Case Law Details

Case Name : M/s Concept Creations Vs Addl. CIT, Range (ITAT Delhi)
Appeal Number : ITA No. 3370/Del/08
Date of Judgement/Order : 15/09/2009
Related Assessment Year : 2005- 06
Courts : All ITAT (7804) ITAT Delhi (1855)

Insertion of Rule 13E in the I.T.A.T. (Recruitment and Conditions of Service) Rules, 1963, vide Notification No. GSR 389E dated 3-6-2009 prohibiting Retired ITAT President, Vice-President and members to appear before ITAT. No doubt the Ministry, as it were, built a nice palace so that all of us in the ITAT could lead a happy and blissful life hereafter, used strong bricks, good cement and ISI marked steel but they built, in our view, on a loose soil or sandy bed or say without taking ecological clearance. The palace so built, although of strong structural components, is likely to crumble. The same is true here. We were very anxious to apply the ratio laid in P.C. Jain’s case (supra) but refrained or shown caution because the base on which our palace is built is different from the one appreciated by the Delhi High Court. We can only accept the reality and envy our neighbours in the CESTAT.

(1) In our view it does not apply to Members who have retired prior to the date of publication of notification.

(2) In our view the question no. 2 is answered to the effect that it applies to the Members who retired from the Tribunal on or after the date of the publication of this Notification.

(3) That once the Member reties after the date of Notification, it certainly applies. It does not matter when the Members were recruited. Even it applies to the Members who are recruited prior to the date of Notification. Crucial date must be the date of retirement. If it is after 3rd  June, 2009, it applies.

(4) Question no. 4 is answered that the Members who retire on or after 3-6-2009, even if otherwise qualified to practice u/s 288 of the Act, would still be debarred to appear and argue before the Tribunal, in the light of Rule 13E of the ITAT Members (Recruitment and Conditions of Service ) Rules, 1963.

(5) Persons  who have resigned from service prior to the date of Notification, without any retirement benefits would not be covered by this Notification because it applies to those persons who have retired after the date of Notification.

(6) As regards question no. (6), we say the notification does not apply to members who are appointed on a temporary basis and resign from service without being confirmed during probationary period.

INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH “B” NEW DELHI (SPECIAL BENCH )

ITA No. 3370/Del/08

Asst. Yr: 2005-06

M/s Concept Creations

Vs

Addl. CIT, Range, Panipat

 ORDER

PER G.E. VEERABHADRAPPA, V.P:

1. When the above captioned appeal was posted for hearing before the Division Bench, it was noticed by the Bench that in view of insertion of Rule 13E in the I.T.A.T. (Recruitment and Conditions of Service) Rules, 1963, vide Notification No. GSR 389E dated 3-6-2009, questions were raised as to validity to the appearance of Dr. Rakesh Gupta, Advocate, on behalf of the assessee. The Bench, after hearing Dr. Rakesh Gupta, Adv. and some ex-members of the Income tax Appellate Tribunal (“ITAT” in short), who were present in the court, felt that the issue was complex and would therefore require to be first decided, before deciding the merits of appeal. It was argued before the Division Bench that it was inherent duty of the ITAT in the light of the provisions of Sec. 254 of the Income-tax Act, 1961, first to dispose off the preliminary issues, such as this, before disposing off the appeal on merits. The Division Bench also felt that, in the interest of justice, it is necessary that this matter receives uniform treatment so that one may avoid unnecessary and avoidable multiple litigations. Prima facie, the Division Bench was of the opinion that the issue required reference to Special Bench and therefore, drew a reference to the President, ITAT (‘President” in short), on 10th July, 2009. The Division Bench also suggested the President to explore the possibility of the Ministry of Law and Justice being given a notice of hearing so that they may make a representation as regards the exact objectives and implications of the said Rule 13E and also to represent the Government in support of the said Notification. It appreciated the fact that the departmental representatives may not possibly argue in the manner expected of them, while they may not have any interest as to who argues and who does not argue and sometimes they also engage services of ex-members of ITAT to argue their cases.

2. When the reference was placed before the President, he was of the opinion that the questions raised were of great public importance and also felt that in large number of cases ex-members do appear before different Benches in the country, both for the revenue as well as for the assessee. According to the President, engagement of a counsel of its own choice is part of effective hearing before the Tribunal. The President accepted the recommendations of the Division Bench to constitute a Special Bench. It was also directed that the Special Bench to decide whether notice of hearing has to be sent to the Government of India through the Ministry of Law & Justice. That is how the Special Bench was constituted. The Special Bench, it may be stated, was constituted to answer the following questions:

“1. Whether, the said Notification applies to the Members who have retired prior to the date of publication of the Notification?

2. Whether, the said Notification applies only to the Members who retired from the Tribunal on and from the date of publication of this Notification?

3. Whether, the said Notification applies to those Members who are recruited before but retire after the date of Notification?

4. Whether, the said Notification applies to the Members who retire, if otherwise are qualified to practice u/s 288 of the Income Tax Act, should still be debarred to appear and argue before the Tribunal?

5. Whether, the said Notification applies to the Members who resigned from services before the date of Notification, without any retirement benefits?

3. In pursuance of the directions of the Special Bench, a notice was issued to the Ministry of Law & Justice. The case was fixed for hearing on 3rd  August, 2009. In pursuance of the notice given, several ex-Members of the ITAT, who are practicing in Delhi and outside Delhi, sent their applications, referring to their cases before ITAT and pleaded to act as interveners in this case. Having regard to the issue in question, the Bench permitted all such persons who have the cases before the Tribunal to act as interveners. The departmental representative was also present and on behalf of the Ministry, Sr. Central Government counsel, Shri A.K. Bhardwaj, put in the appearance.

4. At the out set, a preliminary objection was taken by the Sr. Central Govt. Counsel that this Tribunal has no jurisdiction to go into Rule 13E, which is the part of the I.T.A.T. (Recruitment and Conditions of the Service) Rules, 1963 and pleaded that no further hearing is necessary on this issue and that the issues be directed to Central Administrative Tribunal (“CAT” in short), who according to him, is the proper forum for disposing off such matter.

