APRIL 06, 2022

By Vijay Kumar

IN 2021-TIOL-854-CESTAT-DEL, dated 14.10.2021 the CESTAT ordered,

the Adjudicating Authority is directed to grant refund within a period of 45 days from the date of receipt of this order along with interest as per Rules (starting from the end of 3 months from the date of filing of the refund claim till the date of grant of refund claim).

What did the Adjudicating Authority do?

Instead of granting the refund, the Asstt. Commissioner again issued show cause notice(s) with regard to the refund, proposing to disallow part of the amount on the grounds mentioned in the show cause notices dated 13.12.2021.

The Tribunal was not amused. In an order dated 23.03.2022 - 2022-TIOL-262-CESTAT-DEL, the Tribunal observed,

the aforementioned action of the Asstt. Commissioner, of issuing of fresh show cause notice, instead of granting refund, in terms of the Final Order of this Tribunal amounts to interference in the justice delivery system.

It seems that the Asstt. Commissioner has no regard for the order of the superior court/Tribunal, and also does not have any concept of doctrine of merger.

Accordingly, the Asstt. Commissioner is directed to show cause as to why the proceedings for contempt of court should not be drawn against him and referred to the jurisdictional High Court for further action in accordance with law.

In the alternative, I grant last opportunity to the Asstt. Commissioner to comply with the final order of this Tribunal and to file compliance, which should be filed before 25.04.2022.

Be you ever so high, the law is above you , except for a few revenue officers who honestly believe they are above Law. It is really unfortunate that an otherwise well-disciplined department like the Customs and Central Tax has scant respect for judicial discipline. An Assistant Commissioner or Joint Commissioner would never disobey the orders of a Commissioner, written or unwritten, legal or illegal and a Commissioner will never dream of disobeying orders of a Chief Commissioner or Board. Perfectly right. But when it comes to judicial decisions, departmental officers flout with total impunity (and immunity) orders of the Tribunal and even those of the High Court and Supreme Court. The unfortunate fact is that these Revenue officers believe that they are better than the judiciary and nothing will happen to them if they pass orders in total violation of binding principles laid by the Tribunal or higher Courts.

In Unichem Laboratories Ltd. v. CCE, Bombay - 2002-TIOL-237-SC-CX, the Supreme Court observed,

No doubt that the authorities functioning under the Act must, as are duty bound, protect the interest of the Revenue by levying and collecting the duty in accordance with law - no less and also no more. It is not part of their duty to deprive any assessee of the benefit available to him in law with a view to augment the quantum of duty for the benefit of the Revenue. They must act reasonably and fairly.

But these are high goals not understood by Revenue.

31 years ago, the Apex Court in UNION OF INDIA v KAMLAKSHI FINANCE CORPORATION LTD - 2002-TIOL-484-SC-CX-LB, very clearly held:

The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the department - in itself an objectionable phrase - and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.

But many in the field do not consider the Supreme Court supreme and have consistently flouted this sacred principle.

In a case decided in 1983, the CEGAT framed the following questions:

(1) Whether the respondent Collector disobeyed the order dated 30-9-1983 passed by this Bench.

(2) If so, whether the respondent Collector had justification for disobeying the order.

(3) Whether the justification, if any, could be pleaded as a defence.

(4) Whether the disobedience if any is wanton and deliberate.

(5) To what action if any is the respondent Collector liable.

And the Tribunal answered:

Answer to point No. 1. - Detailed discussion is not required to answer this point. With impunity, but eloquently the Assistant Collector in her affidavit had furnished the answer. The fact remains that the Assistant Collector has not obeyed the order of this Bench dated 30-9-1983. Disobedience is thus established.

Answer to point Nos. 2 & 3. - The Acts and the rules confer vast powers on the Assistant Collector. More power means more responsibility. Unfortunately, the Assistant Collector acted in an irresponsible manner and abused her power. This is a very disturbing trend and the same is required to be curbed in the interest of public.

