Pramod Kumar Rai, Advocate
Managing Partner
B.Tech (IITKanpur), LLB (Gold Medal), LLM (USA)
Former Joint Commissioner of Customs, Excise & Service Tax (IRS).
Email: [email protected], [email protected]
Tel: +91-11- 4382 9955 (D)/4561 1851 (O) Mob: 9899428589
Website: http://athena.org.in
Inherent powers of Quasi Judicial Authorities and more particularly of Settlement
Commission
In tax administration the effective disposal of litigation is outside the regular court system on
account of presence of departmental and extra departmental quasi judicial authorities. Though a
number of matters are agitated in high courts and supreme court, the stand taken by Appellate
Tribunals, Settlement Commission, Authority for Advance Ruling is changed by higher courts in
a very few cases. Like any other court the quasi judicial authorities under tax laws, do commit
mistakes which are at times apparent on face of the order passed by them. However when
litigants approach these forums for rectification of mistake or seeking some direction for
implementation of orders passed by them, at times in absence of express provision of law, it is
argued that these forums are neither courts nor they have inherent powers given under the
statute so that they can pass miscellaneous orders removing errors and/or giving directions for
effective implementation of their orders. This article examines whether Quasi Judicial Authorities
have inherent powers like regular courts
In a recent case before Settlement Commission for Customs, Excise & Service Tax, where
revenue authorities were acting in derogation to the order passed by commission and assesse
approached the commission seeking implementation of order passed by commission, during
the hearing the bench posed the question whether in absence of express provision under the
Central Excise Act 1944 & Customs Act 1962, the commission has got power to entertain the
miscellaneous application seeking effective implementation of its order ensuring conclusive
settlement of the case.
Every quasi judicial authority is a court
Section 3 of the Indian Evidence Act, 1972 defines 'Court' as below;
"'Court' includes all Judges and Magistrates and all persons, except
arbitrators, legally authorized to take evidence".
Thus any person, even though he is not a Judge or a Magistrate (except arbitrators), would be a
Court if he is legally authorized to take evidence. All quasi judicial authorities are legally
authorized to take evidence and thus they are court under Section 3 of the Indian Evidence Act,
1972. Settlement commission is expressly authorized to take evidence under Chapter V of CEA
1944 and chapter XIVA of Customs Act 1962 and thus is a court. In T.V. Subba Rao v. T.
Koteswara Rao AIR 1963 AP 37, it was held that ordinarily a body or tribunal would be a Court
provided it has the legal power (1) to record evidence and (2) to make a decision on a matter in
contest or issue between two opposite parties so as to bind the parties before it in law. The
same idea may also be expressed by stating that a Court is a body exercising judicial functions
under the authority of law.
Every Court has inherent power to meet ends of justice
Having concluded that quasi judicial authorities are courts, it is submitted that every court has
got inherent powers in addition to powers conferred expressly to ensure ends of justice. Section
151 of the Civil Procedure Code contain the Legislative recognition of the powers of every Civil
Court to pass necessary orders to sub serve the ends of justice and to prevent the abuse of
process of the Court in cases coming before it. These powers are not expressly conferred on
the Court but are inherent in every Civil Court. Since the section itself does not lay down any
guideline when to resort to inherent powers and when not except for using the two key phrases
that is “Ends of Justice” and “Abuse of process of Court”. In a series of decisions the
Supreme Court has enunciated the scope and ambit of the inherent powers of the courts.
In Union of India v. Paras Lminates Pvt. Ltd. (1990) 49 ELT 322 (SC), apex court held as
under
“There is no doubt that the Tribunal functions as a court within the limits of its jurisdiction.