5. The assessee’s counsel as well as the interveners vehemently argued that ITAT is the only proper forum to adjudicate preliminary issues, such as, capacity of the parties’ representative or as to their qualification or disqualification to appear before the Tribunal. It is very fundamental issue that requires adjudication before the appeal is taken up on merits. If ITAT were to wrongly permit a person who is not qualified to appear in a case or a qualified person is denied his right of opportunity to argue the matter, a grave injustice is caused and therefore it is absolutely necessary as a part of its incidental or inherent power that only ITAT should dispose off such issue. For it, specific reliance was placed to the decision of the Supreme Court in the case of ITO Vs. M.K. Mohammed Kunhi (1969) 71 ITR 815 (SC). On that date we proceeded with the matter by keeping the said issue open, but issued direction to the Sr. Central Government counsel to file a detailed affidavit on merits. Accordingly, the matter was adjourned to 17th August 2009. there were also requests from some interveners to adjudicate upon the following question:

“Whether the said Notification applies to the Members who are appointed on temporary basis and resign from service without being confirmed during the probation period, either before or after the date of Notification, without any retirement benefits.”

6. Having regard to the specific facts in some of the cases of the interveners and also it is part of large question no. (5) above, , the Bench after going through their request, found it reasonable and the Sr. Central Govt. counsel or the department had no objection for adjudication of the said question. We, accordingly, take that question as part of the reference and proceed to answer all the (6) questions.

7. Shri A.K. Bhardwaj, Sr. Central Govt. Counsel, ultimately filed an affidavit on behalf of the Ministry on 24-8-2009 and the parties were served with that and the matter was extensively heard on 24th and 25th August 2009. Before going into the questions themselves, as we discussed earlier, the objection of the Law Ministry remains to be adjudicated, which we take up now.

8. It was argued on behalf of the Ministry of Law & Justice that the ITAT is constituted only for the purpose of hearing and disposing off the appeals arising under the Income-tax Act. It cannot go into interpretation of the validity or correctness or otherwise of Rule 13E which is the part of the ITAT Members (Recruitment & Conditions of service) Rules, 1963. The proper forum, according to him, is the Central Administrative Tribunal (‘CAT’) and, therefore, it was vehemently opposed the reference by arguing that this Tribunal has no jurisdiction to adjudicate upon the issues that are being raised before it. The service in the Government is a contract between the employee and the Government of India. The Tribunal Members are part of that class and if their conditions of service are amended to their detriment, it is fair and proper that they should be directed to go before the CAT and not argue their entitlement before the ITAT.

9. On the other hand, the learned counsel for the assessee as well as the interveners, appearing, vehemently argued that this Tribunal is the only forum where the issue of this nature requires to be adjudicated. The ITAT Jaipur Bench in the case of Sagarmal Sarawgi Vs. ITO vide its order dated 10th August, 1976 in ITA no. 473/Jp/1973-74, (1976) 2 TTJ (JP) 1371, went into such questions, when similar issues were raised. Similarly, ITAT Mumbai Bench ‘A’ in the case of Tata Chemicals Ltd. Vs. DCIT vide their order dated 5-12-1997 ITA no. 4604/Mum/(1996) 67 ITD 56, went into the question whether particular DR was validly appointed by the Department and whether he could argue the case before the ITAT. The Tribunal disposed off and adjudicated the same, meaning thereby the Tribunal is the only forum, where such issues require to be thrashed out. It was pointed out by them that they having already retired from government service, cannot approach the CAT. They pleaded that since right to appear before the ITAT is being questioned, only the ITAT has to deal and dispose them. Our attention was drawn to the decision of the Supreme Court in the case of ITO Vs. M.K. Mohammed Kunhi (supra).

10. We have considered the rival contentions on this preliminary issue in the light of ratio laid down by the cases to which reliance is placed. For this it is necessary to go into ourselves. Section 254(1) of the Income-tax Act, 1961, reads as under:

254(1) – The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.”

11. The Tribunal under the aforesaid section is required to hear both the parties to the appeal before passing any order. U/s 254(1) of the Income-tax Act, 1961, the ITAT is required to give both the parties to the appeal, an opportunity of being heard. The expression “opportunity of being heard” is not an empty formality but a valuable right made available to the parties in appeal before the Tribunal. Even though such right personifies the principle of natural justice, it can accurately be described as a statutory right in the context of the explicit provisions of section 254(1). Such a right cannot be allowed to be defeated by procedural wrangles or whims and fancies of the authority concerned. It was explained by the Kerala High Court in the case of SISCO v. State of Kerala (1995) 96 STC 438 that an opportunity of being heard contemplated in section 254(1) shall be effective and adequate and it cannot be made illusory under any circumstance. Mere issue of a notice of hearing of the appeal will not suffice in all circumstances. In fact the power to grant adjournment also arises from the provisions of sec. 254(1) of the Act. A wrong exercise of a discretion to adjourn itself can give rise to questions of law before the High Court and the decision rendered by the ITAT without giving an opportunity of being heard itself can be questioned. The powers of the ITAT u/s 254 of the Act in dealing with the appeal are expressed in the widest possible terms and are similar to the power of an appellate court under the Civil Procedure Code. It was so held by the Bombay High Court in New India Assurance Co. Ltd. vs. CIT (1957) 31 ITR 844. The Supreme Court in the case of Esthuri Aswathiah Vs. CIT (1967) 66 ITR 478 (SC) has held that function of the Appellate Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it. But the Tribunal cannot make arbitrary decisions. It cannot found its judgment on conjectures, surmises or speculation. In the exercise of its powers, the Tribunal is vested with a large area of discretion in a number of matters such as condoning the delay in filing of the appeal, admission of new pleas and additional evidence, conduct of further inquiry on its own or by remand to the lower authorities, passing such orders on the appeal as the interests of justice may require and so on. The discretion thus conferred is an impartial legal discretion to be exercised in conformity with the spirit of the law and in such a manner as to sub serve, and not defeat, the interests of justice or furtherance of its cause. It should be guided by law and should not be arbitrary, capricious, vague, fanciful or governed by humor, unthinking folly or rash injustice.