Answer to point No. 4. the disobedience on the part of the Assistant Collector is not casual, accidental or unintentional.

Answer to point No. 5. - Having regard to our finding that the disobedience is not casual, accidental or unintentional, the proper course for us is to initiate contempt proceedings. But then we restrain from doing so. We were told that the Assistant Collector has just completed her probation and a recent entrant to the department. Immaturity, lack of experience and non-realisation of the consequences of disobedience could have been the reason rather than arrogance or power drunkenness.

Taking all aspects into consideration, instead of initiating contempt proceedings we direct her to comply with our order within 2 days from the communication of this order and report compliance immediately thereafter.

A Commissioner (Appeals) observed,

The whole system of judicial decisions will end up in a mockery if lower authorities are allowed to disregard the judicial decisions of higher authorities. It has become a practice of late among quasi-judicial authorities to somehow pass orders in favour of revenue even by blatant disobedience of the orders of higher authorities.

High Court Order not followed because the party is different! An Assistant Commissioner rejected the refund claims of the claimant on the ground inter alia that the decision of the High is in the case of another assessee and not in the case of claimant and each one must fight its own battle and must succeed or fail in such proceedings.

This kind of disrespect for Law and disobedience of higher judicial authorities is more dangerous than corruption and just like we have a Prevention of Corruption Act, we should have a Section in the Central Civil services Conduct Rules for Prevention of disrespect for and disobedience of higher judicial authorities - that even if they are not punished for contempt of Courts, they should be liable to departmental punishment under Conduct Rules.

CBEC Instruction in F. No. 201/01/2014-CX.6, Dated: June 26, 2014, observed that the assessee had filed appeal before the High Court against rejection of a refund claim on an issue which had earlier been decided by the High Court against the revenue, though in a matter relating to a different assessee. Thus, for deciding the refund, a binding precedent judgment existed. However, the binding precedent was not followed which led to litigation before the High Court to which the High Court took a serious view.

The Board further noted that on the subject of consequential refund, where the department has gone in appeal, there already exists a circular No 695/11/2003 -CX dated 24-02-2003 and had this circular been followed in the case, unnecessary litigation as well as adverse observation of the High Court could have been avoided.

Board directed the learned adjudicating authorities to peruse the judgement of the High Court in 2013-TIOL-1172-HC-AHM-CX for complete understanding of the issues involved and directions of the High Court on need to follow judicial discipline.

Board also directed the officers to peruse the judgement of the Supreme Court in Union of India vs. Kamlakshi Finance Corporation Ltd.- which is an authoritative pronouncement on the issue and which has also been cited by the High Court.

CBEC took the right step in asking adjudicating authorities to read the judgements of the High Court and the Supreme Court to learn judicial discipline. How many adjudicating authorities have read these judgements as directed by the Board? Many officers in the field have as much contempt (if not more) for the Board as they have for the Courts. In any case, many of them are aware of the Kamlakshi judgement of the Supreme Court - this judgement was delivered in 1991 and had been referred in hundreds of cases and it must have been certainly taught in NACIN when the learned adjudicating authority was a humble probationer.

In 2022, we still see blatant judicial indiscipline.

Judicial indiscipline is not because of ignorance - it is because of mighty arrogance and despicable fear of vigilance, coupled with the assurance that nobody ever gets punished for passing an order against the assessee - even in violation of all norms and directions of higher courts and the apex Board itself. In the process, they don't care if the assessees are put to great inconvenience and costs and the Courts are clogged. In fact, many adjudicating authorities openly tell the assessees, "you will win in Tribunal, but I can't give you relief".

We should respect the Supreme Court not because it is always right but because it is the highest Court. Even retrospective legislation, to frustrate Supreme Court orders, is a judicially sanctioned contempt.

We should have a system wherein the bureaucracy or lower-level judiciary should never dare to question or disobey orders of higher judiciary.

Until Next week