Assistant Commissioner has no authority to alter the findings of the higher authority

The Bombay High Court has ruled that an Assistant Commissioner cannot alter or disregard the findings of a higher authority, such as an Appellate Authority. This decision reinforces the principle of judicial discipline, stating that subordinate officers must unreservedly follow the orders of higher appellate bodies. The court directed the Revenue Department to sanction a refund of over INR 11 crore to the petitioner, setting aside the Assistant Commissioner's order that had rejected the claim on grounds already considered and decided by the Appellate Authority.

The Hon'ble Bombay High Court in Jacobs Solutions India Pvt. Ltd. v. Union of India [Writ Petition No. 5808 of 2023 dated July 31, 2023] set aside the order passed by the Assistant Commissioner and held that the revenue officers are required to follow the principles of judicial discipline and accordingly are bound by the decisions of the Appellate Authority.

Facts

M/s. Jacobs Solutions India Pvt. Ltd.("the Petitioner") is engaged in providing engineering consulting services to its group entities registered outside India. The Petitioner has exported services without payment of GST.

Consequently, the Petitioner filed refund application of the ITC availed on the inputs and input services utilized for the export of the said services.

The Revenue Department ("the Respondent") issued a Show Cause Notice to the Petitioner on February 01, 2022 ("the SCN") raising an objection to the Petitioner's refund claim, interalia on the ground of nondisclosure of invoice details, etc. 

The Adjudicating Authority passed an order dated February 22, 2022 ("the Order") in Form GST RFD-06, and rejected the refund claim made by the Petitioner.

Aggrieved by the Order, the Petitioner filed an appeal before the Appellate Authority who vide an Order dated October 11, 2022 ("Order-in-Original") allowed the Petitioner to seek refund on the basis of the letters issued by the HSBC being sufficient proof of correlation of the invoice number/date with the relevant Bank Realisation Certificates/the FIRCs.

In pursuance of the Order-in-Original, the Petitioner again filed a refund claim on November 29, 2022 as per the procedure. 

The Assistant Commissioner of CGST & CX (Central Excise) issued the show cause notice on December 28, 2022 calling upon the Petitioner to show cause as to why the refund claim ought not to be rejected on the ground of nondisclosure of invoice details of FIRCs. The Petitioner vide reply dated January 11, 2023 contended that the issues were considered by the Appellate Authority and wherein it was found that of fact was recorded and there is sufficient proof and correlation between the invoices and FIRCs, thus the Petitioner should be provided with the refund amount.

However, the Assistant Commissioner of CGST & CX (Central Excise) vide the order dated January 27, 2023 ("the Impugned Order") rejected the Petitioner's refund claim and confirmed the refund rejection order.

Aggrieved by the Impugned Order the Petitioner filed writ before the Hon'ble Bombay High Court.

The Petitioner contended that Assistant Commissioner in fact has gone over the Order-in-Original passed by the Appellate Authority by which the appeal filed by the Petitioner was allowed on merits.

The Petitioner submitted that the Assistant Commissioner who is an authority lower in hierarchy and certainly bound by the orders which were passed by the Appellate Authority cannot take such a position in law and reject the claim as raised by the Petitioner on the same grounds which were subject matter of consideration in the appeal proceedings.

The Petitioner relied upon the judgement of Globus Petroadditions Pvt. Ltd. v. Union of India 2022(64) G.S.T.L. 54 (Bom.) wherein the Hon'ble Bombay High Court observed that the Assistant Commissioner is required to comply with the orders passed by the Commissioner of (Appeals) and in taking such view the Assistant Commissioner would not have refused to comply with the orders of the higher authority.

The Respondent contended that Section 112(3) of the Central Goods and Services Tax Act, 2017 ("the CGST Act") provides for review of any order passed by the Appellate Authority which can be examined by the Commissioner for the purpose of satisfying himself as to the legality, or propriety of the said order and accordingly, may direct any officer subordinate to him to apply to the Appellate Authority for setting aside such order.

Issue

Whether the Assistant Commissioner can proceed against the findings of the higher authority?

Held

The Hon'ble Bombay High Court in Writ Petition No. 5808 of 2023 held as under:

• Relied on the judgement of Globus Petroadditions Pvt. Ltd. v. Union of India 2022(64) G.S.T.L. 54 (Bom.) wherein the Hon'ble Bombay High Court observed that the Assistant Commissioner is required to comply with the orders passed by the Commissioner of (Appeals) and in taking such view the Assistant Commissioner would not have refused to comply with the orders of the higher authority.
• Opined that, Assistant Commissioner has no authority to re-visit the concluded findings of fact as derived by the Appellate Authority.
• Held that, the principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court.
• Directed, the Revenue Department to sanction the refund amount of INR 11,69,07,326 to the Petitioner with appropriate interest in terms of Section 56 of the CGST Act.
• Set aside the Impugned Order and allow the refund of INR 11,69,07,326 to the Petitioner.