PROPER JURISDICTION IS ESSENTIAL TO ENSURE MAINTAINABILITY OF ANY PROCEEINGS INCLUDING APPEALS OF REVENUE.

[C.A. DEV KUMAR KOTHARI]

Importance to examine Jurisdiction:

Importance of examining jurisdiction is very important fro tax payers as well as officers concerned with law. For public as tax payer or other applicant or petitioner it is essential to examine where to file return, application, petition or appeal etc. If the document is not filed at proper place before proper authority having jurisdiction, it may cause problems. There are very few occasions as per experience that a document which is filed at wrong place, is forwarded to correct place or returned to the person who wrongly filed to enable him to file the same at proper forum. In government departments, general tendency is that if an irrelevant document is filed, it remains there but without any action. Therefore, like buyer beware, the principal to be followed is return filer/ applicant/ petitioner should beware.  

Proper jurisdiction and status of appellant:

In case of any appeal the appellant should be competent to file an appeal which is permissible.  An appeal will not be maintainable if it is not filed by a person who is competent to file the appeal. Therefore, while drafting any appeal care should be taken to mention name and designation of the appellant. For example, in case of appeal to be filed by a company the appeal memo should be signed by competent person as prescribed in respective law. In case of income tax appeal is to be signed by managing director of company, and in case there is no managing director then by any other director. Under some law any principal officer may be empowered to sign appeal document. Therefore, latest position under relevant law should be examined at the time of preparing appeal.

Similarly in case of appeal by revenue the officer who is competent to sign and present appeal should sign the appeal.  

Other procedural requirements- instructions, approval etc. to file appeal:

In case of appeals by revenue under different law some special provisions are generally  prescribed for prior approval or sanction or instructions of specified authority for the purpose of filing of appeal. If such prior approval , sanction or instructions are not issued by competent authority, then the appeal filed by the revenue official / appellant may be considered bad and void. For example, under the provisions of Income Tax Act and Wealth Tax Act, an appeal before the Tribunal can be filed when the CIT so instructs to the A.O. Vide section 253(2) of the I.T.Act and S. 24(2) of the Wealth Tax Act, 1957.

In such a case the approval or instructions should be passed by competent authority and as per law in due compliance of provisions.

Similarly under the provisions of Central Excise Act and the Finance Act 1994 relating to appeals in relation to service tax matters, there is requirement of approval for filing of appeals at different stages by different authorities. The concerned authority should be competent to issue such directions or instructions.

Competency of concerned authority:

The concerned authority may derive competence and authority by specific provisions of law and also by virtue of properly made appointment and when there is specific requirement of any specific notification, then such notification is also essential. Therefore, the authority must ensure that his/ its appointment and authorization is properly made and he is vested with such power and has jurisdiction in regard to such matters. In case there is no proper appointment or authorization then the approval/ sanction or instructions given for filing the appeal will be invalid and as a consequence the appeal filed by revenue may also be held to be invalid. Cases have been to the extent that due to change in designation, or for any other reason, if proper designation is not mentioned, the appeal may be considered invalid.

Some case laws relating to Central Excise and service tax matters:

An appropriate authority or a review committee has to decide about filing of appeal. Such authority must have specific power and must have been properly appointed. If there is no proper appointment, then the appeal filed in pursuance of directions of such authority will be invalid. This was so held in case of  CCE. & ST, BBSR-II Versus MAHANADI COALFIELDS LTD. 2009 -TMI - 32538 CESTAT, KOLKATA / 2009 (13) S.T.R. 409 (Tri.-Kolkata). Appeal No. - S.T.A.P. 147/2008, Order No. - A/1081/KOL/2008 dated - 16 October 2008. In this case maintainability of appeal was challenged on ground of locus standi to exercise the powers of review by Committee of Chief Commissioners. It was found that the reviewing authorities were not validly appointed by appropriate notification in the Official Gazette to exercise the powers of review as an appropriate authority, the appeal filed by Revenue pursuant to review done by them was not competent and appeals were  dismissed. In this case the appeal was also filed late and COD was also an issue. For this write-up we are not concerned with aspect of COD.

