Andhra Pradesh H.C : These proceedings, for committing contempt of this Court, were instituted, suo motu, by this Court against Sri G. C. Narasimham, Commercial Tax Officer-I, Kurnool, respondent No. 1 herein.

Advocate-General, for the Petitioner : Government Pleader & S. Krishna, for the Respondent

Y. V. ANJANEYULU, J.:

These proceedings, for committing contempt of this Court, were instituted, suo motu, by this Court against Sri G. C. Narasimham, Commercial Tax Officer-I, Kurnool, respondent No. 1 herein. The facts briefly are: Modern Proteins Ltd., Kurnool (“the assessee”, for short), is assessed to sales tax on the file of the Commercial Tax Officer-I, Kurnool. For the sales tax asst. yr. 1977-78, the inter-State sales of protein flour were assessed to tax as general goods at 4 per cent. The assessee’s contention was that protein flour is de-oiled cake and is assessable at 11/4 per cent under entry 29 of the First Schedule to the A. P. General ST Act, 1957. Eventually, the dispute was carried to this Court in TRC No. 40 of 1982. By judgment dt. 26th June, 1984, a Division Bench of this Court held that protein flour produced and marketed by the assessee is edible de-oiled cake falling under entry 29 of the First Schedule to the General ST Act and is liable to be assessed to tax at 1 1/4 per cent. The levy of tax on the inter- State sales of protein flour at 4per cent treating the same as general goods was held to be incorrect. In coming to the aforesaid conclusion, this Court, inter alia, had taken into consideration the report of the Government analyst to the effect that the samples of protein flour conform to the Indian Standard Specification for edible groundnut flour (solvent extract) and the flour is fit for human consumption. The assessee’s contention was accordingly accepted by this Court.

2. The same question had again arisen for consideration before respondent No, 1 in connection with the sales tax assessment for the asst. yr. 1982-83. During this assessment year, the assessee effected inter-State sales of protein flour (solvent extracted groundnut powder). The sales were determined by the first respondent at Rs. 5,92,800. The assessee claimed that these sales are liable to be taxed at 1 1/4per cent under entry 29 of the First Schedule, as was already held by this Court in connection with the asst. yr. 1977-78. The first respondent rejected the contention and levied tax at the rate of 4per cent in respect of these inter-State sales (the assessee produced “C”, Forms and hence the tax payable is only 4 per cent. The assessee brought to the notice of the first respondent, the decision of this Court in TRC No. 40 of 1982 dt. 26th June, 1984. In his order dt. 2nd March, 1987, the first respondent referred to a number of decisions of other High Courts which, in our opinion, do not have any direct bearing on the issue under consideration and eventually observed in his order as under : “An appeal has been filed in the Supreme Court of India, New Delhi, against the judgment of the High Court of Andhra Pradesh, Hyderabad, in TRC No. 40 of 1982 dt. 26th June, 1984, and the case is pending disposal by the Supreme Court of India, New Delhi. With due respect to the judgment of the High Court of Andhra Pradesh, Hyderabad, in TRC No., 40 of 1982 dt. 26th June, 1984, I am unable to implement it as the appeal against the said judgment is pending disposal in the Supreme Court of India, New Delhi, and the said judgment is not directly related to the year 1982-83 but relates to the year 1977-78. The assessment cannot be kept pending till the disposal of the appeal as it gets barred by limitation by 31st March, 1987. For the reasons stated above, the contention of the dealers is not accepted.”

The aforesaid assessment is challenged by the assessee by filing a writ petition bearing No. 3477 of 1987 on the short ground that the levy of tax at 4 per cent on the protein flour by the first respondent is in gross disobedience of the judgment of this Court in TRC No. 40 of 1982 dt. 26th June, 1984. The petitioner, therefore, sought a declaration that the first respondent is bound to follow the aforesaid judgment of this Court and the inter-State sales of protein flour could be taxed only at 1 1/4 per cent under entry 29 of the First Schedule, as was held by this Court. When the writ petition came up for admission, we asked the Government pleader to specify the particulars relating to the claim that an appeal was filed by the Department against the judgment of this Court in TRC No. 40 of 1980(?) dt. 26th June, 1984. It was pointed out to the Government Pleader that apart from the vague statement in the assessment order, there are no details as to whether special leave was granted by the Supreme Court for filing the appeal and if so on what date and the corresponding Civil Appeal Number and also whether any order was obtained from the Supreme Court staying the operation of the judgment of this Court above referred to.

