Excise Appeals To High Court On Substantial Questions Of Law Maintainable After NTT Act Struck Down: Patna High Court

The Patna High Court has recently held that appeals to High Courts in central excise matters involving substantial questions of law remain maintainable after the Supreme Court struck down the National Tax Tribunal Act, 2005, which had omitted the provision providing for such appeals.

The court held that “The earlier provision mentioned in Section 35G of the Central Excise Act, 1944, Section 130 of the Customs Act, 1962 (52 of 1962) as well as any other provisions of law which were omitted by the said National Text Tribunal Act shall automatically revived and there is no need of further legislative or judicial direction for the same and in result the objection as raised here in the present batch of appeals by learned Senior Counsel for the respondents are rejected as not sustainable in the eye of law."

A bench of Justice Bibek Chaudhuri and Justice Dr. Anshuman was hearing a batch of appeals filed by the Commissioner of Central Excise and Service Tax, Patna, against assessees including Indian Oil Corporation Limited and Dadiji Steels Ltd. At the outset, the respondents raised a preliminary objection, questioning whether the appeals themselves were maintainable.

These appeals were brought under Section 35G of the Central Excise Act, 1944, a provision that enables parties to approach the High Court on substantial questions of law arising from orders of the appellate tribunal.

What the court had to determine was whether that right of appeal continued to exist after Section 35G was omitted by the National Tax Tribunal Act, 2005, and what effect followed from the Supreme Court's ruling in Madras Bar Association v. Union of India, which struck down the tribunal law as unconstitutional.

For the taxpayer companies, the position was straightforward. Once Section 35G had been deleted, they argued, it could not come back into force automatically, even if the law that removed it was later invalidated. On that basis, they said, the present appeals could not be entertained.

The revenue took the opposite view. With the National Tax Tribunal Act having been struck down in its entirety, it submitted, the legal position had to revert to what it was before the enactment, including the availability of an appeal to the High Court.

Accepting the Revenue's contention, the court held that adopting the respondents' argument would create a legal vacuum by eliminating both the original appellate provision and the substituted mechanism. It noted that such an outcome is impermissible in law.

The bench also emphasised that the jurisdiction to decide substantial questions of law vests only in the High Courts and the Supreme Court, and cannot be displaced in a manner that undermines that constitutional scheme.

For Appellant: ASG K.N. Singh, Sr. SC Anshuman Singh, Advocates Shivaditya Dhari Sinha, Abhinav, 

For Respondent: Senior Advocate D.V. Pathy, Senior Advocate D.V. Pathy with Advocates Mohit Agarwal, Hiresh Karan, Shivani Dewalla,Sadashiv Tiwari