Such approach of the departmental adjudicating authority results in protracted litigation and harassment of the assessee without any benefit to the department.

As per Article 141 of the Constitution of India, a law declared by the Supreme Court is binding on the all courts within the territory of India. Further, the principle of judicial discipline requires that orders of the higher authority be followed by the lower authorities. For the purposes of consistency and certainty in law, it is necessary that the principles of stare decisis be followed. The Supreme Court held in Govt. of Andhra Pradesh v. A P Jaiswal[1],

“Consistency is the corner stone of the administration of justice. It is consistency which creates confidence in the system and this consistency can never be achieved without respect to the Rule of finality. It is with a view to achieve consistency in judicial pronouncements, the courts have evolved the rule of precedence, principles of stare decisis etc. These Rules and principles are based on public policy and if these are not followed by courts then there will be chaos in the administration of justice.”

Nevertheless, as a matter of fact, binding judicial pronouncements are not followed by many departmental authorities, with impunity.

Section 2(b) of the Contempt of Courts Act, 1971 defines,

“Civil Contempt means willful disobedience of any judgment, decree, direction, order, writ or other process of a court or willful breach of an undertaking given to the court.”

When a proposition of law has been declared by higher judiciary, and despite such knowledge, a departmental adjudicating authority does not follow that precedence- does it amount to contempt of court?

If we look at the definition of the contempt, in the Contempt of Courts Act, 1971; it does amount to the contempt of court.

[youtube]http://www.youtube.com/watch?v=Yx7GiKbeiE0[/youtube]

In re M P Dwivedi[2], when an young judicial officer didn’t take action against handcuffing of the prisoners in his court, he was found guilty of contempt[3]. In Hasmukh Lal Shah v. State of Gujrat[4], Division Bench of the Gujrat High Court held,

“In a government which is ruled by laws, there must be complete awareness to carry out faithfully and honestly lawful order passed by the Court of law after impartial adjudication. Then only be private individuals, organizations and institutions learn to respect the decisions of the Court. In absence of such attitude on the part of all concerned, chaotic conditions might arise and the functions assigned to the court of law under the Constitution might be rendered futile exercise.”

In East India Coomercial Company v. Collector[5], Supreme Court held,

“Under Article 227, a High Court has jurisdiction over all courts and tribunals throughout the territory in relation to which it exercises jurisdiction. It would be anomalous to suggest that a tribunal over which the High Court has superintendence can ignore the law declared by that Court and start proceedings in direct violation of it. If a tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision just like in the case of Supreme Court, making the law declared by the High Court binding on subordinate courts and tribunals. Such obedience, however, would be conducive to their smooth working, otherwise there would be confusion in the administration of law and respect for law would irretrievably suffer. Therefore, law declared by a High Court is binding on all its subordinate courts and tribunals and if proceedings are initiated in violation of it, such notices are invalid and proceedings started thereunder are without jurisdiction….. If the goods were imported under a valid licence, therefore, it cannot be said that the goods imported were those prohibited or restricted by under Section 167(8) of the Sea Customs Act, 1878. Therefore, the quasi-judicial authority has no jurisdiction to proceed with the inquiry under Section 167(8).”

In UOI v. Kamalakshi Finance Corporation[6], Supreme Court held,

“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 mala fides but with the fact that the officers, in reaching 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 hierarchy. 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 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.”

Despite such observation by Courts in a number of cases, the departmental adjudicating authorities have a tendency to overlook judgments against the department. Bombay High Court in a recent judgment in case of Legrand (India) Pvt. Ltd. v. Union of India[7]. Has specifically ruled,

“From the above four decisions, the following propositions emerge:

(a). It is immaterial that in a previous litigation the particular petitioner before the court was or was not a party, but if a law on a particular point has been laid down by the High Court, it must be followed by all authorities and Tribunals in the state;

(b). The law laid down by the High Court must be followed by all authorities and subordinate tribunals when it has been declared by the Highest Court in the state and they cannot ignore it either in initiating proceedings or deciding the rights involved in such proceedings;

(c). If inspite of the earlier exposition of law by the High Court having been pointed out and attention being pointedly drawn to that legal position, in utter disregard to that legal position, proceedings are initiated it must be held to be willful disregard to the law laid down by the High Court and would amount to civil contempt as defined in the Section 2(b) of the Contempt of Courts Act, 1971.

In view of this, utter disregard to the law laid down by the superior judicial authorities by inferior authorities does amount to civil contempt of court, and an assessee may initiate contempt proceeding against any authority committing such contempt.

(Views expressed are personal views of the author.)

[1] AIR 2001 SC 499

[2] 1996 (4) SCC 152; Contempt proceeding against judicial officers also see G Raja Kumari v. B Krishna Rao [1996 (3) ALD 848].

[3] Keeping in view that the contemner is a young judicial officer, Supreme Court refrained from imposing any punishment on him.

[4] (1978) 19 Guj LR 378

[5] 1983 (13) ELT 1342 (SC)

[6] 1991 (55) ELT 433 (SC)

[7] 2007 (216) ELT 678 (Bom.)

Article Source: sooperarticles.com/finance-articles/taxes-articles/binding-effect-precedence-38-contempt-court-53368.html

About Author:

I am also into writing on these laws & other areas of law, and many of my papers has been published in journals, like Excise Law Times, Service Tax Review, The Hindu, Economic & Political Weekly, Combat Law, Legal News & Views etc. I am a regular columnist on News & Reviews. custom.excise@yahoo.comAuthor: Rajesh Kumar, Advocate