This is not a refined judgement

Method and discipline are gradually disappearing in deciding revenue cases in the Supreme Court. Judgments in cases on excise duties have...

Method and discipline are gradually disappearing in deciding revenue cases in the Supreme Court. Judgments in cases on excise duties have been becoming shorter and shorter to a point where the facts of the case are not disclosed but a decision is given. Other judgments are cited in the decision but how the judgments apply to the given facts is not stated. Worse, even in important matters which are decided by a bench of five judges, concepts in issue like manufacture, marketability and how far ruling politicians can go in creating legal fictions remain untouched. The result is that passages in the same judgment may lead to a free for all and further litigation. The recently reported order of the Supreme Court in the case of Hindustan Petroleum Corporation vs Union of India is the latest example.

The important issue involved in Hindustan Petroleum Corporation8217;s case was the excisability of the residual burner fuel oil in the refineries after processing several distillates from crude oil. This residual oil isused as a burning fuel within the refineries. If it is blended with other suitable fractions then it can be used for power plants, ship engines and industrial plants. The contention of the refinery was that this residual oil is not marketable and hence no excise duty can be levied on its captive consumption. The revenue department contended that it was possible to market it and hence it was excisable, notwithstanding the fact that the residual oil has to be kept at around 120 degrees celsius to prevent its solidification and enable its use for captive consumption.

The Supreme Court in complete defiance of its 1991 order in ONGC vs Union of India set about deciding this issue. The 1991 order had declared that it shall be the obligation of every court and tribunal not to proceed with the hearing of a dispute between a public sector company and a department of the Union Government till the clearance for taking the matter to the court or the tribunal has been obtained from a committee of secretaries. Thecommittee in terms of the apex court8217;s order functions under the ultimate control of the Cabinet Secretary. It must consist of senior officials of the Union Ministry of Industry, the Bureau of Public Enterprises and the Union Law Ministry. It may in addition include senior officials of the Union Finance Ministry and from the specific ministry concerned. Though the litigation before them was between a public sector refinery and the revenue wing of the Union Finance Ministry, the Supreme Court judges did not send the matter to the Committee of Secretaries for clearance. There is not the slightest echo of the 1991 order even though that order required the Committee of Secretaries to file from January 1, 1992, a quarterly report in the apex court about the functioning of the system of clearance. The apex court breached its own order and proceeded to hear the case.

The Supreme Court found that the high court, against the decision of which the public sector refinery had appealed, never examined the issue ofmarketability of the residual oil. The apex court agreed that normally the matter should be remanded back to the high court for such examination. This is normally done so that the relevant facts can be examined in detail by the high court and the time of the apex court is saved. However, the Supreme Court pointed out that the high court judgment was of the year 1972 and because of the lapse of time it would go into the question itself. What the apex court did not mention was that the lapse of time of over 20 years had occurred because the appeal was kept pending in its own court. Hence the well known method of getting the valuable opinion of the high court as also the facts had to be ignored simply because of the apex court8217;s own fault of keeping the matter pending without a hearing for over two decades. Silence on this issue ensured its repetition.

Worse, the judges discovered that though the matter had been pending for over 20 years in the apex court itself, the revenue or excise authorities had chosennot to file any reply to the appeal for the public sector refinery. The refinery had filed the affidavit of a chemical engineering graduate from the Andhra Pradesh University at Waltair in Visakhapatnam. The judges did not inquire as to why the Union Government had slept on this and did not fix accountability between the Union Finance Ministry and the litigation Secretary of the Union Law Ministry. Instead, it chose to simply proceed on the basis of the affidavit of the public sector refinery and arguments of the Union of India8217;s counsel to decide in favour of the refinery. While deciding on the basis of expert evidence available only from the appellant, the judges did not bother to find out and mention anywhere in the order the sums of public revenue involved. The apex court judges could easily have exercised their own power to suo motu ask for expert evidence from the Union Ministry of Petroleum. But they chose not to do that also. Incidentally apart from the Chief Justice of India, the bench had two judgeswho specialise in taxation.