Relevant portion of the observations, and order are analyzed below:

a.       In this appeal of Revenue ascertaining locus standi of the Reviewing Chief Commissioners who had authorized filing of appeal against impugned order on behalf of Revenue also require consideration.

b.       Similar issue has been  dealt by Tribunal in many cases holding that a statutory authority appointed in accordance with law and invested with defined powers shall have locus standi to exercise the powers so invested. Few such cases holding so were CCE, Siliguri v. M/s. Mall Exim Pvt. Ltd. [2008 (227) E.L.T. 619 (Tribunal)], CCE, Siliguri v. M/s. Hindusthan Coca-Cola Beverages [2008 (229) E.L.T. 370 (Tribunal)], Philips India Ltd. v. Commr. of C. Ex., Kol-I [2008 (229) E.L.T. 668 (Tribunal)], Commr. of C.Ex. Kol-III v. Naffar Chandra Jute Mills Ltd. [2008 (230) E.L.T. 244 (Tribunal)], CCE, Dibrugarh v. M/s Kothari Products Ltd., CCE Kol-II v. Berger Paints (I) Ltd.

c.        Learned Representative appearing on behalf of Revenue was asked to satisfy the Tribunal whether proper manner of appointment of the learned Chief Commissioners constituting the Committee for review was followed to recognize them under law.

d.       Similar question was involved in this appeal whether the reviewing Authorities i.e. Chief Commissioner who are signatories to the undated Review Order cum-Authorisation said to have seen light of the day on 18-7-08, were appointed in the manner known to law and invested with the power under statute to perform review function.

e.        Revenue sought redressal against OIO dated 26-3-2008 passed by the learned Commissioner, Bhubaneswar-II Commissionerate reducing the service tax demand to Rs. 8,41,988/- imposing equal amount of penalty as against levy of Service tax of Rs. 62,56,493/- proposed to be levied in terms of Show Cause Notice No. 71 dated 23-4-2007. Interest was also levied by order of adjudication as per law and another penalty @ of Rs. 100/- per day was imposed u/s 76 of the Finance Act, 1994 for the period from 5-2-2005 to 3-8-2007. Learned Adjudicating Authority also held that the Respondent was liable to pay service tax on the Goods Transport Agency Service, subject of certain concessions granted under law and such levy shall be on the actual gross value of services. Accordingly there was reduction in the demand compared to the demand proposed by the Show Cause Notice. However penalties were levied for contravention of law.

f.        The order so passed by the learned Adjudicating Authority was in the opinion of the Committee of Chief Commissioners was not legal and proper for which Revenue preferred this appeal.

g.        On the question of manner of appointment of both the signatories to the Review order to enable Revenue to seek appeal remedy as to whether they were the proper authority appointed in the manner known to law remained un explained by the learned Representative of Revenue.

h.       The learned SDR  could only brought to the  notice of Tribunal  an office Order bearing No. 186/2007 dated 26-7-2007 issued by Deputy Secretary to the Government of India showing that Shri Amar Singh was promoted to the grade of Chief Commissioner and he was posted as such in Ranchi. This does not show whether Shri Singh was appointed as Chief Commissioner since he was merely promoted to the grade of Chief Commissioner.

i.          A per section 35E of the Act the Reviewing Committee may, by order, direct the Commissioner to apply to the Tribunal for determination of such points arising out of the decision or order as may be specified by the said Committee in its order.

j.        As per section 35B(1B) of the Central Excise Act, 1944, the Central Board of Excise & Customs (The Board) has been delegated with powers to constitute Committees of Chief Commissioners by Notification in the Official Gazette for review.

k.       A different situation was noticed from a Notification bearing No. 36/08 dated 12-8-2008 which was issued exhibiting that the President was pleased to promote Shri G.S. Narang to the grade of Chief Commissioner, Customs and Central Excise notionally w.e.f. 25-1-2006 and actually w.e.f the date of assumption of charge to the post. Under the same Notification, Shri G.S. Narang was posted as Director General, Inspection, Customs & Central Excise, New Delhi. This makes abundantly clear that the Board is quite aware of manner of appointment of statutory Authorities. But for reasons best known to the Board why such a process known to law was not followed in other cases before us remained unexplained when no discriminatory decision is contemplated under the provisions of the Statute.

