TIOL-DDT 2916
24 08 2016
Wednesday

WHEN you file an appeal or writ petition in a High Court against an order of the CESTAT or ITAT, should the CESTAT or ITAT be shown as a respondent? Once I almost lost an appeal on this ground when a High Court told me that my appeal was bound to be dismissed as I had not shown CESTAT as a respondent in a case challenging an order of the CESTAT. I submitted that the other party in my appeal is the Union of India/Commissioner who should defend the orders of the Tribunal. The Tribunal is not expected to defend its order before the High Court. I submitted that when I appeal to the Supreme Court against an order of the High Court, I don't make the High Court a respondent. The Court was convinced and my appeal was allowed. Not everyone is so lucky.

There was a case decided by the Supreme Court on Monday in which the High Court had dismissed an appeal because the Tribunal was not impleaded as a party. The Supreme Court observed,

The tribunal is not required to defend its orders when they are challenged before the High Court in a Special Civil Application under Articles 226 and 227. It is for the person aggrieved to pursue his or her remedies before the tribunal. An order of the tribunal is capable of being tested in exercise of the power of judicial review under Articles 226 and 227. When the remedy is invoked, the tribunal is not required to step into arena of conflict for defending its order. Hence, the tribunal is not a necessary party to the proceedings in a Special Civil Application.

In several appeals before the High Courts, you will find the Tribunal impleaded as a respondent as in:

CCE, Chandigarh Vs CESTAT - 2007-TIOL-23-HC-P&H-CESTAT

CCE, PONDICHERRY Vs CESTAT - 2009-TIOL-518-HC-MAD-CX

UoI Vs CESTAT - 2005-TIOL-51-HC-KOL-CESTAT

CIT Vs INCOME TAX APPELLATE TRIBUNAL - 2006-TIOL-155-HC-DEL-IT

CIT Vs INCOME TAX APPELLATE TRIBUNAL - 2012-TIOL-115-HC-CHATTISGARH-IT

PR CIT Vs INCOME TAX APPELLATE TRIBUNAL- 2015-TIOL-2787-HC-P&H-IT

Can the Tribunal be an appellant/petitioner in a case? It so happened that the ITAT filed an appeal against an order of the High Court. We reported the case in 2002-TIOL-99-SC-IT.

You can see the latest judgement of the Supreme Court in 2016-TIOL-125-SC-MISC-LB.

Striking Down by One High Court - Binding on Other High Courts?

RECENTLY the Delhi High Court struck down the levy of Service Tax on short term accommodation in hotels as it was outside the legislative competence of Parliament. - 2016-TIOL-1730-HC-DEL-ST. In his article 'Short Term Accommodation & Service Tax - the impasse', Bharat Bhushan, Advocate raised a question whether the judgement is applicable to the whole of India or only within the territorial jurisdiction of the Delhi High Court.

What happens when a taxing provision is struck down by a High Court? Is this decision binding on another High Court?

This issue was discussed in the National Judicial Academy recently where several judges (past and present, of High Courts and Supreme Court) and academics participated.

Justice G. Raghuram sharing his experience as President of a tribunal, CESTAT opined that the process of invalidation and interpretation of a statute looks similar; if a judgement of a High Court interpreting the statute has persuasive value on other High Courts then a judgement invalidating a statute should also have persuasive value only. He said that these difference of opinions are bound to exist and if one High Court is bound by invalidation of other, then they should also be bound by in pari materia statutes of other states. One of the participants said that if one High Court invalidates a particular Act, it must be invalidated in other High Courts also. What would be binding then if two High Courts on the same day give contradicting opinions? There has to be certainty and uniformity across the country.

Chief Justice Chagla said in a judgment that if a High Court is deciding a judgment then the other High Courts must follow the earlier judgment unless there is a different perception and in case of such different perception, the judge must mention the reasons for such different perception. While giving a different judgment, such High Court's judge must inform about this change in perception and this different judgment to the High Court whose judgment has not been followed because these judgments are statutes for the entire nation.

In several cases, where the levy of Service Tax was struck down by a High Court, the assessees were in a dilemma whether to pay the tax or not to pay.

In 2009, when the Delhi High Court struck down Service tax on renting, the Chennai Service Tax Commissioner in an RAC Meeting clarified,

Board was aware of the decision of the Hon'ble High Court of Delhi and a SLP along with Stay Petition has been filed before the Hon'ble Supreme Court of India. It would be incorrect to stop payment of service tax, as otherwise demand notice would be issued by the jurisdictional officers invoking interest and penalty provisions. In the event of Revenue winning the appeal, the responsibility for the payment of applicable Service Tax with interest would squarely fall on the landlord. Hence, till the Hon'ble Supreme Court decides the case, it would be proper to mention service tax in the bills and remit the tax collected into the Govt. Account.

