UOI Vs UOI - All SCNs and Orders Against Govt Departments illegal? Supreme Court Dismisses Revenue Appeal
WHO should be the appellant/respondent in a case filed by/against a Government Department?
In Divisional Railway Manager Vs Commissioner of Central Excise, Jaipur-II - 2013-TIOL-1891-CESTAT-DEL, the CESTAT observed,
it is clear and beyond disputation that suits or proceedings against the State can be pursued only in the name of the Union of India or the concerned State, as the case may be. it is axiomatic that neither the Secretary to the Government; the Railway Board nor as has been done in the present case, the Divisional Railway Manager, Ajmer Division may in law and per se represent the Indian Railways or the Union of India, in the absence of the Central Government being arrayed as a party. A decree passed against the Divisional Railway Manager cannot be executed against the Union of India nor can a decree or award passed against the Divisional Railway Manager be satisfied by drawals from the Consolidated Fund of India. The provisions of Chapter II, in particular, the elaborate provisions relating to procedure in financial matters set out in Articles 112 to Article 114 in the Constitution clearly indicate that a charge upon or an appropriation from the Consolidated Fund of India could only be in respect of expenditure of the Government of India. It is noticed in several cases, clearly oblivious of this fundamental constitutional mandate, proceedings are initiated against state actors instead of the State as duly designated under the Constitutional mandate .
The Tribunal held: The adjudication order as confirmed by the order of the Commissioner (Appeals) in this case, (in circumstances where the Union of India, Ministry of Railways represented by the authorised designated authority was not arrayed as a party to the assessment proceedings) are incompetent and consequently the adjudicated liability cannot be recovered by lawful process of law, from the Indian Railways, a department of the Union of India or from any division thereof.
In fine, the Tribunal held that Proceedings against a Government Department are illegal, if the Union of India is not shown as a respondent. In this case, the Show Cause Notice and the orders were against the Divisional Railway Manager and not the Union of India. For more details on this issue, please see DDT 2256 - 20.12.2013.
The Tribunal forwarded a copy of its order to the Central Board of Excise and Customs for information and issuance of appropriate guidelines to the field formation. Instead of giving guidelines, the Board approached the High Court with the questions of Law whether:
1. the Tribunal was correct in dismissing the appeal for mis-joinder of parties, in an appeal arising out of quasi judicial proceedings (wherein the provisions of CPC are not applicable) of the Central Excise Department by incorrectly applying the Judgement arising out of a suit which was in nature of pure civil proceedings?
2. the Tribunal after holding the appeal to be incompetent could itself have declared/observed that quasi-judicial proceedings of the Central Excise department to be a nullity and void when the matter could not be examined on merits at all?
3. the CESTAT was right in holding the appeal to be an incompetent appeal when the dispute arose out of quasi-judicial proceedings inter-se between two departments of the Union of India (Central Govt.) as the Union of India was not impleaded.
The High Court observed, ()
It is not in dispute that the assessment was in respect of the Union of India through the Ministry of Railways. The Divisional Railway Manager, who is an employee of the Union of India or Ministry of Railway, is not the assessee. No show cause notice was issued to the Union Government. The adjudication did not take place against the Union Government. The order of adjudication and the demand that would be raised in pursuance thereof, would be enforced not against the Divisional Railway Manager but against the Union of India through the Ministry of Railways. Having regard to this position, it is but necessary that the proceedings commencing with the notice to show cause must be initiated against the Union of India through the Ministry of Railways .
The entire exercise of adjudication which commenced with the notice to show cause is clearly a nullity. The show cause notice ought to have been issued against the Union of India through the Ministry of Railways and not against the Divisional Railway Manager who was but an employee and servant of the Ministry of Railways.
The High Court found no merit in the appeal, which did not raise any substantial question of law. And so dismissed the appeal.
The perseverant Revenue took the matter in SLP to the Supreme Court.
A Larger Bench of the Supreme Court headed by the CJI, yesterday dismissed the petition on the ground of delay as well as on merits. But the question of law is kept open. (SLP CC No. 12565/2015, dated 13.07.2015)
What is the question of law kept open when the petition is dismissed on merits also?
Maybe now the CBEC can think of those instructions to the field formations, as suggested by the CESTAT.
So, now the Union of India also necessarily has to be the appellant/respondent.