Precedence - Which is the Jurisdictional HC?
THE Tribunal is bound by and is required to follow the decision of the jurisdictional High Court. But how do you decide which is the jurisdictional High Court? We have CESTAT Benches only in 6 cities whereas every State has a High Court. And a Tribunal Bench may be confronted with decisions of several High Courts .
Let us see a real example.
Larger Bench of the Tribunal had in ATUL COMMODITIES (P) LTD - () held that second hand photocopiers are capital goods and are freely importable. There were four parties in this case other than ATUL - MECH AND TECH, SRI BALAJI OFFICE EQUIPMENTS, R S ENTERPRISES and AIR OVERSEAS, under different Commissionerates.
Against this order (Balaji), the Hyderabad Customs Commissioner filed an appeal in the AP High Court. The AP High Court dismissed the appeal with the terse remark that "No question of law, much less any substantial question of law, as such, arises for our consideration in this appeal" - ()
The Commissioner of Customs, Cochin appealed to the Kerala High Court (against Atul and Mech and Tech). The Kerala High Court set aside the Tribunal (LB) decision and allowed the Revenue appeal. - ()
So the situation is in Andhra Pradesh, the import of second hand copiers is perfectly legal while it is not in Kerala under the same Customs Act and Foreign Trade policy. This would lead to strange situations, as the following case would show.
On a particular day, there were two cases on the above issue listed before the Bangalore Bench of the Tribunal - one from Kerala and one from Andhra Pradesh. The Kerala case came first and the Bench said they were helpless as the Kerala High Court decision was against the assesse. Later when the Andhra Pradesh case came up, the lawyer said that the AP High Court decision would apply to him as that was his jurisdictional High Court and the Tribunal was bound by the AP High Court order. 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. The lawyer 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 allowed agreed. (Incidentally I was the lawyer representing the assesse from AP).
Recently, I discussed this issue with a just retired Judge of a High Court. He 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.
Actually, the Tribunal was faced with this issue within two years of its existence and a Full Bench (Five Members) held that, in view of its All India jurisdiction and peculiar features, the Tribunal cannot be held bound to the view of any one of the High Courts, but has the judicial freedom, to consider the conflicting views, reflected by different High Courts, and adopt the one considered more appropriate to the facts of a given case before the Tribunal. The Tribunal also indicated that this should be so, irrespective of the fact whether one particular assessee was within the jurisdiction of a specified High Court or the original adjudicating authority was located there.
Recently the CESTAT, Principal Bench presided by the President had to decide this issue. The matter related to Service Tax liability on coal handling. There are two conflicting decisions of the Rajasthan High Court and Orissa High Court. The assesse, the Adjudicating authority and the Commissioner (Appeals) are located within the territorial jurisdiction of the Rajasthan High Court.
The Tribunal located at New Delhi is neither within the territorial jurisdiction of the Orissa High Court nor the Rajasthan High Court and there is no decision on this issue from the Delhi High Court.
Now, should the Tribunal follow Rajasthan or Orissa High Court?
The tribunal followed the earlier Larger Bench decisions and held that the Rajasthan High Court decision would prevail.
We will bring you this case tomorrow.