l.          Revenue was also not able to produce any Gazette Notification in respect of appointment of both the signatories to the Review order in the capacity of respective Chief Commissioners of the appropriate jurisdiction.

m.      The basic issue relating to Authority of the aforesaid two Chief Commissioners have been decided in the case of Naffar Chandra Jute Mills (supra). Therefore Tribunal considered the  relevant observations made in that case since that is squarely applicable to all 6 (six) appeals in hand. The relevant part of that order is reproduced in the order  is as follows:

            "28. Objects of the Central Excise Act, 1944 and the Customs Act, 1962 are to be fulfilled by appointing officers in the manner laid down by these two statutes. Central Excise Officers who are appointed under the law are defined under Section 2(b) of the Central Excise Act, 1944. They are invested with power by the Board constituted under the Central Boards of Revenue Act, 1963. Such Officers exercise powers as conferred by law and discharge duties as required under various provisions of the Central Excise Act, 1944. Appointment of such Officers is to be made by Notification in Official Gazette and their jurisdiction is to be defined by Notification under Rule 3 of the Central Excise Rules, 2002 and requirement of publication of such Notification in the Official Gazette under Rule 2(f) of such Rules is indispensable to make known to the public as to appointment of such Public functionaries. This mode of appointment is duly known to law and is a conclusive evidence of following of due process of law which enables them to act as statutory authority thereby within the jurisdiction defined. On failure to so appoint, an authority fails to be invested with statutory powers under law and acts done by such authority shall be nullity.

            29. Similarly the Customs Act, 1962 has its implementing machinery through Sections 3 and 4 of that Act. Who are all different classes of officers are specified in Section 3 of that Act. For exercising powers under these statutes, appointment of the Central Excise officers and officers of Customs are made through Notifications. Notification itself is a pointer to the fact that for the purpose of exercising statutory functions under one provision or other, the Officer concerned notified is invested with power under those provisions. Vesting of power by public Notification being an essential procedure known to law, no power can be invested by any other procedure strange to law. It has been held by the Hon'ble Supreme Court in Mohtesham Mohd. Ismail v. SPL. Director, Enforcement Directorate - 2007 (220) E.L.T. 3 (S.C.) [2009 -TMI - 32515 - SUPREME COURT] that for the purpose of exercising the functions of the Central Government, the officer concerned must be specifically authorized. Only when an officer is so specifically authorized he can act on behalf of the Central Government and not otherwise. If any act is done by an officer without being appointed and invested with the power by appropriate Notification and by the procedure not known to law all his acts done under law becomes non-cognisable and ab initio void. This can be said following the judgment of the Hon'ble Supreme Court in the case of Management, Asstt. Salt Commr. v. Secy., Cen. Salt Mazdoor Union - 2008 (224) E.L.T. 14 (S.C.).

            30. Section 3(39) of the General Clauses Act, 1897 defined the term 'Official Gazette' which means the Gazette of India or the Official Gazette of a State. A Gazette is generally understood as an Official Government Journal containing public Notices and other prescribed matters. Legal Glossary (1983 Edition) issued by the Legislative Deptt. of Ministry of Law, Justice and Company Affairs, Govt. of India defines Gazette as "Official Newspaper containing list of Govt. appointments, legal notices, dispatches etc.". The date on which an Official Gazette is made available to the public that brings out the contents thereof to the notice of public. The General Clauses Act being an important piece of legislation makes clear that appointments of the Public Authorities under different statutes, vesting them with power to act on behalf of the Central Government is communicated to the public because public are to be dealt with by that invested power by the notified authority only who has been recognised by law in terms of Gazette Notification. Vesting of power on an authority comes to knowledge of court as well as public through the Official Journal called Gazette. Appointment of Authorities through Gazette being a necessity of law compliance thereof is mandatory and failure to do so is incurable.

