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January 26, 2011
All Articles by: Mr.†M. GOVINDARAJAN       View Profile
  • Contents

                        The tax laws provide for appeal against the order of the Adjudicating Authority before Commissioner (Appeals).  Appeal may be filed before Appellate Tribunal against the order of Commissioner (Appeals).   Further appeal may be filed before the High Court against the order of Appellate Tribunals.   Usually the order of the Adjudicating authority will confirm the demand of service tax along with interest and penalty under relevant sections/rules.  Before filing appeal it is required to deposit the tax confirmed along with interest and penalty if any and the proof for payment is to be produced before the Appellate Authority.   Or the appellant should file a stay petition seeking the Appellate authority to stay the order of the lower authority from collecting the tax demanded along with interest and penalty, if any.   The Appellate authority after giving reasonable opportunities to the parties will decide the stay petition.   The Appellate Authority may give full waiver of pre deposit or it may direct to remit part of the amount or full amount.  The appeal filed, without filing stay petition, will not stay the order of the lower authority.   Therefore it can be inferred that considerations while deciding interim applications are different than deciding appeal itself whether filed by the Department or assessee.

                        The said concept has examined in the case law 'Commissioner of Central Excise & Customs, Daman V. MET India Limited' - 2010 -TMI - 78538 - (GUJARAT HIGH COURT).   It is a group of appeals.  Detailed show cause notices have been issued  and the orders have been passed by the appellate authority and admittedly the order is passed by the Tribunal while deciding the interim applications of three parties and the entire group of appeals are remanded back to the adjudicating authority without affording any opportunity in respect of other appeals to the department. 

                        The Department, appearing in some of the appeals put forth the following submissions:

  • The Tribunal has passed the order in a laconic and cavalier fashion and, therefore the same is required to remanded back to it;
  • While remanding the matter back to the adjudicating authority, the Tribunal has in fact affected the valuable right of appeal of the appellant department;
  • There were group of appeals which can be seen from the title of the order of the Tribunal and only in three appeals applications for stay were filed by 3 parties and while deciding such interim applications of three appellants the Tribunal has decided the entire group of appeals and remanded the matters back without affording any opportunity of hearing to the appellant department in all other cases;
  • There is no reference even as to whether such interim applications were there in other matters or not;
  • The right of appeal is a substantive right which cannot be denied in such a fashion without affording even an opportunity of hearing in each matter;
  • The Tribunal being the final fact-finding authority was required to consider each appeal and the facts relevant to each appeal and therefore, while deciding the interim application in three matters, it could not have disposed of all the appeals in such a slipshod manner;
  • The matters are required to be remanded for being decided by the Tribunal in the light of the basic principles of law that right of appeal or a statutory right of appeal is a substantial right and the authority or the Tribunal authorized to hear and decide such appeal must decide it after considering the merits and the pros and cons of the matter and after affording an opportunity of hearing to both sides;

The High Court held that the reference made to the three interim applications may not be applicable on facts qua other appeals and therefore the appeal as provided under the statute could not have been decided in such cavalier fashion.  It is well settled that the right of appeal is a substantive right which is vested in the party aggrieved.   The right to file an appeal gets crystallized only when it is decided by the appellate authority or the court/tribunal and no clog can be put on such a right. 

                        The High Court further held that as the appeals have been decided without having heard on merits while deciding the interim applications in three matters, the order passed by the Tribunal deserves to be quashed and set aside.  Though the issue may be similar or identical, again it will have to be considered on the basis of the facts and it is obligatory on the part of the Tribunal to consider the issue involves the pros and cons and after considering the submissions on the basis of material and evidence the appeal could be decided.   If the issues involved are identical or similar, even then it was required to be considered based on the material while deciding the appeal and the appeal ought to have been decided and considering the submissions and after providing an opportunity of hearing to both sides.  Therefore, it is necessary and imperative that it must appreciate the basic facts involved and the controversy or the issue and submissions canvassed by both the sides and thereafter it could have decided, including even the decision to remand it back to the adjudicating authority. 

                        The High Court further pointed out that it is well settled by catena of judicial pronouncements that reasons are required to be recorded reflecting about the decision making process.   It relied on the judgment of the Supreme Court in 'Ran Singh and another V. State of Haryana and Another' - (2008) 4 SCC 70 in which the Supreme Court held that reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at.  Reasons substitute subjectivity by objectivity.    The emphasis on recording reasons is that if the decision reveals the 'inscrutable face of the sphinx', it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision.   Right to reasons is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before court.   Another rationale is that the affected party can know why the decision has gone against him.   One of the salutary requirements of nature justice is spelling out reasons for the order made, in other words, a speaking out.  The 'inscrutable face of a sphinx' is ordinarily incongruous with a judicial or quasi-judicial performance.

                        The High Court further held that while remanding the matter back, there is not a whisper as to the issue involved and in any case while deciding the interim applications in three matters, all the other appeals itself could not have been disposed in such manner.  The High Court stressed that the consideration while deciding the interim applications would be different than deciding the appeal itself whether it is filed by the Department or the assessee.  The high Court at pains noted that the approach of the Tribunal and the course adopted by the Tribunal as it has disposed of the appeals while deciding the interim application in three matters in such manner without having discussed with regard to the issue involved or the merits of the case on appreciation of material or providing an opportunity of being heard.  The High Court felt that the present group of appeals deserves to be remanded back to the Tribunal with direction that the Tribunal will decide about the merits or the issue involved in the matter after providing an opportunity of hearing to both the sides. 


By: Mr.†M. GOVINDARAJAN - January 26, 2011



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