12. Section 254 provides that “Save as provided in section 256 or section 260A, orders passed by the Appellate Tribunal on appeal shall be final”. U/s 256, the High Court has only reference jurisdiction on questions of law framed by it. Now, after the amendment w.e.f. 1-10-1998, an appeal shall lie to the High Court from every order passed by the tribunal, if the High Court is satisfied that the case involves a substantial question of law. All these provisions point out to one thing that the order of the Tribunal on factual aspects is final and unquestionable but on points of law an appeal could still lie before the High Court, if the same is substantial in nature. Reference may be made to the ratio of decisions in the case of I.C.I. (India) Pvt. Ltd. Vs. CIT (1972) 83 ITR 710 (SC); and CIT Vs. Mehmoodmian A. Topiwala 213 ITR 615 (Guj.). The order of the Tribunal, although factual, may be construed as one giving rise to a substantial question of law if such order is based on no evidence in support thereof or there is contravention of principles of natural justice, in that event the order itself will be treated as perverse and is likely to be set at naught and there can be no effective disposal of appeal, unless the order of the Tribunal is passed only after hearing the proper parties, duly qualified to appear either for the assessee or for revenue. Reference may be made to the decision of the Apex Court in the case of Chabildas Tribhuvan Das Vs. CIT (1966) 59 ITR 733 (SC). Where there is denial of principles of natural justice in a given case it will give rise to a legal question, as pointed out by the Madhya Predesh High Court in the case of CIT Vs. Abhyeshwar (1999) 153 CTR MP 372. Failure to give proper and effective hearing amounts to denial of opportunity of being herd and is likely to be construed as one being perverse and all such orders are liable to be disturbed. Only on this preliminary ground if the order could be disturbed, there can be no effective disposal of appeal. Therefore, this issue requires to be properly addressed and sorted out in accordance with well laid down principles of law and also the principles of natural justice.

13. Now we will see the facts in the case of ITO Vs. M.K. Mohammed Kunhi (supra), the assessee was imposed with penalty u/s 271(1)(c) of the I.T. Act for concealment of particulars of income. The assessee questioned those penalties before the ITAT and also made an interim prayer for stay of collection of the penalties imposed. The Tribunal declined to order any stay holding that it had no power to grant such a prayer. In fact there were no provisions as the one we have now at that point of time when the prayer for stay was made. The assessee then moved the Kerala High Court under article 226 of the Constitution. The Kerala High Court in the case of M.K. Mohammed Kunhi Vs. ITO (1966) 59 ITR 171, held that the tribunal had the power to stay the proceedings as also the collection of the penalties pending the appeal since that power was incidental and ancillary to its appellate jurisdiction. The Tribunal was consequently directed to dispose of the stay application in accordance with law. The Revenue challenged further. Their Lordships of the Supreme Court observed that the right of appeal is a substantive right and the questions of fact and law are at large and are open to review by the Appellate Tribunal. The Tribunal has been given very wide powers under section 254(1), for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal. If the ITO and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the Tribunal is entirely helpless in the matter of stay of recovery, the entire purpose of the appeal get defeated if ultimately the orders of the departmental authorities are set aside. It is difficult to conceive that the legislature should have left the entire mater to the administrative authorities to make such orders as they choose to pass in exercise of unfettered discretion. Therefore, the Supreme Court in this context observed that powers which have been conferred by Sec. 254 on the Appellate Tribunal which were of widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective. They quoted from Domat’s Civil Law (Cushing’s edition), volume 1, at page 88, the following passage, which was as under:

“It is the duty of the judges to apply the laws, not only to what appears to be regulated by their express dispositions, but to all the cases where a just application of them may be made, and which appear to be comprehended either within the consequences that may be gathered from it.”

14. They also quoted from Maxwell on Interpretation of Statutes, eleventh edition at page 350, and made the following extract:

“where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution. Cui jurisdictio data est, ea quoque concessa esse videntur, sine quibus jurisdictio explicari non potuit.” An instance is given based on Ex parte Martin that “where an inferior court is empowered to grant an injunction, the power of punishing disobedience to it by commitment is impliedly conveyed by the enactment, for the power would be unless if it could not be enforced.”

15. It is quite interesting to note that their Lordships further proceeded and made the following observation:

“It was said that the general principle was that in a taxing statute the was no room for what could be called the equitable construction, but that principle applied only to the taxing part of the statute and not to the procedural part. It has further been observed that “where the legislature invests an Appellate Tribunal with powers to prevent an injustice, it impliedly empowers it to stay the proceedings which may result in causing further mischief.

It is well known that the Income-tax Appellate Tribunal is not a court but it exercises judicial powers. The Tribunal’s powers in dealing with appeals are of the widest amplitude and have in some cases been held similar to and identical with the powers of an appellate court under the Civil Procedure Code: see Commissioner of Income-tax v. Hazarimal Nagji and Co. and New India Assurance Co. Ltd. v. Commissioner of Income-tax/ Excess Profits Tax.”

16. The Supreme Court upheld that the ITAT has a power to grant the stay although there were no express provisions in the Act, as a part of the incidental or ancillary to its appellate jurisdiction. It was observed by the Supreme Court that when Sec. 254 confers appellate jurisdiction on ITAT , it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as well to prevent the appeal if successful from being rendered nugatory.

17. In the light of the aforesaid principles laid down by the Supreme Court, we will examine the provisions of Sec. 254(1), which mandates the Tribunal to give to both the parties to appeal an opportunity of being heard in the matter. If one of them is denied or a proper person is not allowed, the judicial process itself get derailed and the order of the Tribunal, how so ever strong it is, is liable to be set aside, on the ground that proper opportunity of being heard is not granted to a proper person or an improper person is allowed to argue the mater. So, therefore, in our considered opinion, in the light of the principle laid down by the Supreme Court in the case of M.K. Mohammed Kunhi (supra), The Tribunal has inherent jurisdiction to go into the question, whether the parties who are appearing before it are properly entitled under the law to make appearance. For this purpose they are entitled to go into provisions of Advocates Act, Bar Council Act, Chartered Accountants Act or the Service Regulations or Pension rules or into provisions of I.T. Act. They may also interpret laws of contract, Agency, Company Law, Partnership Law, Allied Laws, Branches of International law or any other allied laws etc. for the purpose. The areas where we are required to look into for this purpose may thus get extended depending upon the facts and circumstances of each case. After all, it must be appreciated the right of appeal provided under the Income-tax Act to the parties is not an empty formality but a part of judicial process, mandated by the law. Be it revenue or the assessee, has substantive right and the Tribunal cannot run away from its basic duty to adjudicate this preliminary issue, when it raised or arises before it as a part of such a judicial process.

