1. The matter referred to the Larger Bench for consideration relates to the status of an order passed by a Central Excise Officer without his jurisdiction. With effect from 27-12-1985, the show cause notice in regard to duty of excise short levied or short paid, etc., by reason of fraud, collusion or any wilful mis-statement or suppression of facts was to be decided by the Collector of Central Excise. The Tribunal while hearing Appeal No. E/150/89 - MAS of Wilson & Company Ltd., and Appeal No. E/236/90 - MAS of the Revenue with regard to the similar issue and with reference to the same assessee but for a subsequent period, noted that the Superintendent of Central Excise had passed an order on 29-12-1987 although he was not competent to initiate any proceedings and pass orders in proceedings where the demand of duty was for a period of more than six months. From the facts as recorded in para 3 of the Tribunal's decision aforesaid, it is seen that after ignoring the order, dated 29-12-1987 of the Superintendent of Central Excise, the Collector of Central Excise independently exercised the jurisdiction under the Proviso to Section 11A of the Central Excises Act, 1944 (hereinafter referred to as the 'Act'), for the same period by the issue of a show cause notice, and then proceeded to pass the adjudication order. After making a reference to an earlier decision of the Tribunal in the case of Akola Oil Industries Ltd. v. C.C.E., Nagpur -1991 (53) E.L.T. 136 (Tribunal) the Bench noted that when the order of the authority suffers from an inherent lack of jurisdiction in is ab initio void, nonest in the eye of law and consequently a nullity, the same would not give rise to legal consequences. The Bench observed that such an order was different from a wrong order passed by an officer, who was competent to pass such an order and that such a wrong order could be reviewed. It was added that if an officer who has no jurisdiction or competence at all to pass an order but he purports to pass an order, then the same would be plainly void, nonest, in the eye of law and a nullity, and would not give rise to legal consequences; such a void and nonest order will not take away the power of another competent officer from exercising his power in terms of the proviso to Section 11A of the Act, to initiate proceedings for recovery of duty not levied or short levied, etc. It was in this background that the Bench referred the matter to the Larger Bench in view of the larger implications and wider ramifications of the issues involved.
In the other case referred to the Larger Bench, show cause notice invoking the extended period of limitation was issued to M/s. Sunrise Struc-turals & Engg. Co. Pvt. Ltd., on 11-3-1985 (prior to 27-12-1985), by the Asstt. Collector of Central Excise, Nagpur. This show cause notice was disposed of by the Asstt. Collector of Central Excise on 31-7-1986, although with effect from 27-12-1985 the show cause notice invoking the extended period of limitation was to be decided only by the Collector of Central Excise. The Collector of Central Excise, Nagpur under Memorandum, dated 31-7-1987 observed that this order passed by the Asstt. Collector of Central Excise was a nullity and invalid. He re-opened the proceedings and proceeded to adjudicate the case in exercise of the powers vested in him under Proviso of Section 11A of the Act.
2. Shri V. Sreedharan, Shri G. Shivdas and Shri M.P. Devnath, all Advocates appeared for M/s. Sunrise Structurals & Engg. Co. Pvt. Ltd. None appeared for M/s. Wilson & Company Ltd. Revenue was represented by Shri Sanjeev Srivastava, JDR.Shri V. Sreedharan, Advocate submitted that the order of the Asstt.
Collector of Central Excise although beyond jurisdiction should have been reviewed under the relevant provisions of the law and that the order once passed could not be ignored. It was not open for the Collector of Central Excise to ignore the order of the Asstt. Collector of Central Excise even when it was passed without jurisdiction. He relied upon the Tribunal's decision in the case of Akola Oil Industries Ltd. v. CCE - 1991 (37) ECR 144 (Tribunal). He also referred to the Publication 'Administrative Law' by Sir William Wade.
In reply, Shri Sanjeev Srivastava, Departmental Representative submitted that after the legislative dictum as contained in Section 8 of the Central Excises & Salt (Amendment) Act, 1985 (hereinafter referred to as the 'Amendment Act of 1985') the proceedings pending before the Asstt. Collector of Central Excise or any officer lower in rank, stood transferred to the Collector of Central Excise. Even when hearing had been granted by the Asstt. Collector of Central Excise, the pending proceedings were to be transferred to the Collector of Central Excise. The show cause notice remained pending for adjudication by the competent authority and the order passed by the authority without jurisdiction was no order in the eye of the law. He pleaded that no sanctity could be imparted to the nonest order by reviewing the same.