Learned Government Pleader was unable to furnish these details. We were shocked that the first respondent nonchalantly observed in the assessment order dt. 2nd March, 1987, that he was unable to implement the order of this Court. The first respondent had the audacity to refer to a number of decisions of other High Courts which do not have any direct bearing on the issue under consideration and to observe that those decisions were more acceptable to him than the decision of this Court. We felt that there were prima facie grounds to think that the first respondent had committed contempt of this Court. It was in these circumstances that we directed the issue of notice on 31st March, 1987, suo motu, to the first respondent to show cause why he should not be punished for committing contempt of this Court. We also directed the first respondent to be present in person on 13th April, 1987.

The first respondent was personally present on 13th April, 1987, when the matter was called. He filed a counter answering the charge of contempt and we reproduce below the counter : “In the assessment order, on account of pressure of work at the fag end of financial year and due to inadvertence, I held that I was unable to implement the judgment of this High Court in TRC No. 40 of 1982 dt. 28th June(?), 1984, as the matter is pending in appeal before the Supreme Court. I express my regret for writing the above passage in the assessment order. I tender my unqualified apology to this Hon’ble Court for writing so.” Significantly enough, the first respondent does not state even in the present counter whether the claim that an appeal was filed before the Supreme Court is true. We again asked the learned Government Pleader on 13th April, 1987, to furnish the particulars relating to the claim that an appeal was filed against the judgment of this Court in TRC No. 42 of 1980(?) dt. 26th June, 1984, but the learned Government Pleader pleaded inability to furnish any particulars. Apparently, the claim that an appeal was filed and that the same is pending in the Supreme Court does not appear to be correct and the statement to that effect was recklessly made by the first respondent in the assessment order dt. 2nd March, 1987.

The question assumes importance, not because we have reasons to think that no appeal was filed as claimed. The real question is whether the first respondent can refuse to follow the judgment of this Court even if his statement that an appeal was filed before the Supreme Court is true. In recent times, we are coming across innumerable cases where the authorities observe with impunity that they cannot follow the decisions of this Court on a variety of grounds, such as: (a) that an appeal was actually filed in the Supreme Court against the judgment of this Court and is pending in the Supreme Court ; (b) that a special leave petition is filed in the Supreme Court seeking leave to appeal against the judgment of this Court and the special leave petition is pending in the Supreme Court; (c) that the Department has not accepted the decision of this Court and is taking steps to file an appeal before the Supreme Court.

We have noticed observations to the above effect in the orders passed by the Commercial Tax Authorities, including the Head of the Department, Commissioner of Commercial Taxes, ITOs, including the Head of, the Department, the CIT, Central Excise and Customs Authorities, including the Collector of Central Excise and Customs and a host of other authorities. The question for consideration is whether the authorities below can refuse to follow the judgments of this Court on the above grounds. Whenever a decision of this Court is found to be unacceptable to the authorities below, the simplest course to follow is to carry the matter in appeal to the Supreme Court by following the necessary statutory procedure and seek suspension of the order appealed against. If the Supreme Court suspends the operation of the Judgment or order appealed against, it is clear that the authorities in the State are under no legal obligation to follow the judgment so suspended till the matter is decided by the Supreme Court. What is really happening is that without following the above course, the authorities are lightheartedly declining to follow the judgments of this Court on the ground that either an appeal was filed or steps are being taken to file an appeal. It is not as if guidance on this aspect is wanting. This question came up for consideration before the Supreme Court as well as several High Courts. We may refer to the decision of the Supreme Court in East India Commercial Co. Ltd. vs. Collector of Customs, AIR 1962 SC 1893. The following observations contained in para 29 of the judgment of Subba Rao J. (as he then was), speaking for the majority, are instructive : “This raises the question whether an administrative Tribunal can ignore the law declared by the highest Court in the State and initiate proceedings in direct violation of the law so declared. Under Art. 215, every High Court shall be a Court of record and shall have all the powers of such a Court including the power to punish for contempt of itself. Under Art. 226, it has plenary power to issue orders or writs for the enforcement of the fundamental rights and for any other purpose to any person or authority, including in appropriate cases any Government, within its territorial jurisdiction. Under Art. 227, it has jurisdiction over all Courts and Tribunals throughout the territories in relation to which it exercises jurisdiction. It would be anomalous to suggest that a Tribunal over which the High Court has superintendence can ignore the law declared by that Court and start proceedings in direct violation of it. If a Tribunal can do so, all the subordinate Courts can equally do so, for there is no specific provision, just like in the case of the Supreme Court, making the law declared by the High Court binding on subordinate Courts. It is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working : otherwise, there would be confusion in the administration of law and respect for law would irretrievably suffer. We, therefore, hold that the law declared by the highest Court in the State is binding on authorities or Tribunals under its superintendence, and that they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding.”

