In Special Leave Petition (Civil) No. 18051/2023 -SC- Top Court upholds finality in litigation & rejects reopening of overruled judgments
Justice B.V. Nagarathna & Justice Prashant Kumar Mishra [04-07-2023]

Read Order: Commissioner of CGST and Central Excise (J And K) V. M/s Saraswati Agro Chemicals Pvt. Ltd.

Chahat Varma

New Delhi, July 17, 2023: Adivision bench of the Supreme Court has dismissed a Special Leave Petition filed by the Commissioner of CGST and Central Excise (J&K). The TopCourt held that the argument presented, which sought to reopen and align an overruled judgment with a subsequent judgment, was impermissible in law.

In the said case, the Additional Solicitor General (ASG) representing the petitioner(s) argued that a previous judgment of the Supreme Court in the case of SRD Nutrients (P) Limited vs. CCE [LQ/SC/2017/1640], contradicted the earlier ruling of a three-judge bench in the case of Modi Rubber Ltd. And Anr. vs. Union of India and Others [LQ/SC/1986/269]. However, the ASG pointed out that the subsequent decision in M/s Unicorn Industries vs. Union of India [LQ/SC/2019/1836], overruled the judgment in SRD Nutrients (P) Limited and held that the exemption from payment of excise duty under a notification did not extend to the payment of education cess and secondary education cess. The ASG informed the court that an order was passed on 27.09.2021, referring the decision in M/s SRD Nutrients (P) Limited (which had been overruled) to a larger bench because it was per incuriam, as it had not considered the earlier judgment in Modi Rubber Ltd. Therefore, the ASG argued that this case should be connected with the mentioned matter, and the judgment to be passed should align with M/s Unicorn in M/s SRD Nutrients (P) Limited when the reference is answered.

The bench comprising of Justice B.V. Nagarathna and Justice Prashant Kumar Mishra noted that the reference order made on 27.09.2021, raised the question of whether it was necessary to refer the matter to a larger bench. The bench identified two reasons why such a reference may not be necessary. Firstly, the Revenue's application for review of the judgment in M/s SRD Nutrients (P) Limited came after the dismissal of a review petition, indicating an attempt at a second review, which was not permissible in law. Secondly, the argument made by the ASG implied that if a judgment was overruled by a subsequent judgment, the overruled judgment must be reopened and aligned with the subsequent judgment.

The bench emphasized the importance of finality in litigation and the principle that a person cannot be vexed twice.

“That is why the explanation to Order XLVII Rule 1 which is a wholesome provision has been inserted to the Code of Civil Procedure. It states that once there is a subsequent judgment overruling an earlier judgment on a point of law, the earlier judgment cannot be reopened or reviewed on the basis of a subsequent judgment,” remarked the bench.

The Revenue had contended that, based on the subsequent judgment in M/s Unicorn Industries, recoveries could be made from the assessees regarding the refund of education cess that was previously made by the Department, or if not paid by the assesses following the judgment in SRD Nutrients (P) Limited. In response to this, appeals were filed by the assessees before the High Court. The bench observed that the High Court, in its order, considered both the judgment in SRD Nutrients (P) Limited and M/s Unicorn Industries and had held that the appellants were not entitled to recover the refunded amount based on the subsequent decision of the Supreme Court in Unicorn Industries. The High Court had noted that allowing such action would open a Pandora's box and prevent the final resolution of the dispute between the parties that had already attained finality.

Thus, the division bench opined that the reference order made on 27.09.2021 was unnecessary and sought reopening of a previously finalized matter. Upon reviewing the reference order in light of the discussions, the bench concluded that it was not required.