It has all the powers conferred expressly by the statute. Furthermore, being a judicial
body, it has all those incidental and ancillary powers which are necessary to make fully
effective the express grant of statutory powers. Certain powers are recognised as
incidental and ancillary, not because they are inherent in the Tribunal, nor because its
jurisdiction is plenary, but because it is the legislative intent that the power which is
expressly granted in the assigned field of jurisdiction is efficaciously and meaningfully
exercised. The powers of the Tribunal are no doubt limited. Its area of jurisdiction is
clearly defined, but within the bounds of its jurisdiction, it has all the powers expressly
and impliedly granted. The implied grant is, of course, limited by the express grant and,
therefore, it can only be such powers as are truly incidental and ancillary for doing all
such acts or employing all such means as are reasonably necessary to make the grant
effective. As stated in Maxwell on Interpretation of Statutes, (eleventh edition) “where an
Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or
employing such means, as are essentially necessary to its execution.”
In Ram Chand & Sons Sugar Mills Pvt. Ltd. Vs Kanhayalal Bhargav, (A.I.R 1966 SC 1899)
the Supreme Court in this connection, observed that:
“the inherent power of the Court is in addition to and complimentary to the powers
expressly conferred under the Civil Procedure Code; but that power will not be exercised
if its exercise is inconsistent with, or comes into conflict with any of the powers expressly
or by necessary implication conferred by the other provisions of the Code. If there are
express provisions exhaustively covering a particular topic, they give rise to a necessary
implication that no power shall be exercised in respect of the said topic otherwise than in
the manner prescribed by the said provisions.”
In the case of Arjun Singh v. Mohindra kumar, (AIR 1964 SC 993) the Hon’ble Supreme
Court has said that
“It is common ground that the inherent power of the court cannot override the
express provisions of the law. In other words, if there are specific provisions of the
Code dealing with a particular topic and they expressly or by necessary implication
exhaust the scope of the powers of the Court or the jurisdiction that may be exercised in
relation to a matter the inherent power of the court cannot be invoked in order to cut
across the powers conferred by the Code. The prohibition contained in the Code need
not be expressed but may be implied or implicit from the very nature of the provisions that
it makes for covering the contingencies to which it relates.”
In the case of Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal-(1962) 1 Supp.
SCR 450 apex Court at page 463 referred to section 151 of the Code of Civil Procedure and
observed that the section itself said that nothing in the Code should be deemed to limit or
otherwise affect the inherent power of the court to make orders necessary for the ends of
justice. This inherent power as was observed by this Court had not been conferred on the
Court. It was a power inherent in the Court by virtue of its duty to do justice between the
parties before it.
SunitaDevi Singhania Hospital Trust v. Union of India, (2009) 233 ELT 295 (SC), The
Hon’ble Supreme Court in this case has held that:
“It is true that the period of limitation specified in terms of Sub-Section (2) of Section
129(B) of the Customs Act is required to be observed but the Tribunal failed to notice that
it has inherent power of recalling its own order if sufficient cause is shown therefor. The
principles of natural justice, which in a case of this nature, in our opinion, envisage that a
mistake committed by the Tribunal in not noticing the facts involved in the appeal which
would attract the ancillary and/or incidental power of the Tribunal necessary to discharge
its functions effectively for the purpose of doing justice between the parties, were
required to be complied with.”
Assistant Collector of Customs, Madras v. Abdul Samathu, (1985) 22 ELT 761 (Madras).
The Hon’ble High Court has held that:
“It is true that Section 10(3) of the Passports Act, 1967 enumerates the grounds on which
and the circumstances under which the Passport authority can impound the Passport
issued under the Act, i.e. an Indian Passport but the Act does not deal with the Passport
issued by a foreign Government. There is, however, no provision in the Passport Act or in
any other law for the time being in force which prohibits a Court from withholding or
impounding a Passport of a person accused of a grave offence when there is reasonable
apprehension that the accused may flee from the country and make the prosecution
against him an exercise in futility. Such a power is a part of the inherent powers of the
Court. It is age old and well established principle that Courts must possess inherent
powers apart from the express provisions of the law which are necessary to their
existence and the proper discharge of duties imposed upon them by law. Every Court, in
the absence of express provision must be deemed to possess, as inherent in its very
constitution all such powers as are necessary to do the right and to undo a wrong in the
course of administration of justice. The Criminal Court has the power to withhold or
impound the passport of any person more so, of a foreign accused of a grave offence
when there is every likelihood of his leaving the country and making a mockery of the
judicial process against him.
