Inherent powers of Quasi Judicial Authorities and more particularly of Settlement Commission

[Pramod Rai]

In tax administration the effective disposal of litigation is outside the regular court system on account of presence of departmental and extra departmental quasi judicial authorities. Though a number of matters are agitated in high courts and supreme court, the stand taken by Appellate Tribunals, Settlement Commission, Authority for Advance Ruling is changed by higher courts in a very few cases. Like any other court the quasi judicial authorities under tax laws, do commit mistakes which are at times apparent on face of the order passed by them. However when litigants approach these forums for rectification of mistake or seeking some direction for implementation of orders passed by them, at times in absence of express provision of law, it is argued that these forums are neither courts nor they have inherent powers given under the statute so that they can pass miscellaneous orders removing errors and/or giving directions for effective implementation of their orders. This article examines whether Quasi Judicial Authorities have inherent powers like regular courts

In a recent case before Settlement Commission for Customs, Excise and Service Tax, where revenue authorities were acting in derogation to the order passed by commission and assesse approached the commission seeking implementation of order passed by commission, during the hearing the bench posed the question whether in absence of express provision under the Central Excise Act 1944 and Customs Act 1962, the commission has got power to entertain the miscellaneous application seeking effective implementation of its order ensuring conclusive settlement of the case.

Every quasi judicial authority is a court

Section 3 of the Indian Evidence Act, 1972 defines 'Court' as below;

"'Court' includes all Judges and Magistrates and all persons, except arbitrators, legally authorized to take evidence".

Thus any person, even though he is not a Judge or a Magistrate (except arbitrators), would be a Court if he is legally authorized to take evidence. All quasi judicial authorities are legally authorized to take evidence and thus they are court under Section 3 of the Indian Evidence Act, 1972. Settlement commission is expressly authorized to take evidence under Chapter V of CEA 1944 and chapter XIVA of Customs Act 1962 and thus is a court. In T.V. Subba Rao v. T. Koteswara Rao 1962 (1) TMI 57 - ANDHRA PRADESH HIGH COURT, it was held that ordinarily a body or tribunal would be a Court provided it has the legal power (1) to record evidence and (2) to make a decision on a matter in contest or issue between two opposite parties so as to bind the parties before it in law. The same idea may also be expressed by stating that a Court is a body exercising judicial functions under the authority of law.

Every Court has inherent power to meet ends of justice

Having concluded that quasi judicial authorities are courts, it is submitted that every court has got inherent powers in addition to powers conferred expressly to ensure ends of justice. Section 151 of the Civil Procedure Code contain the Legislative recognition of the powers of every Civil Court to pass necessary orders to sub serve the ends of justice and to prevent the abuse of process of the Court in cases coming before it. These powers are not expressly conferred on the Court but are inherent in every Civil Court. Since the section itself does not lay down any guideline when to resort to inherent powers and when not except for using the two key phrases that is “Ends of Justice” and “Abuse of process of Court”. In a series of decisions the Supreme Court has enunciated the scope and ambit of the inherent powers of the courts.

In Union of India v. Paras Lminates Pvt. Ltd. 1990 (8) TMI 140 - SUPREME COURT OF INDIA, apex court held as under

“There is no doubt that the Tribunal functions as a court within the limits of its jurisdiction. It has all the powers conferred expressly by the statute. Furthermore, being a judicial body, it has all those incidental and ancillary powers which are necessary to make fully effective the express grant of statutory powers. Certain powers are recognised as incidental and ancillary, not because they are inherent in the Tribunal, nor because its jurisdiction is plenary, but because it is the legislative intent that the power which is expressly granted in the assigned field of jurisdiction is efficaciously and meaningfully exercised. The powers of the Tribunal are no doubt limited. Its area of jurisdiction is clearly defined, but within the bounds of its jurisdiction, it has all the powers expressly and impliedly granted. The implied grant is, of course, limited by the express grant and, therefore, it can only be such powers as are truly incidental and ancillary for doing all such acts or employing all such means as are reasonably necessary to make the grant effective. As stated in Maxwell on Interpretation of Statutes, (eleventh edition) “where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution.”

In Ram Chand and Sons Sugar Mills Pvt. Ltd. Vs Kanhayalal Bhargav, (A.I.R 1966 SC 1899) the Supreme Court in this connection, observed that:

“the inherent power of the Court is in addition to and complimentary to the powers expressly conferred under the Civil Procedure Code; but that power will not be exercised if its exercise is inconsistent with, or comes into conflict with any of the powers expressly or by necessary implication conferred by the other provisions of the Code. If there are express provisions exhaustively covering a particular topic, they give rise to a necessary implication that no power shall be exercised in respect of the said topic otherwise than in the manner prescribed by the said provisions.”

In the case of Arjun Singh v. Mohindra kumar, 1963 (12) TMI 27 - SUPREME COURT the Hon’ble Supreme Court has said that

“It is common ground that the inherent power of the court cannot override the express provisions of the law. In other words, if there are specific provisions of the Code dealing with a particular topic and they expressly or by necessary implication exhaust the scope of the powers of the Court or the jurisdiction that may be exercised in relation to a matter the inherent power of the court cannot be invoked in order to cut across the powers conferred by the Code. The prohibition contained in the Code need not be expressed but may be implied or implicit from the very nature of the provisions that it makes for covering the contingencies to which it relates.”

