GST Appeals - Who is the appellant/respondent?
OCTOBER 20, 2021
IN a CGST appeal by a Commissioner, who should be the appellant and similarly in an appeal by a taxpayer, who should be the respondent? Please have a look at these representative cases reported by us:
1. Principal Commissioner Central Goods and Service Tax Vs Lantech Pharmaceuticals Ltd - 2020-TIOL-06-SC-GST-LB
2. National Anti Profiteering Authority Vs Glenmark Pharmaceuticals Ltd - 2021-TIOL-25-SC-GST
3. Union of India Vs Mohit Minerals Pvt Ltd - 2021-TIOL-21-SC-GST-LB
4. Suresh Kumar PP Vs Deputy Director, Directorate General of GST Intelligence - 2021-TIOL-57-SC-GST-LB
5. Devendra Dwivedi Vs Union of India - 2021-TIOL-02-SC-GST-LB
6. Gulshan Dhingra Vs Directorate General of Goods and Service Tax - 2020-TIOL-154-SC-GST
7. Ashok Kumar Vs Commissioner of CGST & CE - 2020-TIOL-150-SC-GST-LB
In these 7 cases, the first three are petitions/appeals by the Government and the appellant/petitioner is shown as:
1. Principal Commissioner
2. National Anti Profiteering Authority
3. Union of India
And in the four other cases, the respondent is shown as:
4. Deputy Director, Directorate General of GST Intelligence
5. Union of India
6. Directorate General of Goods And Service Tax
7. Commissioner of CGST & CE
Now, can the Principal Commissioner or the National Anti Profiteering Authority file petitions for and in the name of 'Union of India' ? Similarly can the Deputy Director, Directorate General or Commissioner be the respondent on behalf of the Union of India?
As per Article 300 of the Constitution of India, the Government of India may sue or be sued by the name of the Union of India.
So, if the Government is the petitioner/appellant in a case, the petitioner/appellant should be shown as 'Union of India' - similarly as respondent in cases against the government.
But we see many cases like Commissioner vs …..
Here is an interesting case - Divisional Railway Manager Vs Commissioner of Central Excise & Service Tax - 2013-TIOL-1891-CESTAT-DEL
The CESTAT delivered this landmark judgement by which all demands by the Customs, Excise and Service Tax Department against Central Government and State Government Departments have become a NULLITY - which cannot be enforced.
The basic question revolves around 'who should be the appellant/respondent in a case filed by/against a Government Department'.
As per Section 79 of the CPC,
Suits by or against Government.-- In a suit by or against the Government, the authority to be named as plaintiff or defendant, as the case may be, shall be-
(a) in the case of a suit by or against the Central Government, the Union of India; and
(b) in the case of a suit by or against a State Government, the State.
So if you are filing a case against the Government as in GST, the respondent should be "Union of India" and if a Department is filing a case, the petitioner/appellant should be "Union of India", but in practice, we find that many of the appeals before the Tribunals and High Courts are either filed against a Commissioner or filed by a Commissioner. Union of India is rarely a party. This seems to be against the above provisions.
The CESTAT considered this issue.
The appeal was filed by the Divisional Railway Manager, North Western Railway, Ajmer against a Service Tax demand. The Tribunal observed,
Suits or proceedings against the State can be pursued only in the name of the Union of India or the concerned State, as the case may be. It is axiomatic that neither the Secretary to the Government; the Railway Board nor as has been done in the present case, the Divisional Railway Manager, Ajmer Division may in law and per se represent the Indian Railways or the Union of India, in the absence of the Central Government being arrayed as a party.
A decree passed against the Divisional Railway Manager cannot be executed against the Union of India nor can a decree or award passed against the Divisional Railway Manager be satisfied by drawals from the Consolidated Fund of India. The provisions of Chapter II, in particular, the elaborate provisions relating to procedure in financial matters set out in Articles 112 to Article 114 in the Constitution clearly indicate that a charge upon or an appropriation from the Consolidated Fund of India could only be in respect of expenditure of the Government of India.
It is noticed in several cases, clearly oblivious of this fundamental constitutional mandate, proceedings are initiated against state actors instead of the State as duly designated under the Constitutional mandate.
The Tribunal noted a Supreme Court decision in Chief Conservator of Forests, Govt. of A.P. vs. Collector and others wherein it was observed,
Every post in the hierarchy of the posts in the Government set-up from the lowest to the highest, is not recognized as a juristic person nor can the State be treated as represented when a suit/proceeding is in the name of such offices/posts or the officers holding such posts, therefore, in the absence of the State in the array of parties, the cause will be defeated for non-joinder of a necessary party to the lis, in any court or Tribunal.