18. Although it is not of much importance, Rules 16 and 17 of the Appellate Tribunal Rules, 1963, also provide for filing of proper authorization for appearing before the ITAT. It may be quite possible the Registry officials may raise objection and do not accept the power of attorney of a person filed by the parties when a rule like Rule 13E is raised on a person who claims an opportunity of being heard in the matter. Therefore, it is all the more necessary that the Tribunal has to go into this question and dispose off the preliminary objection in this regard. It may be mentioned, that Jaipur and Bombay Benches of the Tribunal, in the cases cited earlier, have exactly done the same thing when disputes were raised as to the competence of a person claiming to represent before ITAT. In both these cases the competence of person appearing as authorized representative was a departmental representative, protecting the interest of the revenue was in question and the Tribunal adjudicated these issues. Therefore, we entirely agree with the view taken by the Jaipur Bench and the Mumbai Bench in this regard.

19. The Delhi High Court in the case of Taylor Instrument Co. (India) Ltd. Vs. CIT (1998) 232 ITR 771 (Del.) has held that the Tribunal cannot determine whether or not a provision violates Articles of Constitution. The tribunal being a creature of the Income-tax Act, can only confine itself to the provisions of the Act and cannot pronounce upon the constitutional validity or vires of any provision of the Act.

20. We are aware of the limitation. With this caution, we reach a conclusion that the Tribunal is competent to go into the questions as raised in these result of the Notification, which has a direct bearing on the process of hearing.

21. Rule 13E, which is the bone of contention, is inserted by the Notification G.S.R. 389(E) dated 3-6-2009. This is issued by the Ministry of Law and Justice and reads as under:

“13E. The President, the Senior Vice-President, the Vice-President and the Member of the Tribunal shall not practice before the Tribunal after retirement from the service of the Tribunal.”

Broadly stated, this Notification has the effect of denying/ disturbing the specified persons i.e. President, Sr. Vice President, Vice-president and the Members of the Tribunal, to appear and argue the cases before the ITAT, although they may have necessary qualification under the provisions of Section 288 of the Income-tax Act, 1961. Unless a person is duly qualified u/s 288 of the I.T. Act and does not suffer from any of the disqualifications stated under sub-sections (4), (5) and (7) of Sec. 288, the person is entitled to appear before the tribunal on behalf of the assessee or the department. The provision of Section 288 is an act of Parliament. The Notification, stated above, is issued by the President of India in exercise of the powers conferred by the proviso to Article 309 of the Constitution of India. The said Notification has the effect of amending the Income-ax Appellate Tribunal Members (Recruitment and Conditions of Service )Rules, 1963.

22. It was the common argument of all the persons, who appeared for the assessee as well as the interveners, that the Delhi High in Writ Petition © No. 6710/07 in the case of P.C. Jain was concerned with sub-section (6) of Section 129 of the Customs Act, 1962. The said provision was introduced by Section 110 of the Finance Act, 2007 w.e.f. 11-5-2007. The said sub-section read as under:

“129(6) – On ceasing to hold office, the President, Vice-President or other Member shall not be entitled to appear, act or plead before the Appellate Tribunal.”

23. It was pointed out that Delhi High court was not at all concerned with the interpretation of a provision relating to conditions of service. They were concerned with the provisions of sec. 129(6), which was brought by the Parliament in the statute relating to Customs Act. This is the difference, according to the interveners and the appellant’s advocate. The major issues that fall for our consideration, could be as under:

(i)Whether, there is any difference in the legislative amendment in section 129(6) of the Customs Act, 1962 and Rule 13-E of the Income Tax Appellate tribunal Members (Recruitment and Conditions of service) Rules, 1963. Whether, that really makes any difference?

(ii) Classification of the Members, whether prohibited from appearing before the ITAT. Whether, the said prohibition applies to the ex-Members or the present Members or only the Members who join hereafter.

24. Among the ex-members, there is an important classification, as to the position of resigned Members and the Members who superannuated after their full length of service. The Special Bench has addressed itself on all the above questions. We take up the case of resigned Members and after hearing their arguments dispose of their matters. We will take up the cases of retired Members separately and dispose off their issues. According to us, persons mentioned at (1) to (5) fall under this category of resigned members –

(1) Dr. Rakesh Gupta Advocate; (2) Shri Ved Jain CA; (3) Shri Anoop Sharma Adv.; (4) Shri Salil Kapur Adv.; and (5) Shri Y.K. Kapoor Adv. The case of the resigned Members is quite interesting. We will take facts of each of the resigned Members for a better appreciation.

25. Dr. Rakesh Gupta, advocate, was appointed as an Accountant Member in the ITAT vide his appointment letter dated 20th July 2000. His post itself was advertised to be temporary and the terms and conditions of appointment contained the following:

“1. The said post of Accountant Member in the Income Tax Appellate Tribunal belongs to General Central Service (Group ‘A’) and carries a pay scale of Rs. 22,400-600-26000/-p.m. In addition, you will be entitled to allowance at the rates admissible to Central Govt. Officers of your category, under and subject to the conditions laid down in rules and orders governing the grant of such allowances in force from time to time.

2. The said post is purely temporary and is at present sanctioned upto the 28th February, 2001, but likely to continue thereafter.

3. The appointment carries with it the liability to serve in any part of India.

4. Your conditions of service will be governed by the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 (copy enclosed).

5. In your temporary appointment to the post of Accountant Member, Income Tax Tribunal, you will remain on probation for a period of two years, but the said period may be extended at the discretion of the appointing authority. The appointment may be terminated by the appointing authority at anytime without assigning any reason. N case you want to resign the appointment you will be required to give one month’s notice to the appointing authority.

……

……..

