THE CARDAMOM PLANTERS MARKETING CO-OPERATIVE SOCIETY LTD., V. UNION OF INDIA,

WP(C)/35724/2019

AI Insights

The case involves the Cardamom Planters Marketing Co-operative Society Ltd., which challenged an order (Ext.P-7) from the Assistant Commissioner of Central Tax and Central Excise, Idukki Division, confirming service tax proposals against the society for its auctioneering activities. The society argued that the order violated principles of judicial discipline by not adhering to a superior appellate authority's decision (Ext.P-4), which had previously favored the society. The respondents contended that the society had an alternate appellate remedy, which the society had not exhausted. The court, referencing decisions from the Supreme Court, emphasized the need for lower authorities to follow the orders of higher appellate authorities and directed the society to pursue the available appellate remedy.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 678968 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 09-01-2020
• Assessment Year: misc
• Other Referred Cases: Union of India v. Kamlakshi Finance Corporation Ltd., Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District I, Calcutta
• Laws Referred To: Article 226 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: THOMAS NELLIMOOTTIL
• Assessee Lawyers: M GOPINATHAN
• Keywords: Appellate Authority; Judicial discipline; Service tax; Writ of Certiorari; Cardamom Auctioneer
• Section: 55 E.L.T. 433; 41 ITR 191

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS THURSDAY, THE 09TH DAY OF JANUARY 2020 / 19TH POUSHA, 1941 WP(C).No.35724 OF 2019(M) PETITIONER: THE CARDAMOM PLANTERS MARKETING CO-OPERATIVE SOCIETY LTD., “SPICE HOUSE”, THEKKADY P.O., IDUKKI DISTRICT-685509, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER MR.P.C.PUNNOOSE. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM RESPONDENTS: 1 UNION OF INDIA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI-110004. 2 ASSISTANT COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, IDUKKI DIVISION, K.P.VARKEYS MALL, IIND FLOOR, ROTARY JUNCTION, THODUPUZHA, IDUKKI-685584. 3 ADDL.R3- THE COMMISSIONER OF CENTRAL EXCISE (APPEALS), CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, ERNAKULAM, COCHIN-682 018. (ADDL R3 IS SUO MOTU IMPLEADED AS PER ORDER DATED 9.01.2020.) R1 BY ADV. SRI.HARIDAS P.NAIR R2, ADDL.R3 BY SRI.THOMAS MATHEW NELLIMOOTTIL, SC, CENTRAL BOARD OF EXCISE & CUSTOMS THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.35724 OF 2019(M) 2 ALEXANDER THOMAS, J. =========================== W.P(C) No.35724 of 2019 =========================== Dated this the 09th day of January, 2020 JUDGMENT The prayers in the above Writ Petition (Civil) are as follows: \"i) call for the records leading to Ext.P7 order issued by the 2nd respondent and quash the same, by the issuance of a writ of certiorari or such other writ, order or direction; ii) grant such other and incidental reliefs as this Hon'ble Court may deem just and necessary on the facts and circumstances of this case; And iii) Allow this writ petition (civil) with costs to the petitioner.” 2. Heard Sri.P.Gopinathan, learned senior counsel instructed by Ms.S.Parvathy, learned counsel appearing for the petitioner and Sri.Thomas Mathew Nellimoottil, learned Counsel appearing for the respondents. 3. The case projected in this Writ Petition is as follows: The petitioner is engaged in the activity of sale of cardamom entrusted by the growers on commission basis and the petitioner WP(C).No.35724 OF 2019(M) 3 Co-operative Society is licensed as a cardamom auctioneer by the Spices Board under the Cardamom (Licensing & Marketing) Rules, 1987. The Service Tax Department of the Government of India has confirmed its proposals against the petitioner for payment of Service Tax on this activity of the petitioner. However, the Appellate Commissioner vide Ext.P-4 order dated 22.07.2019 had dropped the proposals and allowed the appeal of the petitioner. When the 2nd respondent conducted adjudication of another show cause notice in a similar matter, the petitioner relied on Ext.P-4 order dated 22.07.2019 by an officer, who is superior in rank to the 2nd respondent and prayed to drop the proposal in the show cause notice. However, the 2nd respondent has passed Ext.P7 order confirming the proposals, refusing to follow the appellate order as per Ext.P-4. The petitioner would fervently urge that the action of the 2nd respondent in not following the decision of the superior authority is upsetting the hierarchical system and all principles of judicial discipline, which warrants inference of this Court under Article 226 of the Constitution of India. In the light of these averments and contentions, the petitioner has filed this Writ Petition (Civil) with the aforementioned WP(C).No.35724 OF 2019(M) 4 prayers. 