The Tribunal held:
The adjudicated liability, in the circumstances cannot be charged on the Indian Railways. Since the very initiation of assessment proceedings, in respect of the alleged liability to service tax of the India Railways is patently misconceived, the entire proceedings are a nullity. The appeal before us preferred by the Divisional Railway Manager is also, for reasons alike, mis-conceived and so are the Misc. applications.
And so the appeal by the Divisional Railway Manager was dismissed.
What could be the consequences?
1. Are all the demands against Government Departments (where Union of India is not made a party) nullity and the demands simply evaporate into thin air?
2. Are all the appeals filed by Commissioners invalid, as Union of India is not made an appellant?
3. Are all the appeals in which Commissioner is the only respondent invalid, as Union of India is not made a respondent?
4. If a Railway officer has to file an appeal against a GST Commissioner's order, should it be Union of India vs Union of India - can you file an appeal against yourself?
Incidentally, Rule 12 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 reads as:
RULE 12. Who may be joined as respondents - (1) In an appeal or an application by a person other than the Commissioner or the Administrator, the Commissioner concerned or the Administrator shall be made the respondent to the appeal or, as the case may be, the application.
(2) In an appeal or an application by the Commissioner or the Administrator, the other party shall be made the respondent to the appeal or as the case may be, application.
As per this, the Commissioner is to be the respondent/appellant, but what is the status of these Rules before the Constitution and the Supreme Court?
Interestingly against the CESTAT order mentioned above, the Union of India filed an appeal in the High Court. And the appellant was the 'Commissioner of Central Excise' (not Union of India) and the respondent was 'Divisional Railway Manager'.
The High Court observed - 2014-TIOL-2576-HC-ALL-ST
The Divisional Railway Manager, who is an employee of the Union of India or Ministry of Railway, is not the assessee. No show cause notice was issued to the Union Government. The adjudication did not take place against the Union Government. The order of adjudication and the demand that would be raised in pursuance thereof, would be enforced not against the Divisional Railway Manager but against the Union of India through the Ministry of Railways. Having regard to this position, it is but necessary that the proceedings commencing with the notice to show cause must be initiated against the Union of India through the Ministry of Railways.
The Divisional Railway Manager was not acting as a statutory authority. Hence, the entire exercise of adjudication which commenced with the notice to show cause is clearly a nullity. The show cause notice ought to have been issued against the Union of India through the Ministry of Railways and not against the Divisional Railway Manager who was but an employee and servant of the Ministry of Railways.
The perseverant Revenue took the matter in appeal to the apex court. The Supreme Court dismissed the Revenue Appeal on the ground of delay as well as on merits, but the question of law is kept open.
I can share a personal experience:- I filed a writ in a High Court against an order of attachment by a Deputy Commissioner and the attachment was stayed, but when the case came up for hearing, I was told that my writ is not correct as I had not made the Union of India as a respondent. I prayed for allowing me to file a Miscellaneous Petition for inclusion of Union of India as a respondent, which was allowed by His Lordship. It was the same judge of the High Court who, later as President of CESTAT delivered this judgement of the Tribunal.
Can this defect be rectified?
In Chief of The Army Staff and Ors. vs Daya Shanker Tiwari, the Allahabad High Court held,
we reach the inescapable conclusion that the writ is not maintainable against the Government officers or the employees of the State, it lies only against the State and if State is not impleaded, the writ is not maintainable.
This issue doesn't seem to be taken seriously always by the Government or the Courts. Please see the following cases:
1. Union of India Vs CESTAT - 2005-TIOL-51-HC-KOL-CESTAT
2. Commissioner of Central Excise, Chennai-II Vs - CESTAT, SOUTH REGIONAL BENCH, CHENNAI - 2013-TIOL-1268-HC-MAD-CX
3. Commissioner of Central GST, Mumbai West Commissionerate Vs CENTRAL EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BRANCH AND ANOTHER - 2019-TIOL-1441-HC-MUM-CX
In these cases, Commissioners have made the CESTAT a respondent. Can the CESTAT defend its order in a higher court? Is it expected to do so? Do you ever make a High Court as a respondent?
And in this case -
Skoda Auto Volkswagen India Pvt Ltd vs COMMISSIONER (APPEALS) - 2021-TIOL-616-HC-MUM-ST
the Commissioner (Appeals) was made a respondent and to jest complete the story, in this case -
Commissioner of Central Excise (Appeals) Vs CROWN TOURS LTD - 2019-TIOL-3682-CESTAT-DEL
the Commissioner (Appeals) filed the appeal!
This may appear as a small issue now, but it can snowball into a Cannon as happened for the notices issued by DRI.
Until Next Week.