11.     Other conditions of the service will be same as are applicable to Central Govt. Servants under the relevant rules and orders in fore from time to time. …

13.  Your said appointment to the post of Member in the ITAT will be subject to the final orders in CWP Nos. 6797/99 (K.K. Gupta Vs. UOI) 6798/99 (B.R. Jain Vs. UOI) 7241/99 (Sh. D.K. Tyagi Vs. UOI) 7714/99 (B.R. Mittal Vs. UOI) and 135/2000 (UOI Vs. P.K. Bansal) pending before the High Court of Delhi.

26. Shri Rakesh Gupta, in his compilation, filed copy of the recruitment rules, which were sent to him. He accepted the offer of appointment. He joined the Tribunal on 16-8-2000. He submitted his resignation during the probation itself and the said resignation was accepted from 21-3-2001. the said acceptance, it may be stated was done by the government even by waiving the notice period of one month, as mentioned in the acceptance letter. It may me mentioned that before joining the Tribunal Dr. Rakesh Gupta practiced between 1984 to 2000 and appeared before Delhi Benches of the ITAT in various cases from 1990 to 2000. After he resigned, Dr. Gupta started practicing as an advocate from May 2001 and has been appearing before the tribunal mainly before Delhi Benches of the ITAT regularly since then. It was stated by him that he was never posted at Delhi Benches where he has been practicing. It may be mentioned that before he resigned, he was posted at Hyderabad Benches of the ITAT. The case or Dr. Rakesh Gupta is that he is not hit by Notification No. GSR 389(E) dated 3rd June, 2009 and is entitled to appear for the parties despite Rule 13E of the Income-tax Appellate Tribunal Members (Recruitment and Conditions of Service )Rules, 1963, as according to him he is not the one who retired from the service of the Tribunal but he has resigned from service that too during the probation period itself. He was not even confirmed in the service from the post that was always remained temporary during his service and subject to several stipulated uncertain conditions. Only the persons specified in the said Notification who retire from service of the Tribunal are only prohibited. According to him, he has not retied from service but resigned from service. The retirement, according to Dr. Rakesh Gupta, has a definite connotation in the service regulation for which Rule 11 of the Recruitment Rules was relied upon by Shri Rakesh Kumar Gupta, which reads as under:

“The date of retirement of a member shall be the date on which he attains the age of sixty two years and not the last date of the month as in the case of other Government servants.”

27. It was also pointed out that the said rule was amended subsequently vide Notification GSR no. 753(E) dated 29th December, 2005, which reads as under:

“1) Retirement – The date of retirement of –

(a) the President shall be the date on which he attains the age of sixty years.

(b) The Senior Vice President, Vice President and Member shall be the date on which thy attain the age of sixty two years

And not the last date of the month as in the case of other Government servant.

Our attention was further drawn to fundamental rule 56 which applies to other government services, which reads as under:

“F.R. 56. (a) Except as otherwise provided in this rule, every government servant shall retie from service on the afternoon of the last day of the month in which he attains the age of sixty years;

Provided that a Government servant whose date of birth is the first of a month shall retire from service on the afternoon of the last day of the preceding month on attaining the age of sixty years.

[Provided further that a Government servant who has attained the age of fifty-eight ears on or before the first day of May, 1998 and is on extension in service, shall retire from the service on expiry of his extended period of service.

or on the expiry of any further extension in service granted by the Central Government in pubic interest, provided that no such extension in service shall be granted beyond the age of 60 years.”

28. According to Dr. Rakesh Gupta, the retirement can be at superannuation, voluntary retirement on completing prescribed years of service; or a compulsory retirement by employer. According to him, the retirement takes place normally at superannuation or on completion of qualified period of service. In his case and in the cases of four others, there is no retirement but they have resigned from service. The resignation is not the same thing as retirement. This difference, according to him, was noticed by the Supreme Court in the case of UCO Bank & others Vs. Sanwar Mal AIR 2004 SC 2135. In that case, according to Shri Rakesh Gupta, the Supreme Court went through different regulations and opined that the expressions ‘resignation’ and ‘retirement’ have been employed for different purposes and carry different meanings. An employee can resign at any point of time even on the second day of his appointment but in case of retirement he retires only after attaining the age of superannuation or in case of voluntary retirement, on completion of qualifying service. The effect of resignation and retirement to the extent that there is severance of employment is common but in service jurisprudence both the expressions are understood differently. According to him, the decision of the Supreme Court in the case of UCO Bank (supra) takes him and like interveners, out of the purview of Rule 13E of the Income Tax Appellate tribunal Members (Recruitment and Conditions of service) Rules, 1963. Reliance was also placed on the ratio of decision of Rajasthan High Court in the case of Sohan Lal Soni (MANU/RH/0617/2006).

29. Our attention was drawn to the decision of Supreme court in the case of Jaipal Singh Vs. Smt. Sumitra Mahajan & another AIR 2004 SCW 2010 to contend that in the case of resignation the relationship of employer and employee terminates on acceptance of resignation whereas in the case of retirement, voluntary or on superannuation, the relationship continues for the purpose of payment of retirement benefits.

30. Our attention was further drawn to Clause 26 of the Central Services (Pension) rules, wherein it is provided that resignation from a service or a post entails forfeiture of past service. According to him, once resignation is accepted and past service has been forfeited, he could not possible be put in the same bracket with those who continue to receive benefits on the basis of their past service with the Government even after retirement or reemployment as provided in the said regulation. Thus, past service rendered by him, it was strongly argued, is non est as the same has been forfeited after resignation as provided in the aforesaid rules. Thus, according to him, this must be appreciated in the light of the fact that he was not even confirmed in service and was still on probation and that too on temporary post. After the resignation, there could be no question of the said notification being applicable to him as within the said provisions of Rule 13E he could not be treated as a person who has retired. A temporary post is a post sanctioned for a limited time. These posts are over and above the permanent strength and are sanctioned to cope with temporary rush of work or to discharge special functions, which are not of a permanent nature. Our attention was drawn to the decision of the Supreme Court in the case of Kedarnath Vs. State of Punjab AIR 1972 SC 873 held that the phrase “likely to continue” with a temporary post does not mean an assurance that the post will be permanent. In fact in the case of Kedarnath Bahl Vs. State of Punjab AIR 1979 SC 220, the Supreme Court held that there could be no question of confirmation if the post itself is temporary. It was again argued by Shri Rakesh Kumar Gupta that during probation there is no question of right to the post. The Hon’ble Supreme Court in the case of Purshottam Lal Dhingra Vs. UOI AIR 1958 SC 36 at page 42 have elaborated the concept of ‘probation’ in these words:

“an appointment to a permanent post in government service on probation means ……. That the servant so appointed is taken on trial”.

