Court was also pleased to grant stay of recovery of penalty, subject to the appellants depositing the service tax along with interest within a period of two months.

Prior to the filing of appeal before the Supreme Court, the appellant had also moved an application for rectification of mistake before the Tribunal in terms of Section 35 C (2) of the Central Excise Act, 1944 on the ground that the Tribunal disposed of the appeal only on merits and did not consider the plea of limitation raised before it in the appeal memo as also during the course of hearing and in the written synopsis filed at the time of hearing. It was contended that the non-consideration of limitation issue amounted to mistake on the part of the Tribunal, thus requiring rectification. The fact of filing of ROM before the Tribunal was also disclosed before the Supreme Court in the Memo of appeal filed before the apex court.

The said ROM application was listed on 02.08.2016 and was taken up for decision on the same day itself. After hearing both sides, Tribunal observed that admittedly the limitation issue was raised before it, but the same was not considered by the Bench and as such in view of various decisions laying down that non-consideration of limitation amounts to mistake on the part of the Tribunal requiring rectification, the Bench agreed to the appellant's plea that the same is a mistake and proceeded to rectify it.

Further, by taking note of various decisions of the Supreme Court on the issue of limitation, Tribunal vide its order dated 02.08.2016 [2016-TIOL-2471 CESTAT -DEL] held that in as much as the demand was raised beyond the period of limitation and in absence of any suppression or mala fide on the part of the assessee, the same is required to be held as barred by limitation. Accordingly, ROM was allowed.

Revenue is aggrieved with the passing of this order on ROM application. For the said purpose, they have filed a Miscellaneous Application praying for recalling of the said order passed on the appellant's ROM application.

The Departmental Representative argues that:

1. In as much as the final order dated 29.10.2015 passed by the Tribunal on merits was already appealed against by the appellant before the Supreme Court and was pending consideration for disposal, subject to the appellants depositing the tax amount along with interest, the disposal of the ROM application was not justified.

2. The fact of pendency of the appeal before the Supreme Court was not brought to the notice of the Bench by the ld. advocate appearing for the applicant in support of the ROM, even though the same law firm appeared before the Hon'ble Supreme Court.

3. As such it was the duty of the ld. advocate to inform the Tribunal about the pendency of the appeal before the Hon'ble Supreme Court and as the Tribunal was kept in dark about this aspect by the ld. advocate as also by the Registry, the order dated 02.08.2016 stands obtained without full disclosure of facts and as such should be recalled.

4. Two remedies under law before two different fora commonly known as forum shopping is a practice which stands disapproved by the Hon'ble Supreme Court, and it is an abuse of the process of law.

5. After the final order was passed on 29.10.2015, the Tribunal became functus officio and had no jurisdiction at all to entertain the application of ROM and the Tribunal could not have reviewed its earlier order and passed a new order setting aside its earlier order.

He, however, fairly admitted that the fact of the matter pending in the Supreme Court was also not brought to the Bench either by the Departmental Representative or by the Chief Commissioner, who had admittedly received the same by that time.

Accordingly, he prayed for recalling the Final Order dated 20.08.2016, passed on ROM.

Contesting the above stand of the Revenue, the advocate for the applicant raised a preliminary issue submitting that there is no provision for rectifying any mistake in the order passed on the ROM application and the provisions of Section 35 C (2) of the Act empowers the Tribunal to make amendments in any order passed under Section 35C (1) of the Act. As such, he submits that the present application filed by Revenue is not maintainable.

He also submits that

1. Revenue itself has pleaded in the present Miscellaneous Application that the Tribunal having finally disposed of the appeal on 29.10.2015 has become functus officio and was not having any jurisdiction to entertain the ROM application.

2. For the very same reason, the present application filed by Revenue cannot be entertained as the Tribunal has become functus officio after having disposed of the ROM application.

3. Doctrine of merger does not apply in the present case in as much as the provisions of Section 35 C (2) of the Act operate in altogether different arena of rectification of mistake and the pendency of the appeal before the Supreme Court will not wipe away the appellants right to apply for rectification of mistake and seek relief in terms of Section 35C (2) of the Act.

4. In fact, the Hon'ble Supreme Court, in exercise of jurisdiction under Section 35L of the Act has been pleased to grant leave vide its order dated 08.07.2016 against the Final Order dated 29.05.2015, passed by the Tribunal.

5. There is no provision like Section 35F of the Act requiring an appellant to deposit the amount confirmed against him, as a condition of hearing of his appeal. An appellant is not required to deposit the amount before his appeal is to be admitted before the Hon'ble Supreme Court and the grant of stay of recovery against penalty subject to deposit of interest and tax was an order by the Hon'ble Supreme Court which was in favour of assessee. Such an order does not debar exercise of the jurisdiction by the Tribunal in respect of an application filed in terms of Section 35 C (2) of the Act.

