Mumbai High Court strongly disapproves judicial indiscipline in CESTAT
IN a recent case 2010-TIOL-184-CESTAT-MUM, Mumbai Zonal Bench of CESTAT disagreed with an earlier decision of a Coordinate Bench rendered in favour of the assessee on a similar issue for an earlier period.
While there is no doubt that the Tribunal acted within its powers while disagreeing with an earlier decision of a Coordinate Bench rendered on a similar issue, such disagreement will not attain finality because the relevant provisions of the Law provides that in such cases of disagreement between two Coordinate Benches, the Bench which disagrees with the earlier order has to refer the matter to the President of CESTAT for constituting a Larger Bench to resolve such disagreement.
Unfortunately, in this case the Mumbai Bench chose not to follow this legal path. In fact, the Tribunal justified its action by observing as follows:
“We have to admit that when the hearing started, our impression was that the issue has been settled in favour of the appellant by the precedent decision of the Tribunal and only when the learned special counsel vehemently submitted that he would be able to convince us that the decision of the Tribunal would not be applicable, we proceeded to hear both the sides and spent considerable time hearing the arguments. While deciding not to follow the decision of the Tribunal, we would like to record clearly that we are doing so with full awareness of our responsibilities towards observance of judicial discipline. Each transaction is to be assessed and each show cause notice/issue has to be decided treating it as a fresh one unless proved otherwise. When a decision is given by the Tribunal based on representations made by both the sides, it would not be binding eternally, when it can be shown that no ratio was laid down or the conclusion was reached based on arguments advanced.”
But this approach of the CESTAT did not find favour with the Mumbai High Court. Agreeing with the contentions of the petitioner (assessee) that the approach of Mumbai Bench was contrary to established norms of judicial discipline, the High Court strongly disapproved the same with the following observations:
“The judicial decorum and legal propriety demand that where a learned single Judge or a Division Bench does not agree with the decision of a Bench of co-ordinate jurisdiction, the matter should be referred to a larger Bench. It is a subversion of judicial process not to follow this procedure. In our system of judicial review which is a part of our Constitutional scheme, we hold it to be the duty of the judges of the courts and members of the tribunals to make the law more predictable. The question of law directly arising in the case should not be dealt with apologetic approaches. The law must be made more effective as a guide to behaviour. It must be determined with reasons which carry convictions within the Courts, profession and public. Otherwise, the lawyers would be in a predicament and would not know how to advise their clients. Subordinate courts would find themselves in an embarrassing position to choose between the conflicting opinions. The general public would be in dilemma to obey or not to obey such law and it, ultimately, falls into disrepute.”