He also referred to the Administrative Law by Sir William Wade.
Both the sides referred to the case law in support of their rival contentions. These will be discussed at appropriate place in this order.
3. We have carefully considered the matter. For our consideration is the status of the order passed by a Central Excise Officer after he had been divested of the power to deal with the subject.
4. Under Section 11A of the Act as in force prior to 27-12-1985, where any duty of excise had not been levied or paid or had been short levied or short paid (had been evaded, so to say), by reason of fraud, collusion, or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder (by reason of suppression of facts etc. to say in brief), with intent to evade payment of duty, by the person or his agent chargeable with the duty (which had been evaded), then a central excise officer could within 5 years from the relevant date (as denned in subsection (3) of that Section 11A of the Act), serve a notice on such person. Under Sub-section (2) of that Section the Asstt. Collector of Central Excise was competent to determine the amount of duty of excise due from such person.
These provisions were amended by an Act of Parliament - Amendment Act of 1985 - enacted on 27-12-1985. The amended provisions provided that the show cause notice in regard to duty of excise evaded by reason of suppression of facts, etc. was to be issued and such cases were to be decided by the Collector of Central Excise. Thus, with effect from 27-12-1985, the jurisdiction of the Asstt. Collector of Central Excise to determine the amount of duty of excise due from any person where the duty had been evaded by reason of suppression of facts etc., was ousted and, he was divested of the powers to deal with such matters. Even with regard to the pending proceedings in this behalf, the Asstt. Collector of Central Excise was no more competent to go ahead with the matters.
This position was placed beyond doubt by Section 8 of the Amendment Act of 1985.
Under Section 8 aforesaid, it was provided that every proceeding in which extended period of limitation had been invoked and which were pending as on 26-12-1985 before an Asstt. Collector of Central Excise, and any matter arising out of or connected with such proceedings and which was so pending as on 26-12-1985 (before an Asstt. Collector of Central Excise), shall stand transferred on 27-12-1985 to the Collector of Central Excise. The Collector of Central Excise was authorised to proceed with such proceedings or matter from the stage at which it was on 27-12-1985 or from any earlier stage as he might deem fit.
5. It is clear from Section 8 of the Amendment Act of 1985 that the proceedings in which extended period of limitation had been invoked stood transferred to the Collector of Central Excise, from the Asstt.
Collector of Central Excise, as on 27-12-1985. The Legislative mandate was couched in absolute terms - "shall stand transferred". By legislative mandate the proceedings in which the extended period of limitation, had been invoked stood transferred on 27-12-1985 from the Asstt. Collector of Central Excise to the Collector of Central Excise.
On that date - that is on 27-12-1985 - such proceedings were no longer pending with the Asstt. Collector of Central Excise. He has no power and jurisdictioan to proceed with such proceedings or matter.
6. It is an established position of law that in the case of ousting of jurisdiction, the authority whose jurisdiction has been ousted will have no power to pass the orders.Commissioner of Income Tax v. Dhadi Sahu -1993 (199) ITR 610 (S.C.), the Supreme Court held that when a provision is made for change over of the proceedings from one forum to the other forum, then the jurisdiction of the forum where the proceedings were pending at the time of the change in the law, is clearly ousted. The Apex Court referred to their earlier decision in the case of Mohd. Idris v. Sat Narain - AIR 1966 (S.C.) 1499 wherein it was observed that the provisions for change over of proceedings from one court to another are commonly found in a statute which takes away the jurisdiction of one court and confers it on another in pending action.
If the authority whose jurisdiction has been ousted by the legislature goes ahead with the matter, then there will be chaos in the administration of justice. There is a well defined hierarchy with regard to appeals, and if any cognizance is given to the orders passed after the ouster of the jurisdiction, the system will collapse with irreparable harm to the cause of justice.
In the present case, the legislature by express words had unambiguously ruled that the jurisdiction of the Asstt. Collector of Central Excise, stood ousted from 27-12-1985 to deal with the matter where extended period of limitation had been invoked.