             31. Mode of communication in the matter of appointment of learned Chief Commissioner being the Gazette and that is only known to law, any other mode of communication shall be said to be ultra vires. Hon'ble Supreme Court in the case of Union of India v. Ganesh Das Bhojraj - 2000 (116) E.L.T.431 (S.C.) held that it is established practice of the Government that the publication in the Official Gazette i.e. Gazette of India is to communicate various decisions required by different statutes. Intention of Government comes into effect as soon as the decision is communicated through the Official Gazette published. A Gazette is admissible evidence being official record evidencing public affairs and a court is required to presume its contents as genuine unless contrary is proved. Therefore appointment of reviewing Authorities who are learned Chief Commissioners to discharge the function of the Central Government for a specific purpose of the Central Excise Act, 1944 and the Customs Act, 1962 is made known to the public only when their appointment is published in the Official Gazette and power of review made available to them by appropriate Notification.

               32. An Authority assumes jurisdiction only when that Authority is vested with the same. Whenever question of jurisdiction arises for consideration whether such a plea was raised earlier by litigant is a question of law and that inevitably calls for entertainment by a higher forum. This follows from the judgment of the Hon'ble Supreme Court in the case of Moly and Another v. State of Kerala - (2004) 4 Supreme Court Cases 584. Tribunal has been consistently following such a principle which can be seen from the case of Nandy Metal Rolling Mills v. CCE - 1992 (60) E.L.T. 322 (Tribunal) as early as 1992 in view of various decisions rendered by the Apex Court and the other Courts, more elaborately discussed in that order of the Tribunal. It has been held by the Hon'ble Supreme Court in Marathwada University v. Seshrao Baiwant Rao Chavan - (1989) 3 Supreme Court Cases 132 that it is a settled principle that when the Act prescribes a particular body to exercise a power it must be exercised only by that body. It cannot be exercised by others unless it is delegated. Any action by a statutory Authority without power has no legal validity. It is ab initio void and cannot be ratified. Accordingly Revenue's plea that failure to appoint the Reviewing authorities by appropriate notification is curable is inconceivable.

                 33. It has been noticed in preceding paragraphs that the Reviewing Signatories who have signed the authorizations in all the above three cases are without being validly appointed by appropriate notification to act as Chief Commissioners, were not invested with power of Review u/s 35B(1B) of Central Excise Act, 1944 and u/s 129A(1B) of Customs Act, 1962. Revenue failing to bring copies of Notifications in the Official Gazette for perusal by the Bench and satisfy that both the signatories were authorized Authorities and notified according to the procedure known to law to perform the functions of Reviewing Authority, they were made powerless by the Board which ultimately made the Revenue remediless. Accordingly we are compelled to declare the act of review by the signatories in all the 3 (three) appeals ab initio void and non est. Revenue's Appeals are accordingly liable to be dismissed at the threshold." (emphasis supplied)"

After considering the law, above decisions the Tribunal held as follows:

a.      When the reviewing authorities aforesaid were not validly appointed by appropriate notification in the Official Gazette to exercise the powers of review as an appropriate authority, the appeal filed by Revenue pursuant to review done by them fail and liable to be dismissed in at the threshold. So the appeals were dismissed as not maintainable.

b.       Tribunal also dismissed the application for condonation of delay.

c.        Due to such dismissal Tribunal did not consider merits of these appeal.

d.      The Tribunal also reiterated (to emphasis)  that authorities may be appointed and invested with power in the manner known to law to enable them to discharge their duties under law for the public good. 

Per author: In other words it can be said that if the appointment is not as per law and in the manner known to law, they cannot function for public good.

Conclusion:

Utmost care should be required by revenue authorities while functioning and exercising authority under particular law. Unless care as to jurisdiction, authority, status and limitation are fully taken care and legal requirements are satisfied, the revenue may suffer huge losses due to such lapses because such lapses are very vital and have been considered as fatal to initiation, continuation and conclusion of relevant proceedings which may be in relation to assessment, appeal, revision , review and filing of appeals.