6. In as much as the appeal was still pending before the Hon'ble Supreme Court and has not been disposed of, the Revenue's contention that the earlier order of the Tribunal stands merged with the Hon'ble Supreme Court order dated 08.07.2016 is not worthy of acceptance.

7. The allegation of forum shopping made against the appellant is not sustainable in as much as filing of an appeal before the Hon'ble Supreme Court as well as filing of ROM application before the Tribunal, in exercising of the statutory rights given to the assessee in terms of two different section of Central Excise Act cannot be held as forum shopping.

8. The ROM application as also the appeal is maintainable simultaneously in as much as both are operating in different two fields. Such a stand, if accepted, would make Section 35 C (2) of the Act, as redundant and otiose.

9. The fact of non-disclosure of the order of the Supreme court will not have any effect on the disposal of ROM, as the fact of pendency of ROM was in the knowledge of Supreme Court.

He fairly agreed that the said fact was not mentioned before the Tribunal at the time of disposal of ROM, but submits that the same was an unintentional, inadvertent, mistake on the part of the advocate. He has filed an affidavit to the effect that the order was brought by him, for mentioning on the date of hearing of ROM, but could not be placed before the Bench. He further submitted that equally guilty is the Departmental Representative, as also the Chief Commissioner and the Tribunal's Registry, who had received the said order of the Apex Court, much prior, but failed to bring it to the notice of the Bench. The same was also available in the Hon'ble Supreme Court's website and as such, it cannot be said that there was any fraudulent intent on the part of the Advocate. He also referred to a published report in Excise Economic Law Times with an assertion that Department has leaked the information to the press, in respect of a matter, which is sub-judice , with a mala fide intention to create pressure on the Bench of the Tribunal.

The Tribunal observed,

1. Revenue has sought for recalling of the order passed on 02.08.2016 vide which the applicant's ROM applications stands allowed on the point of limitation. It is not the Revenue's case that the said order is wrong or against the law. Their only contention is that the said order stands obtained by the assessee without disclosing the fact of pendency of appeal before the Hon'ble Supreme Court and the directions contained therein for depositing of service tax and interest. It is strongly contended that in as much as the ld. advocate appearing in support of the ROM application belonging to the same law firm, caused appearance before the Hon'ble Supreme Court on 29.05.2015, they were very well aware of the said order of the Hon'ble Supreme Court and should have brought the same to the notice of the Bench. Any order obtained by fraud is a nullity.

2. Without commenting upon the correctness of the Order passed in ROM, we are of the view that the ld. advocate was under legal duty to bring to the notice of the Bench, at the time of disposal of ROM application, the above factual developments irrespective of the fact as to whether the Tribunal in that case would have decided or not decided the ROM application.

3. Though we agree with the learned advocate that filing of an appeal before the Hon'ble Supreme Court in terms of Section 35L of the Act and filing of a separate ROM application before the Tribunal under Section 35 C (2) of the Act does not amount to forum shopping or amounts to merger, but the fact remains that there was non-disclosure of the proceedings pending before the Hon'ble Supreme Court, at the time of disposal of the ROM application.

4. It is well settled principle that one who comes to the court seeking justice must come with clean hands. The fraud vitiates everything and the fact of non-disclosure of the order of the Hon'ble Supreme Court has the effect of making the ROM order dated 02.08.2016 void ab initio.

5. Intentionally or unintentionally, the fact remains that the Bench was not appraised of the said order of the Hon'ble Supreme Court. As we have already observed that non-disclosure of the relevant facts and obtaining of a favourable order by not bringing the relevant facts to the notice of the Bench abuses the due process of law and vitiates the very order so obtained. As such, we deem it fit to recall the order passed on ROM application as prayed for by Revenue and allow the Miscellaneous Application filed by them.

6. In respect of judgements obtained by suppressing or not disclosing the material developments before the higher forum, the principles of res judicata also does not apply. As such, the technical objection of non-maintainability of misc. Application is not sustainable as the same is neither a rectification of mistake application nor any mistake stand pointed out by the Revenue.

7. In view of the fact of non-disclosure of the development at the Apex Court level, we invoke our inherent powers for recalling the said order dated 2.8.2016 and order accordingly.

8. In view of the foregoing discussion, we allow the Misc. Application filed by the Revenue, and recall the order dated 2.8.2016.

9. A copy of the said order be sent to Bar Council of India for appropriate action, whatsoever, is deemed fit.

(See 2016-TIOL-2938-CESTAT-DEL)