8. The life to a judicial order is provided by the power bestowed on the authority passing the same. Jurisdiction goes to the root of the matter. If the subject is beyond the jurisdiction of the authority then the very existence of the order stands nullified.
In the case of Commisioner of Income Tax v. Late S.M. Syed Mohamed -1995 (ITR) 216 Kerala (FB) it had been provided that the jurisdiction is the power, right or authority to take cognizance and decide any matter according to law.
In Subramania Pattar v. Narayana Pattar -1915 (28) IC 189,191 (Madras), it is laid-down that the word 'jurisdiction' means the authority or power which a court has, to do justice in the causes of complaint brought before him [referred in 1995 (TTR) 216 Kerala (FB)].
The word jurisdiction is defined in Webster's 3rd New International Dictionary as under :- "_____the legal power, right or authority to hear and determine a cause considered either in general or with reference to a particular matter;__." (Refer . Nem Kumar Tholia v. Addl. Commissioner of Income Tax -1992 ITR 194 371 (Ra-jasthan, Jaipur (F.B).Kiran Singh v. Chaman Paswan - AIR 1954 SC 340 as under:- "It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity and that its invalidity could be set-up, whenever and wherever it is sought to be enforced or relied-upon even at the stage of execution and even in collateral proceedings. A defect of jurisdiction whether it is pecuniary or territorial or whether it is in respect of the subject matter of the action, strikes at the very authority of the Court to pass any decree, and such defect cannot be cured even by consent of parties." (Refer Deep Chand Kothari v. Commissioner of Income Tax -1988 (171) ITR 381 (Rajasthan)."Rungta Sons Pvt. Ltd. v. Collector of Customs, Visakhapat-tanam - 1986 (23) E.L.T. 14 (Calcutta), the Calcutta High Court had held that when a decision is without jurisdiction such adjudication order is null and void and nullity cannot be cured by the appellant.
In the case of Dr. S.K. Jhunjhunwala v. Collector of Customs, New Delhi -1985 (19) E.L.T. 521 (Tribunal), the Tribunal had held that where there is a want of inherent jurisdiction then the order must be treated as nullity in the eyes of law.
9. After 26-12-1985, the Asstt. Collector of Central Excise was devoid of the inherent jurisdiction and power to deal with the matter in which extended period of limitation had been invoked. By legislative mandate such a matter automatically stood transferred from him. If even then he, without power and authority, passed any order then such an order passed by him had to be treated as a nullity. It had no existence in the eye of law. It was not just an illegality in the exercise of jurisdiction but lack of inherent jurisdiction.
Rajasthan High Court at Jodhpur in the case of Dispensing Chemist v.State of Rajasthan - 1984 (56) STC 162 (Rajasthan -Jodhpur) had observed that the distinction between a nullity and an illegal order depends upon the nature, scope and object of a particular provision in contravention of which the order was passed. The High Court referred to the test laid down by Coleridge J. in Holmes v. Russel (1841) 9 DOWL 487, in the following terms :- "It is difficult sometimes to distinguish between an irregularity and a nullity, but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity." The distinction between lack of inherent jurisdiction and an illegality in the exercise of jurisdiction has been pointed out by the Supreme Court in Dhirendra Nath Gorai and Ors. v. Sudhir Chandra Ghosh - AIR 1964 SC 1300 in the following words: - "Where the Court acts without inherent jurisdiction, a party affected can not by waiver confer jurisdiction on it, which it has not. Where such jurisdiction is not wanting, a directory provision can obviously be waived. But a mandatory provision can only be waived if it is not conceived in the public interests, but in the interests of the party that waives it." (at page 1305).
In the present case as the order was passed by the Asstt. Collector of Central Excise without inherent jurisdiction, it was of no avail and was incapable of being validated.
9A. The legislative intention was that all cases where extended period of limitation had been invoked and which were pending for adjudication on 26-12-1985 should be adjudicated by the Collector of Central Excise.
