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By Vijay Kumar

Res judicata:

- a final judgement already decided between the same parties on the same question by a legally constituted court having jurisdiction is conclusive between the parties and cannot be raised again. Is the principle applicable to tax matters? There is a general opinion that it is not. In Sankaralinga Nader v. CIT (ILR 53 Madras 420), the Full Bench of the Madras High Court observed

“If fresh facts come to light which on an investigation would entitle the Income-tax Officer to come to a different conclusion from that of his predecessor we think he is entitled to reopen the question. But if there are no fresh facts it is difficult to see how he can arbitrarily go behind the facts of finding of his predecessor. The same principles of natural justice or judicial dealing, which Court impose upon Income-Tax Officer, would prevent them capriciously setting aside the orders of their predecessors based on enquiry.”

The great Judge, MC Chagla, in N.A. Shah & Co. v. Commissioner of Income-tax (1956-i 30 ITR 618) posed the question ‘Can it be said that in the subsequent year when that very question arises it is open to the Income-tax authorities at their sweet will to come to a conclusion which is contrary to the one arrived at in the earlier assessment’? He observed:

‘Even though the principle of res judicata may not apply, even though there may be no estoppel by record, it is very desirable that there should be finality and certainty in all litigations including litigations arising out of Income-tax Act. It is not a very satisfactory thing that an assessee should feel a grievance that one Tribunal came to one conclusion and another Tribunal came to a different conclusion and that the two conclusions are entirely inconsistent with one another. Therefore the second Tribunal must be satisfied that the circumstances are such as to justify it in departing from the ordinary principles which apply to all Tribunals to try and give as far as possible a finality and a conclusiveness to the decision arrived at. We should also like to lay down a further limitation upon the power of the Tribunal to revise the decision given earlier by that very Tribunal. The effect of revising this decision should not lead to injustice and the court must always be anxious to avoid injustice being done to the assessee”.

For that very reason res judicata will be applicable in customs and excise matters. In a recent order 2005-TIOL-804-CESTAT-BANG, the Tribunal observed,

“Therefore, the same issue of valuation of the impugned goods cannot be reopened. In our view, it is barred by Res-judicata, in the light of the various decisions of the Supreme Court and other Judicial fora. If the issue is reopened, what happens to the Tribunal’s Order dismissing department’s appeal? In our view, the valuation whether right or wrong, has reached finality. It cannot be agitated again and again. If that is allowed, there will not be any end to the number of proceedings. Today the investigation has revealed that ‘A’ is the importer. After a few months investigations may reveal the importer to be some ‘B’. Are we going to allow another proceedings in the light of new facts? There should be finality to litigation. No doubt, when the investigation is not proper, the cause of justice suffers. That is no reason to have multiplicity of proceedings, which is against the public policy”