Whether Tribunal was correct in referring the case to larger bench when there were conflicting decisions of two benches of the Tribunal on an identical question of law (admissibility of benefit of Notification No.21/2002) arising in a group of tax appeals

PJ/CASE LAW/2016-17/3175

Case:- COMMISSIONER OF CUSTOMS Vs VRL LOGISTICS LTD

Citation:- 2016-TIOL-1036-HC-AHM-CUS

Issue:- Whether Tribunal was correct in referring the case to larger bench when there were conflicting decisions of two benches of the Tribunal on an identical question of law (admissibility of benefit of Notification No.21/2002) arising in a group of tax appeals

Brief Facts:- Two Benches (Delhi & Mumbai) had given diagonally opposite decisions on the same issue. This fact was came to notice of Tribunal while deciding a bunch of appeals and the matter was referred to the larger bench.

Petitioner’s Contention:- While admitting the appeals, by an order dated 16.04.2015, Division Bench had framed following substantial questions of law:
(a) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in referring the appeals for decision of Larger Bench by incorrect reading of the decisions in the case of CC New Delhi Vs. Sameer Gehlot reported in 263 ELT 129 [Tri. Del] and in the case of King Rotors & Air Charter Pvt. Ltd., reported in 269 ELT 323 (Tri. Mum.) = 2011-TIOL-1785-CESTAT-MUM ?
(b) Whether in the facts and circumstances of the case, the interim order No. 72-88/2014 dated 28.10.2014 passed by the Tribunal is oppose to provisions of Section 129C(5) of the Customs Act, 1962, and liable to be set aside by this Hon'ble Court?
(c) Whether in the facts and circumstances of the case, the impugned order passed by the Tribunal is contrary to the settled principles of law of precedent by not following latest ruling on the issue to decide the appeal on hand and thereby declining to exercise jurisdiction vested in it and proposing to refer case to Larger Bench for its decision?
(d) Whether in the facts and circumstances of the case, impugned order passed by the Tribunal can be said to be passed in accordance with law?

Reasoning Of Judgment:-We do not see any error in the approach adopted by the Tribunal. When the Tribunal recorded that the two Benches had given diagonally opposite decisions, the Tribunal was perfectly justified in making a reference. Even if the department were of the opinion that one of the judgments could be distinguished on facts, the same would not give rise to a substantial question of law. Being a forum discharging judicial functions, the Tribunal was bound by the law of precedence. If two different benches of co-ordinate strength had given deferring opinions, the Tribunal had to refer the dispute to the Larger Bench. All the questions of law are, therefore, answered against the Revenue.

Decision:-Appeal dismissed.

Comment:- The gist of the case is that there are two different opinion by two different benches & the divisional bench has referred the case to larger bench. The department has preferred the petition on the grounds that tribunal has incorrectly read two of the decisions involved in the case, which if accepted, it would not give rise to substantial question of law. Hon’ble High Court decided the petition against the department by holding that when there is conflict over decision the trail will go over the decision of larger bench, thus, the divisional bench was correct in referring the case to larger bench.

Prepared By: - Alakh Bhandari

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PJ/CASE LAW/2016-17/3175

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