Incidentally, in a recent case of Dr. T. Rajakumari & Ors vs. Govt. of Tamil Nadu & Ors, the Madras High Court held -

"4. It is trite to say that once a High Court has struck down the provisions of the Central Act, it cannot be said that it would be selectively applied in other States. Thus, there is no question of applicability of provisions struck down by the High Court as of now until and unless the Hon'ble Supreme Court upsets the Judgment or stays the operation of the Judgment."

See 2016-TIOL-1792-HC-MAD-MISC

Which High Court Order should a Tribunal Bench Follow?

SUPPOSE a Tribunal Bench at Mumbai is faced with the problem of deciding as to which High Court decision it has to follow. If there is a decision of the Bombay High Court, there is no problem (to a large extend), but what happens if there are two conflicting decisions of say Madras and Calcutta High Courts? Which decision should the Tribunal follow? What happens if the issue is before a Larger Bench of the Tribunal?

I had an interesting case some years ago. A CESTAT Larger Bench had given an order in favour of the assessees - and there were several assessees spread across several States in this case.

Revenue appealed to the Kerala High Court against some of the assessees in the LB case and the High Court allowed the appeal setting aside the Tribunal decision. Around the same time, the Revenue appealed in the AP High Court against another assessee covered in the same LB order. The AP High Court upheld the CESTAT Order and dismissed the Revenue appeal.

The same issue again reached the Tribunal for a different period. The tribunal bench in Bangalore had territorial jurisdiction for both AP and Kerala. It happened that on the same day an appeal each was listed from Kerala and AP on the issue. When the Kerala case was called, the Bench observed that the issue was covered against the assessee by the Kerala High Court judgement and so dismissed the party's appeal. Next came my case from Andhra Pradesh. I was armed with an order of the AP High Court in my favour in the same LB case and submitted that the Tribunal was bound by the AP High Court order in my case.

The Tribunal wondered if it could take two contradictory decisions (on the same day) in two identical cases because of two different orders from two High Courts. I submitted that as the Tribunal was working under the jurisdiction of three High Courts, it was bound by the decisions of each of the High Courts in matters pertaining to the assesses from the respective States. Tribunal agreed and ordered in my favour. Much Obliged!

I discussed this issue with a retired High Court judge who was of the opinion that the Tribunal sitting in Bangalore was under the jurisdiction of the Karnataka High Court and if there was no order of the Karnataka High Court and there were conflicting orders from other High Courts, the Tribunal should decide the case on merits and follow one of the High Courts and not both. Not much obliged!

Can Larger Bench Include Referral Bench?

WHEN both the Members of a Bench of the Tribunal feel that the issue needs to be decided by a Larger Bench, due to conflicting decisions of two benches, a Larger bench is constituted. Can the Larger Bench constitute the referral bench also? That is can the Larger Bench include the Members who referred the case the Larger Bench? There seems to be no bar! If two Members have already come to a conclusion, what is the purpose of constituting a Larger Bench? I asked a President whether it was fair to include in the Larger Bench, two Members who referred the case to the Larger Bench? He said there was nothing wrong with it. It seems in one of our High Courts, it is mandatory for the referring judge to be included in the Larger Bench.

The Maze of Justice Machinery!

Republic of Guinea-Bissau included in 'Least Developed Countries'

GOVERNMENT  has amended the Notification No. 96/2008-Customs, dated 13th August, 2008 so as to include Republic of Guinea-Bissau in the list of Least Developed Countries eligible to avail of the benefit of duty free tariff preferences (DFTP) scheme.

Notification No. 46/206-Customs; Dated: August 23 2016

Legislative Changes - CBDT Invites Suggestions.

IN the past, suggestions for legislative changes were invited by CBDT from field formations during the budget exercise. Now it has been decided to create an exclusive Email Id (suggestion.tpl@gov.in)  for receiving suggestions thought (what the Board means could be throughout) the year for legislative changes relating to direct taxes from officers/officials of the department.

Do they want suggestions only from field officers and not from the public?

CBDT Letter in F No. 134/56/2015-TPL., Dated: August 23 2016

Tomorrow is a holiday - Janmashtami

Until Friday with more DDT

Have a nice day.

Mail your comments to vijaywrite@tiol.in