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Costly Commissioners

November 29, 2023

By Vijay Kumar

IN a recent judgement, the Allahabad bench of the CESTAT in Mahesh and Co versus Commissioner of Customs, Noida imposed a cost of Rs.2,00,000 on a Commissioner with the direction that the amount shall be paid from the Commissioner's salary. The Tribunal observed - 2023-TIOL-1048-CESTAT-ALL

13. As the Respondent Commissioner and Commissioner of Customs (Exports) New Delhi has not implemented the order of the Tribunal even after being directed under Rule 41 of CESTAT Procedure Rules, 1982 and having been allowed sufficient time and opportunity we are of the view that this is a fit case for imposition of cost on the Commissioner to ensure that he understands the meaning of the phrase "Judicial discipline'.

17. For causing delay in implementation of the earlier orders of this Tribunal without any valid justifiable reasons a cost of Rs.2,00,000/- is imposed on the concerned Commissioner Customs Export IGI Airport, New Delhi. We note that Revenue should not suffer on account of the cost being imposed for the arrogant behavior of the concerned Commissioner and this amount needs to be paid by the concerned Commissioner or recovered from his salary and be deposited to the P.M. Cares fund within a fortnight of receipt of this order.

This is not the first time that Commissioners have disobeyed the orders of the tribunal.

32 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 observed:

1. 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.

2. 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.

3. The disobedience on the part of the Assistant Collector is not casual, accidental or unintentional.

4. 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.


Since a wholly frivolous application is filed by Revenue, seeking review of an order condoning the delay while recording reasons therefore, seeking exercise of a jurisdiction not vested in the Tribunal and what is more, such application is pursued with great vehemence, resulting in wastage of substantial time of a docket overloaded Tribunal, we consider it appropriate to dismiss this application with costs of Rs. 10,000/- payable by the petitioner/Revenue to the Prime Minister's Relief fund, within two weeks from today.

Can payment be ordered to PM CARES Fund?

PM CARES Fund accepts voluntary contributions by individuals/organizations as well as contributions as part of CSR from Companies/Public Sector Undertakings (PSUs). However, contributions flowing out of budgetary sources of the PSUs are not accepted.

The Fund accepts only voluntary contributions by individuals and institutions.

In the case mentioned at the beginning, the Commissioner was asked to pay the cost or it be recovered from his salary. And therefore, it cannot be treated as voluntary and so the Fund cannot accept the amount of 2,00,000 from the Commissioner.

Can CESTAT impose costs? The Unanswered Enigma.

One school of thought is that the Tribunal being a creature of the statute - Customs Act cannot go beyond the statute and the statute does not provide for awarding costs.

So, can the CESTAT impose costs in the absence of any legal provision for that? Under what law or authority is cost imposed? Customs Act has no provision; is it under CPC? Is it under inherent powers?

In Okay Glass case - 2015-TIOL-428-CESTAT-DEL, the Tribunal imposed a cost of Rs. 10,000 on the Commissioner who adjudicated the impugned order. The Department took the case in appeal to the High Court of Allahabad. The High Court did not find any merit in the appeal or a substantial question of law and so the cost on the Commissioner remained intact. 2015-TIOL-2145-HC-ALL-CX

In the Coca Cola case - 2015-TIOL-613-CESTAT-DEL, the Tribunal imposed a cost of Rs.25,000 on the Adjudicating Commissioner. The case was taken in appeal to the High Court of Punjab and Haryana with two substantial questions of Law:

(i) Whether CESTAT is empowered to impose cost on the adjudicating authority?

(ii) Whether direction to deposit cost into the PM National Relief Fund is proper when it is not voluntary?

The High Court found no illegality or perversity in the findings recorded by the Tribunal which may warrant interference by the Court. Accordingly, no substantial question of law was found to arise in this appeal.

Interestingly, the High Court did not answer the question whether the CESTAT is empowered to impose costs on the adjudicating authorities and whether the direction to deposit cost to the PM's National Relief fund is proper. 2016-TIOL-1055-HC-P&H-ST

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.

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 Court 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 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 E.I. Dupont India Pvt Ltd 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 2023, we still see blatant judicial indiscipline.

Judicial indiscipline is not because of ignorance - it is because of mighty arrogance 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 have a system wherein the bureaucracy or lower-level judiciary should never dare to question or disobey orders of higher judiciary.

Until next week

Sub: Judicial Indiscipline - A bugbear to fair Adjudication

Judicial discipline is not a virtue inculcated by the adjudicating authorities. Most of the orders passed by the departmental authorities, including the officers in the appellate hierarchy, completely turn blind to the judicial precedents and pass unfair and unconscionable orders. The adjudicating authorities do not mend their ways even when the Courts and Tribunals pass scathing strictures. This is because no administrative action is taken by the Department against such erring officials. Until the government strictly disciplines such erring officials this saga of unfair orders and judicial indiscipline will continue.

Posted by Chakravarthi Bommakanti
Sub: discipline a joke for the officers

in my own case commissioner cgst did not allow the refund of 2.75 cr out of 10.08 cr on inspite of tribunal having categorically allowed the cenvat credit being totally legal. he mentioned in the order that i will not touch this 2.75 cr as i am intending to appeal against it. a sheer example of contempt.

the non acceptance of the orders of the high courts or some time even of apex court is a routine thing by the officers as well as judicial authorities.

passing a different orders for identical issue in a single day is also case we faced.
penalty is always for malafide intention or mens rea attitude when a taxpayer is involved then why can not it be same when officers have mala fide intent. they should be penalised seriously . this will reduce the baseless scns there by base less orders and also the no of futile or meaning less appeeals creating a burdon daily on the judiciary

Posted by Navin Khandelwal

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