If the order passed by the Asstt. Collector of Central Excise, in violation of such legislative intention was given any cognizance then certainly the legislative intention was going to be frustrated. The order of the Asstt. Collector of Central Excise was appealable to the Collector of Central Excise (Appeals). In turn the order of the Collector of Central Excise (Appeals) was appealable to Govt. of India, Tribunal, whose orders was further appealable to High Court, Supreme Court. The Collector of Central Excise (Appeals) cannot even remand the matter to the Collector of Central Excise to act as original authority.
Thus, by giving cognizance to the order passed by the Asstt. Collector of Central Excise in dis-regard of the legal provisions as mandated by the Legislature the role of the Collector of Central Excise as an adjudicating authority was to be completely shut out and the whole process of the administration of justice will get disturbed. The legislative, intention will stand completely frustrated.
10. Under Section 8 of the Amending Act of 1985, it was made clear that pending proceedings stood transferred from the Asstt. Collector of Central Excise to the Collector of Central Excise.
A court or Tribunal deciding a matter must not only be possessed of jurisdiction initially but should also be clothed with the power to decide the matter when the final matter is passed, (refer Commissioner of Income Tax v. Bhuwaneshwar Singh - 1992 (196) ITR 403 (Allahabad); Commissioner Wealth Tax v. Hemant Pat Singhani -1992 (197) ITR 183 (Allahabad); Commissioner of Income Tax v. Metal Goods Mfg. Co. Pvt.
Ltd. When a proceeding has been validly initiated but has been disposed of by an officer having no jurisdiction, the proceeding itself does not come to an end. The same is to be finalised by the officer having jurisdiction, (refer Commissioner of Income Tax v. Krishna Chandra Pande & Brothers -1991 (188) ITR 149 (Orissa).Ajit Singh v. State of Punjab - AIR 1967 SC 856 relied upon by the Departmental Representative the matter related to the scheme of consolidation under the provisions of East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948. The Act provided for the appointment of a consolidation officer and the preparation of scheme for the consolidation of holdings in the estates.
After the consolidation officer had prepared the draft scheme which was confirmed by the settlement officer, and repartition was carried out, the Notification for his appointment was published in the gezette with retrospective effect. Before the Supreme Court, it was pleaded that the Consolidation officer when he commenced the consolidation proceedings and prepared and published the draft scheme of consolidation, he did not have legal authority to do. The Supreme Court found substance in this plea and observed in para 4 as under :- "4. There seems to be substance in the first two points. It seems to us clear that before a person can start acting as a Consolidation officer he must be appointed as such. Before he is appointed he has no authority to exercise any of the functions of a Consolidation officer. What he does purporting to act as a Consolidation officer has no binding force on the owners and other persons affected in the estate. The Government cannot by appointing him retrospectively clothe him with authority retrospectively. This can be done only by the Legislature subject to the provisions of the constitution."Collector of Central Excise, Bhubaneshwar v. Re-rolling Mills -1997 (94) E.L.T. 8 (S.C.) the Supreme Court followed their earlier decision in the case of Union of India v. Jain Sudh Vanaspati Ltd. In that decision the Supreme Court had held that the show cause notice under Section 28 of the Customs Act, 1962 which is in pari materia with Section 11A of the Act for demand of duty, could be issued without revising, under erstwhile Section 130 of the Customs Act, the order of clearance passed under Section 47 of the said Act of 1962.
In that case, clearance for home consumption of the imported refined, bleached and deodorised (RBD) palm oil in stainless steel containers had been allowed under Section 47 of the Customs Act, and thereafter without revising under Section 130 of the said Act, the order under Section 47, show cause notice under Section 28 and Section 124 had been issued. The Supreme Court held that the High Court was in error in coming to the conclusion that no show cause notice under Section 28 of the Customs Act could have been issued until and unless the order under Section 47 had been first revised under Section 130. In para 6, the Supreme Court held as under :- "6. The case of the appellants in the show cause notices is that the stainless steel containers in which the said oil was imported were banned, that the stainless steel containers were deliberately camouflaged by painting them to resemble mild steel containers, and that this was done with a view to enabling their clearance. An clearance order under Section 47 obtained by fraudulent means such as this (if it, in fact, be so) cannot debar the issuance of a show cause notice for confiscation of goods under Section 124. Fraud, if established, unravels all. An order under Section 47 obtained by the employment of fraudulent methods does not have to be set aside by the exercise of revisional powers under Section 130 before the ill-effects of the fraud can be set right by initiation of the process of confiscation of the fraudulently cleared goods under Section 124." 12. The counsel for the appellants had laid much emphasis on the extracts from the publication - Administrative Law by Sir William Wade.
