Punished for passing right adjudication order - 80 year old retired officer gets relief in High Court
CAN an officer be punished for passing an order in favour of the assessee?
Some years ago, I received a call where the caller said, "I am Duli Chand". For me Duli Chand was the respondent in In Union of India and others v. Duli Chand - I never believed that a party in one of the landmark cases that I reported would call me. It was like a character in a story coming to life and talking to me.
Anyway in the Duli Chand case, the Supreme Court had held that while performing judicial or quasi-judicial functions, if the authority acted negligently or omitted essential conditions prescribed for exercise of such power, disciplinary proceedings could be initiated.
This is the sad story of an officer of the Central Excise Department who retired as an Assistant Commissioner twenty years ago in 1994 and committed the crime of passing an order in favour of the assessee - and that too because there was a Tribunal order binding him.
Two years after his retirement in 1996, the Department issued a charge sheet against him for passing an order in favour of an assessee.
It seems the Commissioner called the Assistant Commissioner and asked him to clear all demand cases involving large amounts of duty. In pursuance to the Commissioner's directions, he adjudicated a case involving classification of certain steel products. As per the Department, these products were required to be classified as "flats" under sub-head 7211.19/7211.30 of the Central Excise Tariff, while, on the other hand, as per the assesses, it was required to be classified as "other bars and rods" under subhead 7214.90. This issue had been decided in favour of the assessee by a decision of the Tribunal. The Department had gone in appeal to the Supreme Court against the decision of the Tribunal - which was ultimately dismissed.
Now, the charge-sheet against this retired officer was that
1. he adjudicated the cases transgressing monetary limit fixed for Assistant Collector; and
2. vacated the demands knowing fully well that the department had gone in appeal in the Supreme Court on the same issue which was pending with the Apex Court at that time.
The retired Assistant Commissioner submitted that as per the Board's Circular, there was no monetary limit in cases of classification and valuation matters and that he only followed judicial hierarchy and obeyed the orders of the CESTAT, which in the absence of stay by the Supreme Court was binding on him.
In 2005, 11 years after his retirement the department imposed a penalty of 30 percent cut in his pension. The CAT dismissed his petition in 2007!
The retired Assistant Commissioner is before the High Court.
In the High Court, the Department argued that though there was no financial loss to the Department as the judicial view of the CEGAT was accepted by the Supreme Court, that would not make a difference to the matter in issue because the conduct of the petitioner has to be seen on the date he passed the order.
The High Court observed,
The petitioner performing quasi-judicial functions was bound by the then prevalent legal position as enunciated by the CEGAT, which was, subsequently, affirmed by the Hon'ble Supreme Court. It was not even a case of not safeguarding revenue. It appears that since the orders were passed by the petitioner on the verge of his retirement, the department chose to draw an adverse inference against him qua his conduct only on that account, which would not be permissible or appropriate.
Judicial History: in Zunjarrao Bhikaji Nagarkar v. Union of India and others - , the Supreme Court opined that an error in interpretation of law cannot be a ground for misconduct unless it is deliberate and actuated by mala fides. If an error of law would constitute misconduct, it would be difficult to independently function for a quasi judicial officer. Such an action could always be corrected in appeal.
In an earlier decision of the Supreme Court in Union of India and others v. Shri K.K. Dhawan - , the view expressed was that the disciplinary proceedings could be initiated against a government servant concerned with regard to exercise of quasi judicial powers, if the act or omission is such as to reflect on the reputation of the government servant for his integrity or good faith or devotion to duty; there is a prima facie material manifesting recklessness or misconduct in discharge of the official duty; the officer had failed to act honestly or in good faith or had omitted to observe the prescribed conditions which are essential for the exercise of statutory power.
In Union of India and others v. Duli Chand - , the Supreme Court held that while performing judicial or quasi judicial functions, if the authority acted negligently or omitted essential conditions prescribed for exercise of such power, disciplinary proceedings could be initiated.
In Union of India and others v. Kamlakshi Finance Corporation Limited - , it was held that ignoring the views of appellate authority amounts to harassment to the assessee by failure of the officers to give effect to the orders of the authorities higher to them in appellate hierarchy. In quasi-judicial proceedings, the Revenue officers were held bound by the decisions of the appellate authorities and the principles of judicial discipline require the same to be maintained.
Coming back the present case, the High Court allowed the writ petition of the retired Assistant Commissioner and quashed the punishment and directed the Government to clear the arrears within two months with interest.
The High Court also awarded costs to the retired Assistant Commissioner quantified at Rs. 10,000/-.
The retired Assistant Commissioner is now 80 years old and is exonerated by the High Court 20 years after his retirement (assuming of course, the Government doesn't go to the Supreme Court) and he gets a cost of Rs. 10,000/- from the High Court!
All those who charge-sheeted him, should be put in jail, if we want some semblance of reason in the first adjudication order.
Why should any adjudicating authority stick his neck out and pass an order in favour of an assessee and invite a possible charge-sheet from the bosses rather than pass a mindless order in favour of Revenue and let the assessee fend for himself in the corridors of the Tribunal and High Courts pleading for waiver of pre-deposit of all those capricious crores?