Gujarat High Court
Air Conditioning Specialists Pvt. Ltd. vs Union Of India & Ors. on 23 March, 1995
Equivalent citations: (1996)2GLR448, [1996]221ITR739(GUJ)
JUDGMENT
1. This petition is filed by the petitioner for a writ of mandamus and/or any other appropriate writ, order or direction quashing and setting aside an order passed by the CIT, Baroda, on 14th Oct., 1985, Annexure-A to the petition and by directing the respondent authorities to pay interest to the petitioner in accordance with the provisions of s. 214 of the IT Act, 1961 (hereinafter referred to as "the Act"), on excess amount paid by him.
2. It is the case of the petitioner that it is a partnership firm engaged in the business of air-conditioning, having principal office at Baroda. The petitioner filed income-tax returns for asst. yrs. 1980-81 and 1981-82 before the ITO, Circle I, Ward A. The ITO made assessment order and held that the petitioner was entitled to refund of certain amounts. He, however, did not allow interest on the ground that the last instalment of the advance tax was not paid by the petitioner within the stipulated period, though it was paid before the end of financial year.
3. Being aggrieved by the said action, the petitioner approached CIT, Baroda, by filing a revision under s. 264 of the Act. The CIT, Baroda, rejected the revision, inter alia, observing that ITO was right in not allowing interest on the ground that the last instalment of advance tax was not paid within time. It could not, therefore, be said that the action of ITO in not paying interest was improper or illegal. The attention of the CIT was invited to decision of this Court in the case of Bharat Textiles Works & Ors. vs. ITO (1978) 114 ITR 28 (Guj) in which it was held that if payment of advance tax was made before the expiry of the financial year in question, the assessee was entitled to interest under s. 214 of the Act. Regarding that decision, the CIT observed :
"As the decision has not been accepted by the Department, at present the claim of assessee is rejected. If the Supreme Court, in the case of Bharat Textiles Works decides the issue in favour of taxpayers, then the ratio of Supreme Court's decision in the case of Bharat Textiles Works (supra) would apply to the assessee also and the ITO would give effect of Supreme Court's decision in the case of assessee also for these years."
4. Mr. J. G. Shah, learned counsel for the petitioner, submitted that the point was concluded by the decision of this Court in the case of Bharat Textiles Works (supra). He strenuously argued that the action of the CIT (respondent No. 2) in not following the decision in the case of Bharat Textiles Works (supra) was illegal and improper. He was bound to follow the law declared by this Court. It is not open to a subordinate Court or an inferior tribunal to ignore or keep aside a decision of this Court and to decide the matter as per his sweet will. The impugned order thus suffers from legal infirmity and requires to be interfered with.
5. Mr. M. J. Thakore, learned counsel appearing for the Revenue, on the other hand, submitted that the matter is pending before the Supreme Court and it cannot be said that any error of law apparent on the face of record has been committed by the second respondent in not granting prayer of the petitioner. He, therefore, submitted that the petition requires to be dismissed.
6. Having given anxious and thoughtful consideration, we are of the opinion that petition requires to be allowed. It is not disputed even by the Revenue that the point is concluded by a pronouncement of this Court in the case of Bharat Textiles Works (supra). Mr. Thakore frankly (admitted) that above view is reiterated subsequently by this Court in the case of Chimanlal Patel vs. CIT & Anr. (1994) 210 ITR 419 (Guj).
7. In view of the above legal position, the petition requires to be allowed and the order passed by the second respondent which is clearly (contrary) to law, requires to be quashed and set aside.
8. We may, however, add that it was not open to the second respondent (CIT) to ignore the law laid down by this Court when it was an inferior tribunal subject to the supervisory jurisdiction of this Court. It was not proper on his part not to follow binding decision of this Court on the ground that the Department had not accepted that decision and had filed an appeal and the matter was pending in the Supreme Court. It cannot be disputed and is not disputed that the second respondent is a "tribunal" subject to the supervisory jurisdiction of this Court under Art. 227 of the Constitution. Hence, he is bound to obey the law declared by this Court.
9. The apex Court of the country in no uncertain terms held that the law declared by a High Court is binding on all subordinate Courts and tribunals within the territory to which it exercises jurisdiction. In Bhopal Sugar Industry vs. ITO (1960) 40 ITR 618 (SC) : AIR 1961 SC 182, the ITO (subordinate authority) refused to carry out the clear and unambiguous directions of the Tribunal (superior authority). Deprecating it, their Lordships of the Supreme Court observed :
"Such refusal is in effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of Courts. If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of the appellate powers, the result will be chaos in the administration of justice".