A reference was made to the distinction between void and voidable orders and it was argued that the order passed by the Asstt. Collector of Central Excise even when he had no jurisdiction to pass it, and to be vacated through the due process of law. The Departmental Representative had however pleaded that in the facts and circumstances of the present case, the order passed by the Asstt. Collector of Central Excise was nullity. He also referred to the same publication wherein it had been provided that a void order is devoid of all legal effects from the outset, and added that here the order was more than a void order; it was a nullity.
We find that in the extracts placed before us, the situation as presented in the reference had not been dealt with. The situations as dealt with in the extracts of the above publication were - where the order was un-reasonable made on wrong grounds, in-violation of statutory requirements (page 340); passed in bad faith, on wrong grounds, in breach of natural justice (page 341); where expiry of statutory time limit was involved (page 342).
As we have seen the order passed by the Asstt. Collector of Central Excise was against the express mandate of the Legislature. The matter already stood transferred from him when he illegally assumed the jurisdiction to deal with the matter. It was no order in the eye of law. The very foundation of the order was without a basis.
In R. v. Paddington, Valuation Officer ex. P. Peachey Property Corporation Ltd. (1966), QB380, lord Denning M.R. said that 'if a rating list is so defective that it is a nullity, there is no need for an order to quash it. It is automatically null and void without more ado'. (Refer Page 341 of the above Publication by Wade).
We have also seen that the consequence of challenging the illegal order of the Asstt. Collector of Central Excise would have been to cloth it with a legality. The jurisdiction the Collector of Central Excise as a original authority would stand completely ousted as the appeal will be only to the Collector of Central Excise (Appeals). The order of the Collector of Central Excise (Appeals) was also not final and the appeal procedure would have completely by passed the Collector of Central Excise as on adjudicating authority.
13. We may also refer to the other case law referred to by the counsel for the appellants.The Commissioner of Income Tax, Delhi, Rajasthan and New Delhi v. Rao Thakur Narayan Singh, Ajmer The issue for consideration in that case was how far and to what extent a final order made in the earlier proceedings under Section 34 of the Income Tax Act, 1922 would be binding on the Income Tax Officer in the subsequent proceedings under the said Section.
It was a clear case of mistake for the Tribunal to set aside the order of the re-assessment in respect of the interest income though its validity to that extent was not disputed. The final decision had been validly made in respect of questions that directly arose for decision.
The Supreme Court observed that on the same facts, the Income Tax Officer could not re-open the same proceedings.Shiv Chander Kapoor v. Amar Bose The matter related to the creation of a tenancy for limited period under Delhi Rent Control Act, 1958. The Rent Controller had passed order under Section 21 of the said Act of 1958 for the limited tenancy in favour of Amar Bose for residential purposes for a limited period of 3 years w.e.f. 8-6-1980. There was no illegality in the order when it was passed. The order had been validly made. It was however assailed by Amar Bose after the expiry of the period of limited tenancy. It was in such circumstances that the Supreme Court observed that unless the order was declared invalid at the instance of the tenant, its en-forceability could not be doubted (para 22).
At the time when the order was passed by the Rent Controller, he did not lack jurisdiction to pass the said order.