10. We may refer to the decision of the Supreme Court in Dibakar Satpathy vs. Hon’ble the Chief Justice & his Companion justices, AIR 1961 SC 1315. That was a case where the Under Secretary to the Board of Revenue, Orissa, had been admonished for contempt of Court and directed to pay the costs of the proceedings before the High Court of Orissa. The occasion for the institution of contempt proceedings against the Under Secretary was the circulation of the view of the Legal Remembrancer and the Advocate-General to the District Magistrate of the Northern Division of Orissa dt. 19th Jan., 1955, containing the following endorsement: “I am directed to enclose copies of the opinions of the Legal Remembrancer and of the Advocate-General and to say that the Law Department are of opinion that no special authorisation is necessary to empower Magistrates to take cognizance under s. 20 of the Cattle Trespass Act. This may be followed until the matter is carried to the High Court in some case, so that the confusion created by the Orissa High Court decision reported in Padma Charan. vs. Rangadhar Das, AIR 1951 Orissa 40, might be set at rest.”

11. The attention of the High Court was drawn to the aforesaid endorsement of the Under Secretary and the High Court directed issue of notices to the Under Secretary and also to the Legal Remembrancer of Orissa to show cause why they should not be committed for contempt. The High Court absolved the Legal Remembrancer but convicted the appellant and admonished him. Both the Legal Remembrancer and the Under Secretary tendered apologies to the High Court. Even so, the High Court found the Under Secretary guilty of contempt of Court and admonished him; he was required to pay the costs of the proceedings. . The matter was carried in appeal to the Supreme Court. The Supreme Court held that there was not the least doubt that such a direction was a flagrant interference with the administration of justice by Courts and a clear contempt of Court. Upon that view, the appeal was dismissed. We are specially referring to this case because on a number of occasions, this Court was informed that whenever a decision rendered by this Court is found to be not acceptable, the Heads of the Departments such as, Commissioner of Commercial Taxes, CIT, Collector of Central Excise and Customs, issue circulars directing the subordinate officers not to follow the decisions of this Court on the ground that the Department did not accept the decision of this Court and intends to carry the matter in appeal to the Supreme Court. The subordinate officers in complete obedience to the directions of the higher authorities ignore the decisions of this Court. We cannot but express our dismay at the tendency of the Heads of Departments issuing circulars of the above type placing its subordinate officers in great distress. As disobedience to follow the instructions of the higher authorities can be a ground for punishing subordinate officers, we are not surprised that the subordinate authorities choose to follow the directions given by the Heads of Departments and ignore the decisions of this Court with impunity.

12. We may refer to yet another decision of the Supreme Court, Baradaanta Mishra vs. Bhimsett Dixit, AIR 1972 SC 2466. In that case, the CIT of Hindu Religious Endowments, Orissa, who was a member of the Superior Judicial Service of the State of Orissa for 23 years and ho, at one time, acted as a District Judge, made an order that the decision of the High Court on Bantla case, (supra), was being appealed against. It was stated that the Supreme Court was being moved in the matter and, therefore, the decision could be safely deemed to be sub judice. The Endowment Commissioner ordered that the decision of the High Court need not be followed. When the matter was brought to the notice of the Orissa High Court, contempt proceedings were initiated against the Endowments Commissioner. After hearing the contemner, the High Court found him guilty of contempt of Court and admonished him in open Court and directed him to pay Rs. 300 as costs of the proceedings. The High Court held that the conduct of the contemner far from being bona fide is clearly a mala fide one and he intentionally avoided to follow the decision of this Court by advancing grounds which were most inappropriate. The matter was then carried in appeal to the Supreme Court. The Supreme Court upheld the finding of the High Court that the conduct of the Endowments Commissioner was clearly mala fide. The Supreme Court observed in para. 14:

“Under Art. 227 of the Constitution, the High Court is vested with the power of superintendence over the Courts and Tribunals in the State. Acting as a quasi-judicial authority under the Orissa Hindu Religious Endowments Act, the appellant (Endowments Commissioner) was subject to the superintendence of the High Court.

