2018 (8) TMI 99 - AT - Service Tax

Tribunal Rules on Constitution Issue, Disagreement on President's Role

The Tribunal held that the Larger Bench was rightly constituted under the Act and Rules, dismissing the preliminary objection raised by the Revenue as ... Jurisdiction - power of Member (Judicial)/HOD to constitute a Larger Bench - Section 129 read with Section 129C sub-section (5) of CA - Constitution of Larger Bench by President only - difference of opinion - majority order - Held that:- In view of difference and majority opinion on the preliminary objection raised, the hearing is adjourned sine-die. Put up the file before Hon'ble President of CESTAT, as and when he joins. Issues Involved:1. Authority to constitute a Larger Bench2. Delegation of President’s powers to a Member (Judicial)3. Validity of the preliminary objection raised by the RevenueDetailed Analysis:1. Authority to constitute a Larger Bench:The Revenue raised a preliminary objection concerning the authority to constitute a Larger Bench, arguing that only the President, as per Section 129C(5) of the Customs Act, has the power to do so. The Revenue cited the Supreme Court ruling in UOI Vs Paras Laminates (P) Ltd., emphasizing that the President has ample power to refer cases to a Larger Bench. The Revenue further argued that no rule or administrative order could take away this power, which is statutorily vested in the President.The Tribunal, however, found that Section 129C(5) refers to differences of opinion among Bench Members and not specifically to situations where Members doubt the correctness of an earlier decision. Nonetheless, this power can be construed broadly enough to enable the President to make a reference when Members find themselves unable to decide a case due to an impediment arising from an earlier decision.The Tribunal also noted that the matter was initially referred to the Larger Bench by the President of the Tribunal and communicated by the Registrar. The present Member (Judicial)/HOD had only reconstituted the Larger Bench due to the superannuation and transfer of Members at the Mumbai Bench over time. Therefore, the Tribunal held that the Larger Bench was rightly constituted under the Act and Rules, dismissing the preliminary objection raised by the Revenue as frivolous.2. Delegation of President’s powers to a Member (Judicial):The appellant/assessee argued that the Central Government, pursuant to the superannuation of the President of the Tribunal, had delegated the powers of the President to a Member (Judicial), appointing him as HOD to exercise the powers of the President, except for the power to transfer a Member. This delegation was made under sub-section (3) of Section 129 of the Customs Act, which allows the Central Government to appoint a person who is or has been a Judge of a High Court or one of the members of the Appellate Tribunal as the President.However, Members C.J. Mathew and S.K. Mohanty disagreed, stating that the Tribunal must operate within the statutory limits. They emphasized that the absence of a President does not bar the Tribunal from functioning but restricts it from deciding matters that require the President’s approval or exercise of power. They highlighted that the statutory instruments from the Central Government did not transform the nominated Member into the President for the purposes of Sections 129 and 129C of the Customs Act.Members Mathew and Mohanty further noted that the Central Government’s orders were limited to administrative functions and did not extend to judicial jurisdiction under the Customs Act. They concluded that the statutory delegation under the Act is restricted to the Vice-President, which none of the present Members of the Tribunal is.3. Validity of the preliminary objection raised by the Revenue:Members Mathew and Mohanty found the preliminary objection raised by the Revenue to be valid. They argued that the Tribunal’s decisions must remain within the statutory framework, and any deviation could lead to controversy. They noted that the Central Government’s orders did not confer the judicial powers of the President to any Member and that the President’s powers could not be delegated without express statutory provision.They concluded that the hearing on merit should be deferred until a President is appointed to constitute a Larger Bench, thus avoiding any potential controversy regarding the Tribunal’s jurisdictional competence.Majority Order:In view of the difference in opinions and the majority decision, the hearing was adjourned sine-die, and the file was to be put up before the Hon’ble President of CESTAT upon their appointment.