2013 (12) TMI 1443 - HC - VAT and Sales Tax

Whether jobwork carried out by an exempted unit can or cannot be included while calculating production for the purpose of rule 28A(11)(a)(i) of the Haryana General Sales Tax Rules, 1975 - Held that - After considering the arguments and in essence recording conclusions, the Tribunal proceeded to abdicate its powers on an erroneous premise that it has no jurisdiction to opine whether an order passed by this court is no longer good law in view of the subsequent judgments of the honourable Supreme Court. The Tribunal was apparently unaware that law laid down by the honourable Supreme Court cannot be ignored merely because a Division Bench of a High Court may or may not have taken a contrary view. The Supreme Court of India sits at the pinnacle of the system of administration of justice, and its orders prevail over all other orders. A Tribunal, exercising judicial or quasi-judicial powers cannot refuse to consider judgments of the honourable Supreme Court by holding that it is for the High Court to decide whether its opinion subsists. The Tribunal, in our considered opinion, while recording that it has no power to consider the Supreme Court's judgments viz-a-viz a Division Bench judgment of this court, has misdirected itself and failed to comprehend the nature of its jurisdiction as a quasi-judicial authority. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of rule 28A(11)(a)(i) of the Haryana General Sales Tax Rules, 1975.
2. Competence of the Tribunal to consider the validity of a High Court judgment in light of subsequent Supreme Court decisions.
3. Jurisdiction of the Tribunal in relation to the hierarchy of legal judgments.

Interpretation of Rule 28A(11)(a)(i): The appellant challenged an order by the Haryana Tax Tribunal regarding whether jobwork by an exempted unit should be included in production calculations under rule 28A(11)(a)(i). The Tribunal ruled against the appellant, leading to the appeal. The appellant cited Supreme Court judgments to argue against the Tribunal's decision. The State of Haryana contended that since the appellant did not maintain average production for the next five years, the issue was academic. The High Court found that the Tribunal erred in not considering Supreme Court judgments, emphasizing that the Tribunal cannot ignore Supreme Court decisions based on High Court rulings. The High Court allowed the appeal, set aside the Tribunal's order, and directed a fresh consideration of the reference.

Competence of the Tribunal: The Tribunal wrongly believed it lacked the authority to assess the validity of a High Court judgment in light of subsequent Supreme Court rulings. The High Court clarified that the Tribunal, as a quasi-judicial body, must consider Supreme Court decisions as paramount. The High Court emphasized that the Supreme Court's orders supersede those of other courts, and the Tribunal's failure to acknowledge this constituted a misdirection. The High Court held that the Tribunal's refusal to apply Supreme Court judgments was a misunderstanding of its jurisdiction, leading to the decision to allow the appeal and instruct a fresh consideration by the Tribunal.

Jurisdiction in Relation to Legal Hierarchy: The High Court reiterated the supremacy of Supreme Court judgments over those of lower courts, emphasizing the need for all judicial bodies to adhere to Supreme Court decisions. The High Court criticized the Tribunal for neglecting to recognize the authority of Supreme Court rulings and for deferring the assessment of legal validity to the High Court. By directing the Tribunal to reevaluate the reference and decide on the merits of the appeal, the High Court underscored the importance of judicial bodies respecting the hierarchy of legal judgments and upholding the precedence of Supreme Court decisions.