Accordingly, the decisions of the High Court were binding on him. He could not get away from them by adducing factually wrong and illegitimate reasons ……

The conduct of the appellant in not following the previous decision of the High Court is calculated to create confusion in the administration of law. It will undermine respect for law laid down by the High Court and impair the constitutional authority of the High Court. His conduct is, therefore, comprehended by the principles underlying the law of contempt …… the High Court has rightly found the appellant guilty of contempt.”

13. Reference may also be invited to the decision of the Bombay High Court in Subramanian, ITO vs. Siemens India Ltd. (1985) 36 CTR (Bom) 197 : (1985) 156 ITR 11 (Bom). The question that arose for consideration in this case is whether the ITO is bound by the decision of a single Judge or a Division Bench of the Court within whose jurisdiction he is operating even if an appeal has been preferred against such decision and is pending. The following observations of the Bombay High Court may be extracted: “So far as the legal position is concerned, the ITO would be bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is (functioning), irrespective of the pendency of any appeal or special leave application against that judgment. He would equally be bound by a decision of another High Court on the point, because not to follow that decision would be to cause grave prejudice to the assessee. Where there is a conflict between different High Courts, he must follow the decision of the High Court within whose jurisdiction he is (functioning), but if the conflict is between decisions of other High Courts, he must take the view which is in favour of the assessee and not against him. Similarly, if the Tribunal has decided a point in favour of the assessee, he cannot ignore that decision and take a contrary view, because that would equally prejudice the assessee.”

14. We may also refer to the decision of the Gujarat High Court in Standard Radiators vs. CIT (1986) 57 CTR (Guj) 168 : (1987) 165 ITR 178 (Guj). An identical question came up for consideration in that case. The Gujarat High Court held that it is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. Hence, the law laid down by the High Court has to be followed by the IT authorities situated in the area over which the High Court has jurisdiction. Adverting to the decision of the Supreme Court in East India Commercial Co. Ltd. vs. Collector of Customs, (supra), the Gujarat High Court observed as under : “In view of this decision of the Supreme Court, the ITO and the AAC were bound to follow the decision of this Court in Hasanali Khanbhai’s case (supra). If they failed to do so, it would undermine the respect for the law laid down by the High Court and the constitutional authority of the High Court and their conduct would, therefore, be apprehended by the principles underlying the law of contempt.”

It is clear from the judicial pronouncements above referred to that the authorities and the Tribunals functioning within the jurisdiction of this Court in respect of whom this Court has the power of superintendence under Art. 227 are bound to follow the decisions of this Court unless, on an appeal, the operation of the judgment is suspended. It is not permissible for the authorities and the Tribunals to ignore the decisions of this Court or to refuse to follow the decisions of this Court on the pretext that an appeal is filed in the Supreme Court which is pending or that steps are being taken to file an appeal. If any authority or the Tribunal refuses to follow any decision of this Court on the above grounds, it would be clearly guilty of committing contempt of this Court and is liable to be proceeded against.

We have come across innumerable instances where the authorities below, especially authorities entrusted with the collection of taxes and excise duties, refused to follow the decisions of this Court on the ground that appeals were either filed or steps were being taken to file appeals, and raised fantastic tax demand and initiated proceedings for recovery of such taxes. The result was that this Court was flooded with innumerable writ petitions. We need hardly observe that all this is totally irregular and should have been avoided. We cannot help putting on notice all the authorities concerned that this Court would not hesitate to take stern action for contempt if decisions of this Court are disregarded unless the operation of the judgments of this Court is suspended by the Supreme Court.

As far as the present case is concerned, there could be little doubt that the first respondent, Commercial Tax Officer, is clearly guilty of committing contempt in observing in the assessment order dt. 2nd March, 1987, that he cannot implement the order of this Court. We have referred to the counter filed by him wherein the first respondent owned his mistake and expressed an unqualified apology. We take a lenient view of the matter, accept the apology tendered by the first respondent and drop further proceedings in the matter.

The contempt case is accordingly disposed of. No costs.

[Citation : 169 ITR 564]