31. Dr. Rakesh Kumar Gupta argued that in his case even the appointment as not to a permanent post. Our attention was further drawn to the decision of the Supreme Court in the case of State of U.P. Vs. Kaushal Kishore Shukla (1991) 1 SCC 691 wherein it has been held that probationer does not acquire any substantive right to the post and his right to continue would arise only on confirmation. The Supreme Court in the case of Purshottam Lal Dhingra’s case (supra) has held that before confirmation a probationer has no right to hold the post. To the same effect is the decision of Supreme Court in the case of S.P. Vasudeva Vs. Stat of Haryana AIR 1975 SC 2292 as also the decision of Apex Court in the case of State of U.P. Vs. Akbar Ali Khan AIR 1966 SC 1842. In the latter case it was held that so long as a person continues as a probationer, he acquires no substantive right to hold the post; and in the first case, according to Dr. Gupta, it was held that adhoc or temporary employee has no right to the post. In view of the aforesaid decision of the Supreme court in so many cases, it cannot be said that he is the one who retired from service within the meaning of Rule 13E of the said Notification. He also took another objection that on the terms and conditions on which the offer of appointment was made to him or even the application was called, Rule 13-E was not there in the Income Tax Appellate Tribunal Members (Recruitment and Conditions of service) Rules, 1963, meaning thereby he could not be subject to any rule that was not there in the said Recruitment Rules when he joined the service or at least when he resigned from the service. Had these conditions been shown to be there, he would not have even joined the service. Our attention was also drawn to the decision of the Supreme Court in the case of State of Gujarat Vs. Raman Lai (1983) 2 SCR 287, wherein it was stated that legislation cannot ignore the march of events over a period of time and the rights accruing thereby. After all, notification or the law must satisfy the requirements of the constitution today taking into account the accrued or acquired rights of the parties as on date. The law cannot say, twenty years ago the parties had no right. A legislature cannot legislate today with reference to a situation that obtained twenty years ago and ignore the march of events and the constitutional rights accrued in the course of the twenty years. That would be most arbitrary, unreasonable and a negation of history. He also relied on the decision of Supreme Court in the case of P.D. Aggarwal Vs. State of U.P. AIR 1987 SC 1676. It was pleaded that amendment of rule, like the one that is being made, cannot take away the vested rights and any such amendment must be reasonable. Dr. Gupta referred to the decision of the Apex Court in the case of Satish Chandra Vs. UOI AIR 1953 SC 250 on the point of “conditions of service” being governed by the contract and contended that although the government can enter into contracts and impose special terms that some one would be ineligible to practice, the special term must exist at the time when he joined the service and such term must be accepted to become effective whereas in his case it was pleaded that there was no term at the time when the accepted or when he relinquished, hence no question of acceptance on his part. Even the state, according to him, is bound by the term or absence of term. Reliance was also placed on the decisions of Supreme Court in the cases of State of M.P. Vs. Shardul Singh (1970) 3 SCR 302; and I.N. Subba Reddy Vs. Andhra University (1976) 3 SCR 1013, wherein it has been held that the expression “conditions of service” means all those conditions which regulate the holding of a post by a person right from the time of his appointment till his retirement and even beyond it in matters like pension.

32. Next attention was drawn to the decision of Supreme Court in the case of State of Punjab Vs. Kailash Nath (1989) 1 SCC 321, wherein their Lordships have held that the term “conditions of service” would include the following:

i) Salary or wages including subsistence allowance during suspension
ii) Periodical increments
iii) Pay scale
iv) Leave
v) Provident fund
vi) Gratuity
vii) Confirmation
viii) Promotion
ix) Seniority
x) Tenure or termination of service
xi) Superannuation
xii) Compulsory or premature retirement
xiii) Pension
xiv) Changing the age of superannuation
xv) Deputation
xvi) Disciplinary proceeding.

33. Dr. Gupta submitted that even for the sake of argument it is presumed that this kind of a bar could be part of the service conditions, can the said power under Article 309 of the Constitution be used to alter the conditions of service after the said service itself stands forfeited. The government regulations or conditions of service cannot be applied to him when he is no longer in such service. Article 309 does not empower the President of India to impose restrictions under the colour of “conditions of service” upon the persons who are no more the government servants and cannot even be termed as past servants after having forfeited their service and specially past servants who got their service forfeited due to resignation. Shri Rakesh Gupta further argued that provisions of section 288 of the Income-tax Act read with rule 2(ii)(a) of the Income Tax (Appellate Tribunal ) Rules, 1963 authorized him to appear before the Tribunal and the said authority cannot be taken away through the impugned notification which merely seeks to lay down the service conditions and such service conditions, according to him, are applicable only to serving employees and not to persons who have resigned long back. The ITAT, according to him, should not bar him from appearing before the Tribunal. If he is barred from appearing, it will be denial of principles of natural justice. If one violates a service condition, the government which wants to enforce the service condition upon him can take action, but certainly the ITAT as a judicial body, cannot prevent him from arguing the case either for the assessee or for the department.

34. Nextly it was argued that the decision of Hon’ble Delhi High Court in the case of P.C. Jain (supra), was not applicable to him and to the other interveners, who are identically placed, as the facts in that case are totally different. According to him, in the case of P.C. Jain (supra), their Lordships of Delhi High Court were mainly concerned with interpretation of Sec. 129(6) of the Customs Act and were not concerned with any interpretation as to the conditions of service. Moreover, it was emphasized by Dr. Gupta that in the case of P.C. Jain (supra), none of the instances discussed therein pertained to the Members, who have resigned from service. The terminology used in Rule 129(6) and Rule 13E are different and is to be judicially recognized before views are drawn, debarring the eligible persons u/s 288 of the I.T. Act from appearing before the ITAT. It will be denial of opportunity, which, according to him, is not warranted even on the basis of decision of Delhi High court in the case of P.C. Jain (supra).