There is not even remote similarity in the facts before the Hon'ble Supreme Court in that case, and the facts before us in this reference.State of Punjab v. Gurdev Singh Ashok Kumar The matter related to the limitation governing the suit for declaration by a dismissed employee. The dismissed employee had pleaded that he continued to be in service since his dismissal was void and inoperative. It was not a case where the authority passing the dismissal order had no jurisdiction. The order of dismissal was challenged on the ground that it was against the principles of natural justice and terms and conditions of employment treating the order as invalid, the Supreme Court held that the party aggrieved by the invalidity of the order has to approach the Court within the period of limitation, for relief of declaration that the order against him is in-operative and not binding upon him. The Supreme Court held "a suit for declaration that an order of dismissal or termination from service passed against the plaintiff is wrongful, illegal or ultra virus is governed by Article 113 of the Limitation Act, 1963." The Supreme Court had refered to their earlier decision in the case of State of Madhya Pradesh v. Syed Quamarali -1967 (Serv.) LR 228 (S.C.) wherein Apex Court had ruled that since the order of dismissal was invalid being contrary to para 241 of the Berar Police Regulations it need not be settled. This decision also is of no help to the appellants.State of Kerala v. M.K. Kunhi Kannan Nambiar Manjori Manikoth Naduvil (Dead) The matter related to the determination of ceiling area under the Kerala Land Reforms Act by the Taluk Land Board Tali Paramba. The Board under order, dated 28-6-1977 had rejected the impleadment of the sisters of the first respondent and held that the tenancy put-forward was a 'Collusive' one.
It was in this background that the Supreme Court observed "in our opinion even void order or decision rendered between parties cannot be said to be non-existent in all cases and in all situations. Ordinarily such an order will in fact be effective inter-parties until it is successfully avoided or challenged in higher forum." We find that in this case the Supreme Court had observed that in their opinion this was not a case where the infirmity was fundamental. We consider that none of these decisions is applicable to the facts before us.
14. A reference has been made to the Tribunal's decision in the case of Akola Oil Industries Ltd., Akola v. CCE, Nagpur - 1991 (53) E.L.T. 136 (Tri.). In that case the Superintendent of Central Excise had issued a notice on 24-9-1984 to M/s. Akola Oil Industries Ltd. (appellants), to show cause why the duty benefit availed of by them in terms of Notification No. 259/83-C.E., dated 15-10-1983 during Feb. and March, 1984, should not be disallowed and the amount recovered from them. The matter was adjudicated by the Asstt. Collector of Central Excise, who under his order, dt. 9-12-1986 dropped the demand. The Collector of Central Excise on 15-6-1989 issued a memorandum to the appellants re-opening the proceedings for adjudication in exercise of his powers under the Proviso to Section 11A of the Act.
The Tribunal under order, dated 10-1-1991 agreed that the Collector of Central Excise was undoubtedly correct when he said that the Asstt.
Collector of Central Excise, when he passed his order, dated 9-12-1986 was not competent to do so and should have transferred the proceedings to the Collector of Central Excise for adjudication. It was also admitted that the order, dated 9-12-1986 of the Asstt. Collector of Central Excise was un-doubtedly an illegal order. At the same time, it was held that the course open to the Collector of Central Excise was to direct the Asstt. Collector of Central Excise in terms of Section 35E of the Act to apply to the Collector of Central Excise (Appeals) for determination of the points specified by him i.e. Collector of Central Excise.
We have already discussed the consequences of such an approach. Such a course would result in complete frustration of legislative intention and will clothe the illegal order with a legality.
Both the assessee and the Revenue have a right to challenge the order of the Collector of Central Excise (Appeals) in higher forums. Whatever order the Collector of Central Excise (Appeals) may pass, the consequence will be that the pending proceedings may not come to the Collector of Central Excise at all thus defeating the express provisions of the Amendment Act of 1985. Such a course could not be said to be legal.Akola Oil Indus. Ltd. v.CCE, the Tribunal in the case of Wilson & Co. Ltd. v. CCE, Bangalore -1993 (65) E.L.T. 608 (Tri.) took a view that as the order passed by the Superintendent of Central Excise suffered from an inherent lack of jurisdiction, and was ab initio void, non-est in the eye of law and consequently a nullity, it would not give rise to any legal consequences; such a void and non-est order will not take away the power of competent officer for exercising his powers under the law.
15. After giving our careful consideration to the matter, we hold that the orders passed by Superintendent of Central Excise/Asstt. Collector of Central Excise after 26-12-1985 in cases where duty of excise had been evaded by reason of suppression of facts, etc., and where the extended period of limitation had been invoked, were a nullity in the eye of law. Such non-est orders will not affect the powers of the competent authority to proceed with the proceedings or matter from the stage at which it was on 27-12-1985 or from any earlier stage as that authority may deem it fit.
16. The reference is answered accordingly. The matter be now posted before appropriate benches for regular hearings.