4. Sri.P.Gopinathan, learned senior counsel instructed by Ms.S.Parvathy, learned counsel appearing for the petitioner would place reliance on the decisions of the three Judge Bench of the Apex Court in Union of India v. Kamlakshi Finance Corporation Ltd. [1991 (55) E.L.T. 433 (S.C.)], in paragraph No.6 as well as the judgment of the Constitution Bench of the Apex Court in the case in Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District I, Calcutta and another [41 ITR 191], p.207 & 208. It has been held by the three Judge Bench of the Apex Court in Kamlakshi Finance Corporation Ltd.'s case (supra) [1991 (55) E.L.T. 433 (S.C.)], paragraph No.6 as follows: “6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching in their conclusion,by-passed two appellate orders in regard to the same issue which were placed before them,one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view,rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate heirarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors WP(C).No.35724 OF 2019(M) 5 working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not \"acceptable\" to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.” 5. It will be pertinent to refer the relevant portions of pages 207 and 208 of the judgment of the Constitution Bench of the Apex Court in Calcutta Discount Co. Ltd.'s case (supra) [41 ITR 191], p.207 & 208, which reads as follows: “Mr. Sastri next pointed out that at the stage when the Income- tax Officer issued the notices he was not acting judicially or quasi- judicially and so a writ of certiorari or prohibition cannot issue. It is well settled however that though the writ of prohibition or certiorary will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled, will issue appropriate orders or directions to prevent such consequences. Mr. Sastri mentioned more than once the fact that the company would have sufficient opportunity to raise this question, viz., whether the Income-tax Officer had reason to believe that under assessment had resulted from non- disclosure of material facts, before the Income-tax Officer himself in the assessment proceedings and, if unsuccessful there, before the appellate officer or the appellate tribunal or in the High Court under section 66(2) of the Indian Income-tax Act. The existence of such alternative remedy is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. WP(C).No.35724 OF 2019(M) 6 In the present case the company contends that the conditions precedent for the assumption of jurisdiction under section 34 were not satisfied and come to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. In the present case we can find no reason for which relief should be refused.\" 6. The learned counsel appearing for the respondents would submit that the petitioner has an alternate appellate statutory remedy as has been mentioned in paragraph No.2 of the preamble of Ext.P-7 order given on internal page No.1 thereof (see page No.57 thereof), where it has been clearly stated that any person deeming himself aggrieved by the said order may appeal to the Commissioner of Central Excise (Appeals), etc., within two months from the date of communication of a copy of the said order and that Ext.P-7 order dated 05.09.2019 has been issued on 30.09.2019. It appears from a reading of Ext.P-7 (13-14) postal cover endorsement that the petitioner has been served with a copy of Ext.P-7 order on 29.10.2019. Accordingly, it is urged by the learned counsel appearing for the respondents that since the petitioner has an alternate and efficacious appellate remedy, this Court need not entertain this writ petition on merits. WP(C).No.35724 OF 2019(M) 7 7. The petitioner has a definite case that Ext.P-4 order has been issued in a similar situation in favour of the petitioner by the statutory appellate authority, who is superior