35. In the case of Shri Ved Jain by letter dated 21-11-1997, he was offered the post of Accountant Member in ITAT. The conditions on which the post was offered, were the same as in the case of Dr. Rakesh Kumar Gupta, except condition no. 13 as spelt out in the case of Dr. Rakesh Kumar is not there. On 27-3-1998 Shri Ved Jain submitted his resignation to the President, which was accepted with effect from the afternoon of 27th  April 1998 by the Government. It may be mentioned that the duration of Shri Ved Jain as Member in the ITAT was approximately for a period of 4 months. It was pointed out by Shri Ved Jain that he did not preside over any of the Benches of the ITAT and he was purely on orientation and training at Hyderabad during that period. The arguments of Shri Ved Jain are identical to the one that were made by Shri Rakesh Kumar Gupta.

36. In the case of Shri Anoop Sharma, advocate, he jointed the ITAT as Judicial Member at Mumbai on 27-3-1989 and resigned from service on 31-5-1990. the terms and conditions of appointment of Shri Anoop Sharma are almost identical to the case of Shri Rakesh Kumar Gupta.

37. In the case of Shri Y.K. Kapoor, he jointed the ITAT as Judicial Member on 3-12-2001 and resigned from service on 16-4-2004 and relinquished from duties w.e.f. 1-7-2004. It was pleaded by Shri Y.K. Kapoor that terms of appointment contained as those of other members. The appointment was purely for a temporary post and probation of two years. It was submitted by him that his probation was not cleared. He was not confirmed in service. Reliance was placed on the ratio of decision of Apex Court in the case of State of Punjab Vs. Dharam Singh AIR 1968 SC 1210 to contend that when an appointment is made on probation for a specific period and the employee is allowed to continue in the post after the expiry of the period without any specific order of confirmation, he should be deemed to continue in his post as a probationer only. An express order of confirmation is necessary to give the employee a substantive right to the post and from the mere fact that he is allowed to continue in the post after the expiry of the specified period of probation it is not possible to hold that he should be deemed to have been confirmed. Reliance was placed on the ratio of decisions of Apex Court in the cases of Sukhbans Singh Vs. The State of Punjab MANU/SC/0356/1962; and State of U.P. Vs. Akbar Ali MANU/SC/0231/1966 and it was submitted that he could not be considered to be retired from service. He could at best be regarded as resigned from services. All the case laws cited by Shri Rakesh Kumar Gupta were relied upon. Reliance was placed on the ratio of decision of Delhi High court in the case of Raj Bhaskar Vs. Oriental Insurance Co. Ltd. MANU/DE/9223/2006 wherein their Lordships, applying the principle laid down by the Supreme court in the case of UCO Bank (supra), held that the resignation and the retirement cannot be taken together. Our attention was drawn to the decision of Rajasthan High Court in the case of Sohan Lal Soni Vs. State of Rajasthan & others RLW 2007(2) Raj 1044. Shri Y.K. Kapoor further submitted that the Supreme Court again noticed the same difference between resignation and retirement in the case of Chandrashekar A.K. vs. State of Kerala & Anr. AIR 2009 SC 643. Having regard to the facts that he could not be considered to have retired within the meaning of Rule 11 of the Income Tax Appellate Tribunal Members (Recruitment and Conditions of service) Rules, 1963. Our attention was specifically drawn to para 26 of the decision of the Delhi High court in the case of P.C. Jain (supra), as reproduced below:

“26. In our view, the two cases cited by the petitioners are clearly distinguishable. In both the cases the court struck down the bar placed on the legal practitioners to practice before the Tribunal constituted under the concerned statutes on the ground that the prohibition was enacted by the

State which trenched upon the right to practice conferred by a law enacted by the Parliament and hence the State law was bad in so far as it trenched upon the law enacted by the Parliament. In the instant case the impugned provision is incorporated in the central statute. Hence the said ratio of these aforementioned decision would not apply to the instant case.”

38. Our attention was drawn to the decision of the Supreme Court in the case of T.R. Kapur Vs. State of Haryana AIR 1987 SC 415. According to him, his case along with like persons who had resigned and not retired, much before the date of promulgation of the impugned Notification dated 3-6­2009, thus cannot said to be affected by it, even if it is assumed though not admitted that they come within the general sweep of the said notification. Our attention was also drawn to the decision of the Supreme Court in the case of K.C. Arora & another Vs. State of Haryana AIR 1987 SC 1858. Shri Y.K. Kapur drew our attention to para 11 of the affidavit filed by the Ministry of Law & Justice that on the basis of analogy the Members of the Tribunal who resigned from service when not confirmed without retirement benefits may plea that they should not be debarred from practicing before ITAT, in the said para the Ministry suggested that magnanimous view need to be taken by the ITAT. Therefore, in the light of this it was pleaded that a magnanimous view be taken in favour of the interveners like him and declare that they are not debarred from practicing before the ITAT.

39. In the case of Shri Salil Kapoor, Advocate, he joined the ITAT as Judicial Member on 1-3-2005. The terms of appointment by which the offer was made are the same, that the post is said to be temporary and service conditions are governed by the Income Tax Appellate Tribunal Members (Recruitment and Conditions of service) Rules, 1963 (copy enclosed) and the period of probation is stated to be 2 years with an option that it can be extended at the discretion of the appointing authority. On these conditions Shri Salil Kapoor joined the service on 1-3-2005. On 14-8-2006 he gave a notice of resignation and the resignation was accepted with effect from the afternoon of 13th September 2006. It is clear that the said resignation is within the period of probation. Shri Salil Kapur argued that he was never posted at Delhi Benches where he is practicing and his case is that of resignation from service and not retirement. Reliance was placed on the ratio of decisions of Supreme Court in the cases of UOI Vs. Gopal Chandra Mishra (1978) 2 SCC 301; UCO bank & others AIR 2004 SC 2135; and Jaipal Singh Vs. (Smt.) Sumitra Mahajan 2004 AIR SCW 2010, wherein the difference between resignation and retirement is judicially noticed. He argued on the same lines as in the case of Shri Rakesh Gupta.