Therefore it is safe to conclude that quasi judicial authorities, in addition to powers expressly
conferred on them, has got inherent powers like any other regular court to entertain the
miscellaneous application and pass orders and give direction to meet ends of justice. The basic
objective for creation of Settlement commission is to conclusively settle the dispute without
going into rigors of adjudication process and if revenue authorities try to open an issue
conclusively settled by settlement commission, the commission has got inherent power to pass
orders seeking effective implementation of its order to meet end of justice.
Comparison between powers of CESTAT and Settlement commission
During the argument it also come up that CESTAT in a routine manner is exercising inherent
powers because inherent powers are specifically provided under Rule 41 of CESTAT Procedure
Rules 1982, whereas Settlement commission has not been given any such power and thus it
cannot exercise inherent powers. It is submitted that CESTAT Procedure Rules 1982 are
neither legislated by parliament nor by central government rather they are framed by CESTAT
itself to govern its procedure. The opening line as well as Rule 41 is extracted below for clarity.
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
(PROCEDURE) RULES, 1982
CEGAT Notification No. 1/CEGAT/82, dated 25-10-1982 as amended
In exercise of the powers conferred by sub-section (6) of section 129C of the
Customs Act, 1962 (52 of 1962), read with sub-section (1) of section 35D of
the Central Excises and Salt Act, 1944 (1 of 1944) and sub-section (1) of
section 81B of the Gold (Control) Act, 1968 (45 of 1968), the [Customs, Excise
and Service Tax Appellate Tribunal] hereby makes the following rules, namely
:—
RULE 41. Orders and directions in certain cases. — The Tribunal may make
such orders or give such directions as may be necessary or expedient to give
effect or in relation to its orders or to prevent abuse of its process or to secure
the ends of justice.
The power which is conferred on CESTAT by sub-section (6) of section 129C of the Customs
Act, 1962 read with sub-section (1) of section 35D of the Central Excises Act, 1944 is as under
:—
Subject to the provisions of this Act, the Appellate Tribunal shall have power to
regulate its own procedure and the procedure of the Benches thereof in all
matters arising out of the exercise of its powers or of the discharge of its
functions, including the places at which the Benches shall hold their sittings.
Thus what is provided by CESTAT in rule 41 is provided by CESTAT itself because it has got
inherent power to do so. Rule 41 is mere expression of power by CESTAT itself which CESTAT
is already having and thus rule 41 is nothing but reiteration of Section 151 of CPC. The power
similar to Section 35D(1) of CEA 1944/129(6) of CA 1962 is already conferred on Settlement
commission under Section 32-I(4) of CEA 1944/Section 127F(4) of Customs Act 1962, which
reads as under
32-I-(4) The Settlement Commission shall, subject to the provisions of this
Chapter, have power to regulate its own procedure and the procedure of
Benches thereof in all matters arising out of the exercise of its powers, or of the
discharge of its functions, including the places at which the Benches shall hold
their sittings.
Thus today settlement commission can very well frame a procedural rule similar to CESTAT
Procedure Rules 1982. The fact that commission has not framed any such rules does not mean
that it is devoid of such inherent powers. Settlement commission and CESTAT both being
creation of CEA 1944 and both being authorized to regulate their own procedure under the
statute has got similar inherent powers. CESTAT in a routine manner keep on passing orders
for effective implementation of its orders, the commission can also do the same. There is
nothing in law which prohibits commission from exercising inherent powers.
Pramod Kumar Rai
Advocate