In a recent case, the Commissioner of Customs (Import) Vs Siya Paper Mart Pvt. Ltd., the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Delhi held that the principles of judicial discipline require subordinate authorities to follow the orders of higher appellate authorities unreservedly.
The case involved the interpretation of Notification no. 102/2007-Cus dated 14.09.2007, which provided for a refund of Special Additional Duty (SAD) if an importer sold the imported goods and paid the Value Added Tax (VAT) on them, subject to certain conditions. One of the conditions was that the importer had to file a claim for refund of the SAD with the jurisdictional customs officer within one year from the date of payment of the duty.
Siya Paper Mart Pvt. Ltd. filed a refund claim that was rejected by the Assistant Commissioner on the grounds that it was filed beyond the one-year time limit. However, the Commissioner (A) allowed the appeals of the respondent based on the judgment of the Delhi High Court in M/s. Sony India Pvt. Ltd. vs Commissioner of Customs, New Delhi, which held that the notification must be read down insofar as it places the restriction of one year for filing the refund claim.
The Revenue filed an appeal against this decision, arguing that the Commissioner (A) should not have followed the judgment of the Delhi High Court and should have instead defied it. They cited another case involving the same issue, Wilhem Textiles India Pvt. Ltd., in which the Delhi High Court dismissed the Revenue's appeal but Supreme Court then admitted the Revenue's Special Leave Petition (SLP) against this dismissal.
The CESTAT held that the principles of judicial discipline require subordinate authorities to follow the orders of higher appellate authorities unreservedly, unless their operation has been suspended by a competent Court. The mere fact that an order is the subject of an appeal and is not "acceptable" to the department is not a ground for not following it.
The CESTAT cited the Supreme Court's decision in Union of India vs. Kamakshi Finance Corporation Ltd., which explained the importance of following the principle of judicial discipline. The Supreme Court held that not following the orders of higher appellate authorities would lead to undue harassment of taxpayers and chaos in the administration of tax laws.
The CESTAT's decision in Commissioner of Customs (Import) Vs Siya Paper Mart Pvt. Ltd. serves as a reminder to subordinate authorities to follow the orders of higher appellate authorities unreservedly, unless their operation has been suspended by a competent Court. This principle ensures consistency and certainty in the administration of tax laws, and prevents undue harassment of taxpayers.
This is a very important judicial observation made by the Tribunal and is a much needed one for the taxpayers!
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