In the case of Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal- 1961 (11) TMI 59 - SUPREME COURT OF INDIA apex Court at page 463 referred to section 151 of the Code of Civil Procedure and observed that the section itself said that nothing in the Code should be deemed to limit or otherwise affect the inherent power of the court to make orders necessary for the ends of justice. This inherent power as was observed by this Court had not been conferred on the Court. It was a power inherent in the Court by virtue of its duty to do justice between the parties before it.

Sunita Devi Singhania Hospital Trust v. Union of India, 2008 (11) TMI 249 - SUPREME COURT OF INDIA The Hon’ble Supreme Court in this case has held that:

“It is true that the period of limitation specified in terms of Sub-Section (2) of Section 129(B) of the Customs Act is required to be observed but the Tribunal failed to notice that it has inherent power of recalling its own order if sufficient cause is shown therefor. The principles of natural justice, which in a case of this nature, in our opinion, envisage that a mistake committed by the Tribunal in not noticing the facts involved in the appeal which would attract the ancillary and/or incidental power of the Tribunal necessary to discharge its functions effectively for the purpose of doing justice between the parties, were required to be complied with.

Assistant Collector of Customs, Madras v. Abdul Samathu, 1984 (12) TMI 70 - HIGH COURT OF MADRAS. The Hon’ble High Court has held that:

“It is true that Section 10(3) of the Passports Act, 1967 enumerates the grounds on which and the circumstances under which the Passport authority can impound the Passport issued under the Act, i.e. an Indian Passport but the Act does not deal with the Passport issued by a foreign Government. There is, however, no provision in the Passport Act or in any other law for the time being in force which prohibits a Court from withholding or impounding a Passport of a person accused of a grave offence when there is reasonable apprehension that the accused may flee from the country and make the prosecution against him an exercise in futility. Such a power is a part of the inherent powers of the Court. It is age old and well established principle that Courts must possess inherent powers apart from the express provisions of the law which are necessary to their existence and the proper discharge of duties imposed upon them by law. Every Court, in the absence of express provision must be deemed to possess, as inherent in its very constitution all such powers as are necessary to do the right and to undo a wrong in the course of administration of justice. The Criminal Court has the power to withhold or impound the passport of any person more so, of a foreign accused of a grave offence when there is every likelihood of his leaving the country and making a mockery of the judicial process against him.

Therefore it is safe to conclude that quasi judicial authorities, in addition to powers expressly conferred on them, has got inherent powers like any other regular court to entertain the miscellaneous application and pass orders and give direction to meet ends of justice. The basic objective for creation of Settlement commission is to conclusively settle the dispute without going into rigors of adjudication process and if revenue authorities try to open an issue conclusively settled by settlement commission, the commission has got inherent power to pass orders seeking effective implementation of its order to meet end of justice.

Comparison between powers of CESTAT and Settlement commission

During the argument it also come up that CESTAT in a routine manner is exercising inherent powers because inherent powers are specifically provided under Rule 41 of CESTAT Procedure Rules 1982, whereas Settlement commission has not been given any such power and thus it cannot exercise inherent powers. It is submitted that CESTAT Procedure Rules 1982 are neither legislated by parliament nor by central government rather they are framed by CESTAT itself to govern its procedure. The opening line as well as Rule 41 is extracted below for clarity.

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL (PROCEDURE) RULES, 1982

CEGAT Notification No. 1/CEGAT/82, dated 25-10-1982 as amended

In exercise of the powers conferred by sub-section (6) of section 129C of the Customs Act, 1962 (52 of 1962), read with sub-section (1) of section 35D of the Central Excises and Salt Act, 1944 (1 of 1944) and sub-section (1) of section 81B of the Gold (Control) Act, 1968 (45 of 1968), the [Customs, Excise and Service Tax Appellate Tribunal] hereby makes the following rules, namely :-

RULE 41. Orders and directions in certain cases. - The Tribunal may make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of its process or to secure the ends of justice.

The power which is conferred on CESTAT by sub-section (6) of section 129C of the Customs Act, 1962 read with sub-section (1) of section 35D of the Central Excises Act, 1944 is as under :-

Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of the Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.

Thus what is provided by CESTAT in Rule 41 is provided by CESTAT itself because it has got inherent power to do so. Rule 41 is mere expression of power by CESTAT itself which CESTAT is already having and thus rule 41 is nothing but reiteration of Section 151 of CPC. The power similar to Section 35D(1) of CEA 1944/129(6) of CA 1962 is already conferred on Settlement commission under Section 32-I(4) of CEA 1944/Section 127F(4) of Customs Act 1962, which reads as under

32-I-(4) The Settlement Commission shall, subject to the provisions of this Chapter, have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers, or of the discharge of its functions, including the places at which the Benches shall hold their sittings.

Thus today settlement commission can very well frame a procedural rule similar to CESTAT Procedure Rules 1982. The fact that commission has not framed any such rules does not mean that it is devoid of such inherent powers. Settlement commission and CESTAT both being creation of CEA 1944 and both being authorized to regulate their own procedure under the statute has got similar inherent powers. CESTAT in a routine manner keep on passing orders for effective implementation of its orders, the commission can also do the same. There is nothing in law which prohibits commission from exercising inherent powers.

Pramod Kumar Rai

Advocate