10. A direct question arose before the Hon'ble Supreme Court in East India Commercial Co. Ltd. vs. Collector of Customs AIR 1962 SC 1893. In that case, proceedings were initiated by Collector of Customs against petitioner-company on allegations that it had violated conditions of licence and illegally disposed of goods and thereby committed an offence punishable under the Customs Act. The High Court confirmed the order of acquittal passed by the trial Court holding that it cannot be said that "a condition of the licence amounted to an order under the Act" and, therefore, no offence was committed by the company. The High Court also passed an order directing the seized goods to be sold and the sale proceeds to be deposited in the Court. After those proceedings, a notice was issued by the Collector on the company to show cause why the amount should (not) be confiscated and penalty should not be imposed. It was contended on behalf of the company that once the High Court decided that the breach of condition of licence could not be said to be a breach of order, the Collector had no jurisdiction to issue show-cause notice. It was submitted that the decision of a High Court on a point was binding on all subordinate Courts and inferior tribunals within its territorial jurisdiction. The notice was, therefore, liable to be quashed. The precise question before the Hon'ble Supreme Court was as to whether or not the decision rendered by a High Court would bind all subordinate Courts and inferior tribunals within its territorial jurisdiction. It was argued that there was no provision similar to Art. 141 of the Constitution making the law declared by a High Court, binding on all Courts and tribunals within its territorial jurisdiction. Considering relevant provisions of the Constitution and power of High Court, Subbarao, J. (as he then was), observed :
"This raises the question whether an administrative tribunal can ignore the law declared by the highest Court in the State and initiate proceedings in direct violation of the law so declared. Under Art. 215 every High Court shall be a Court of record and shall have all the powers of such a Court including the power to punish for contempt of itself. Under Art. 226, it has a plenary power to issue orders or writs for the enforcement of the fundamental rights and for any other purpose to any person or authority, including in appropriate cases any Government within its territorial jurisdiction. Under Art. 227, it has jurisdiction over all Courts and tribunals throughout the territories 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 the 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. It is implicit in the power of supervision conferred on a superior tribunal that all the tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working, otherwise there would be confusion in the administration of law and respect for law would irretrievably suffer. We, therefore, hold that the law declared by the highest Court in the State is binding on authorities or tribunals under its superintendence and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding."
11. The above view has been reiterated by the Supreme Court in a number of subsequent decisions (See Padmanabha Seity vs. Papiah Seity AIR 1966 SC 1824, Kaushalya Devi vs. Land Acq. Officer, Aurangabad AIR 1984 SC 892, Bishnu Ram Bohra vs. Parag Saikia AIR 1984 SC 898).
12. In our opinion, submission of the learned counsel for the petitioner is well founded and deserves to be upheld. It is not even the case of the Department that the decision of this Court in Bharat Textiles Works (supra) has been stayed by the Hon'ble Supreme Court. Hence, so far as this Court is concerned, the point is concluded. It is settled law that unless and until decision is reversed by a superior Court, it holds the field. It also cannot be gainsaid that the second respondent is an inferior Tribunal subject to supervisory jurisdiction of this Court and this Court can exercise jurisdiction over him by invoking Art. 227 of the Constitution. In our considered view, therefore it was not open to the second respondent to ignore the decision of this Court or to refuse to follow it on a specious plea of verdict being not accepted by the Department and that matter was carried further and was pending before Supreme Court.
13. In Baradakanta vs. Bhimsen Dixit AIR 1972 SC 2465, when a member of superior judicial service functioning as Commissioner of Hindu Religious Endowments, Orissa, refused to follow the decision of the High Court, contempt proceeding had been initiated against him and he was punished by the High Court. When the matter was carried by the appellant to the Supreme Court, dismissing the appeal and extending further the principle laid down in the decision of East India Commercial Co. Ltd. (supra), the Court held :
"The conduct of the appellant in not following previous decision of the High Court is calculated to create confusion in the administration of law. It will undermine respect of law laid down by the High Court and impair the constitutional authority of the High Court".
14. In this connection we may emphasise that it would indeed be appropriate to keep in mind the following observations of Lord Diplock in Casell & Co. Ltd. vs. Broome & Anr. 1972 (1) All ER 801 :
"It is inevitable in a hierarchical system of Courts that there are decisions of the supreme appellate tribunal which do not attract the unanimous approval of all members of the judiciary. When I sat in the Court of Appeal I sometimes thought the House of Lords was wrong in overruling me. Ever since that time there have been occasions, of which the instant appeal itself is one, when, alone or in company, I have dissented from a decision of the majority of this House. But the judicial system only works if someone is allowed to have the last word and if that last word, once spoken, is loyally accepted".
15. We are very clear and we have no doubt in our minds that when a point is concluded by a decision of this Court, all subordinate Courts and inferior tribunals within the territory of this State and subject to the supervisory jurisdiction of this Court are bound by it and must scrupulously follow the said decision in letter and spirit. Since the second respondent has not decided the matter in accordance with law laid down by this Court in the case of Bharat Textiles Works (supra), the order passed by him requires to be quashed and set aside.
16. In the result, the petition is allowed. Respondent authorities are directed to pay interest to the petitioner in accordance with law on the amount refunded to him. Rule is accordingly made absolute with no order as to costs.