in rank to that of the 2nd respondent, who has issued the present impugned Ext.P-7 order. The learned counsel appearing for the respondents has made certain submissions, as to why the department has not preferred to initiate proceedings to challenge Ext.P-4 order in view of the norms regarding the monetary limits in the matter of initiation of such proceedings and that merely because Ext.P-4 order has not been impugned by the department, does not necessarily mean that Ext.P-4 order is the last word in the subject. In the light of these rival pleas, this Court is of the considered view that the writ petition need not be adjudicated on merits. Ext.P-7 order issued on 30.09.2019 has been served to the petitioner on 29.10.2019. The period for filing the appeal is two months therefrom. Further, the Act provides that delay upto 30 days will also be condoned. The instant Writ Petition (Civil) to impugn Ext.P-7 order has been filed on 20.12.2019, which is well within the period of limitation. 8. Since the statutory appellate remedy is available, this WP(C).No.35724 OF 2019(M) 8 Court feels that it is only the fitness of things that the petitioner pursues the said remedy. Accordingly, it is ordered in the interest of justice that it is for the petitioner to immediately file statutory appeal to impugn Ext.P-7 order before the 3rd respondent-Appellate authority, without much delay, preferably within an outer time limit of two weeks from the date notified for receiving a certified copy of this judgment. On receiving the said appeal, the 2nd respondent may take up the matter for consideration, without much delay and may take all reasonable endeavours possible in the circumstances to ensure the early finalisation of the said appeal and after affording reasonable opportunity of being heard to the petitioner through his authorised representative or counsel, if any, will pass final orders disposing of the said appeal, without much delay, preferably within a period of 6 to 8 weeks from the date of receipt of a certified copy of this judgment. The petitioner has made certain definite submissions that Ext.P-4 order passed by the superior authority is in his favour and has also made certain submissions on the basis of aforecited judgments. 9. Taking note of the facts and circumstances of this case, WP(C).No.35724 OF 2019(M) 9 this Court is persuaded to take the view that this is a fit case, wherein this Court can exercise its discretion conferred under Article 226 of the Constitution of India to order the preservation of the subject matter of the lis. Only for the limited purpose of the preservation of the subject matter of the lis, it is ordered in the interest of justice that further steps for enforcement of the impugned Ext.P-7 order be kept in abeyance, until the final orders are passed on the said appeal, as aforestated. However, in case, the petitioner does not prefer any appeal, within the said outer time limit as aforestated, then the benefit of the abovesaid direction to keep in abeyance further coercive steps shall stand automatically vacated without any further orders from this Court. With these observations and directions, the above Writ Petition (Civil) stands finally disposed of. Sd/- ALEXANDER THOMAS JUDGE vgd WP(C).No.35724 OF 2019(M) 10 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 A TRUE COPY OF THE COMMON ORDER IN ORIGINAL NOS.285 AND 286/2016 ST DATED 29.11.2016 PASSED BY THE JOINT COMMISSIONER. EXHIBIT P2 A TRUE COPY OF THE APPEAL MEMORANDUM IN APPEAL NO.100/2017 FILED BEFORE THE COMMISSIONER (APPEALS) FOR PERIODS FROM 01.11.2014 TO 31.03.2015 DATED 3.4.2017 (WITHOUT ANNEXURES). EXHIBIT P3 A TRUE COPY OF THE APPEAL MEMORANDUM IN APPEAL NO.101/2017 FILED BEFORE THE COMMISSIONER (APPEALS) FOR PERIODS FROM 01.04.2013 TO 31.10.2014 DATED 3.4.2017 (WITHOUT ANNEXURES). EXHIBIT P4 A TRUE COPY OF THE COMMON ORDER-IN- APPEAL NO.COC-EXCUS-000-APP-367 TO 368- 2019 DATED 22.07.2019 PASSED BY THE COMMISSIONER (APPEALS), COCHIN. EXHIBIT P5 A TRUE COPY OF THE SHOW CAUSE NOTICE NO.35/2018-ST DATED 05.02.2019 ISSUED BY THE 2ND RESPONDENT. EXHIBIT P6 A TRUE COPY OF THE REPLY DATED 12.03.2019 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXHIBIT P7 TRUE COPY OF THE ORDER-IN-ORIGINAL NO.13/2019-ST DATED 05.09.2019 PASSED BY THE 2ND RESPONDENT (ALONG WITH POSTAL COVER AND TRACKING DETAILS) "