In a recent development, Lakra, a former Commissioner of Appeals, and AC Subhash Chandra are facing charges of contempt of court for their alleged willful disobedience of orders from the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ). The matter has been referred to the Delhi High Court by the Principal Bench of CESTAT in Delhi.
The decision was reached in the case M/s. Delhi Duty-Free Services Pvt. Ltd. vs The Commissioner, Central Tax and a bunch of other appeals where the rejection of refund claim was questioned.
The refunds were barred by quoting unjust enrichment, but the assessee was in fact and in law entitled to the refund claim.
The Bench observed from multiple Supreme Court decisions that, “when an order is passed by a higher authority, the lower authority is bound, keeping in view the principles of judicial discipline.”
The Supreme Court’s observation that the “order of the Tribunal is binding upon the Assistant Collectors who function under the jurisdiction of the Tribunal and that the principles of judicial discipline require that the orders of higher appellate authorities are unreservedly followed by the subordinate authorities was also quoted by the tribunal bench of President Justice Dilip Gupta and Technical member P V Subba Rao.
“To maintain the judicial discipline, the Assistant Commissioner had necessarily to implement the decision of the Tribunal and the order passed by the Commissioner (Appeals) and by denying refund, despite specific orders having been passed, the AC and the Commissioner (Appeals) acted in a manner which can be said to be contemptuous”, the principal bench observed while the impugned order was quashed and set aside.
The Delhi High Court is expected to hear the case in due course and deliver its verdict based on the evidence presented before it. If found guilty of contempt of court, the then Commissioner(Appeals) Lakra and GST Officer Subhash Chandra could face penalties ranging from fines to imprisonment, depending on the severity of the offence.
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