Can CESTAT/ITAT impose costs?

By Vijay Kumar

LET us restrict the issue to the two tax Tribunals, the ITAT and the CESTAT. One school of thought is that these Tribunals being creatures of the statutes like Income tax Act and Customs Act cannot go beyond the statutes and these statutes do not provide for awarding costs.

Now can Tribunal award costs?

The CESTAT had awarded costs in a few of cases. The Investigation Commission under the chairmanship of Sir Srinivasa Vardhachariar was in favour of the Tribunal having the power to award costs in the appeals before it.

As per Section 260A of the Income Tax Act,

(5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit.

There is an identical provision under Section 130(5) of the Customs Act.

The National Tax Tribunal Act, 2005 has a provision in Section 15 (3)(b)(ii) that the NTT may award such cost as it deems fit.

So, can the CESTAT impose costs in the absence of any legal provision for that? Under what law or authority is cost imposed?; Customs Act has no provision; is it under CPC? Is it under inherent powers?

If you look at the orders passed by the present President of the CESTAT, almost invariably, all of them end with the words, “no order as to costs”. So obviously he believes that CESTAT can order costs - he should know; he had been an experienced and distinguished judge of a big High Court. Or was it simply carrying the High Court language into the Tribunal?

Anyway, he has imposed costs in several cases during the last one year. And the cost mentioned in the case discussed above was also in an order passed by the Hon'ble President.

Frivolous litigation needs to be curbed at any cost.