40. On behalf of the Ministry Shri A.K. Bhardwaj, Sr. Central Govt. Counsel appeared and has filed detailed affidavit. It was pleaded that in the light of the decision of Delhi High Court in the case of P.C. Jain (supra), which interpreted the identical provision of section 129(6) of Customs Act, 1962, there is a possibility to debar the appearance of such Members also. In view of dignity of office and perception of bias, such Members on their own should refrain from appearing and practicing before the Tribunal wherein they have adjudicated the dispute of others. According to him, although many of the interveners have questioned the legislative competence for enacting Rule 13E into the service conditions and have also questioned its validity as discriminatory and violative of Article 14, 19 and 309 of the constitution of India, in so far as these questions are raised by the interveners, this Tribunal is not competent to go into the warrants of the legislation in the manner canvassed by the interveners and it should be rejected at the threshold. As a result, the Members who have resigned from such posts while they were in probation an analogy may be drawn to Article 220 of the Constitution, where provision of appointment of a permanent judge of the High Court and persons who have resigned before becoming permanent may not be debarred under Article 221 of the Constitution. On the same analogy such Members of the Tribunal who resigned from service when not confirmed without retirement benefits may plead that they should not be debarred from practicing before ITAT. However, this controversy cannot be left here for the reason that in the case of P.C. Jain, where identical provisions were subject matter of consideration by the High Court, they may also be hit by Rule 13E, but on the said question of their right to practice a magnanimous view may be taken. This was stated in para 11 of the affidavit, as referred to by some of the interveners. Accordingly, Rule 13E may not disqualify such persons from practicing u/s 288 of the I.T. Act. The intention of Rule 13E, according to him, was to avoid any kind of perception of a litigant that the decision in any controversy could be influenced by appearance of a retired Member of the Tribunal. He relied upon the affidavit on merit and pleaded that the ratio of decision in the case of P.C. Jain (supra) may still be made applicable to all the cases including the cases of resigned Members.

41. Shri Bhardwaj further submitted that provisions of section 129(6) of the customs Act and Rule 13E inserted in the Income Tax Appellate tribunal Members (Recruitment and Conditions of service) Rules, 1963 are almost identical. The manner of the legislation, whether they are brought into the statute by amendment to the Act or they are brought into force by amendment in the conditions of service rules, does not make any difference so far as the object to be achieved by both type of legislation is to debar the ex-Members who once presided over the Benches of the tribunal to argue before the Tribunal either representing the assessee or the department. Both the legislation have equal effect. The Notification issued under Article 309 of the Constitution has the same legislative impact as the one that was done by the Parliament. According to him, Rule 13E has the same fore as that of the provision of Sec. 129(6) of the Customs Act. Any difference in interpretation will not be in line with the view expressed by the Delhi High court in the case of P.C. Jain (supra). He vehemently relied upon the decision of P.C. Jain. According to him, their Lordships of Delhi High Court have elaborately dealt with all the contentions that are now being taken by the parties and therefore the law expressed by the Jurisdictional High Court in that case should be applied in the larger interest of the Institution.

42. The learned Sr. Central Govt. Counsel further relied on the decision of the Supreme Court in the case of State of Punjab Vs. Kailash Nath AIR 1989 SC 558. According to him, this decision, carried the scope of Article 309 even beyond the period after retirement. The ratio laid down in this case, according to him, supported the view canvassed by the Ministry of Law & Justice in this regard. The prosecution of an employee who long back retired, was upheld by the Apex Court even after the retirement as a part of conditions of service. The learned Sr. Central Govt. Counsel pleaded that no employee can have any vested right as to the terms and conditions of service. The government can always vary the terms and conditions of service. The learned counsel heavily relied upon the decision of the Delhi High court in the case of P.C. Jain, which according to him, answers all the possibility in favour of upholding the type of legislation that is brought out by amendment to the recruitment rules.

43. The learned departmental representative who appeared on behalf of the department had nothing more to say than what has been submitted by the Sr. Central Government Counsel in the matter.

44. Now we take up the cases of other classes of persons who appeared as interveners. They are all Members who retired before 3-6-2009 i.e. the date of Notification GSR 389(E) was promulgated.

45. Shri S.C. Tiwari, Advocate, pointed out that unlike section 129(6) of Customs Act, Rule 13E of ITAT Members (Recruitment & Conditions of Services ) Rules, 1963 does not disentitle a Member of the Tribunal from practicing before the Tribunal. Rule 13-E, according to him does not say that Member of the ITAT shall not be allowed to practice before the ITAT. In other words, a Member who is otherwise entitled to practice, continues to be entitled to practice even after promulgation of Rule 13E. According to him, it is only a prohibition under a service rule. If there is any violation thereto, the employer may take an action. He objected to the very appearance of the Ministry of Law & Justice before the Special Bench. According to him, after the Rule 13E was introduced by the Ministry of Law and Justice, it has become functus officio and therefore should not offer any opinion after this date.

46. Shri Tiwari argued that the Members who have retied and ceased to hold the office as the Members of the tribunal, cannot be regulated by the said Notification. The purpose of the recruitment rules is to lay down the conditions of service of those persons who are in service and these cannot be made retrospective so as to affect the right of persons who are already retired much before the promulgation of the said Notification. There cannot be a condition of service which would be applicable to a person admittedly not in service. In relation to a retired government servant, rules under the power ‘conditions of service’ can be framed only in relation to matters relating to pension and other retirement benefits. A rule framed under proviso to Article 309 cannot apply to a person who is no longer in service. For this reliance was placed on the ratio of decision of Supreme Court in the case of State of Punjab & others Vs. Kailash Nath etc. AIR 1989 SC 58. The learned intervener further submitted that the right to practice was not a condition to service. This fact has been admitted by the ASG who appeared in the case of P.C. Jain & others Vs. Union of India & others (supra). At any rate the decision of the Delhi High court in the case of P.C. Jain & others is binding on this Tribunal to the extent it holds that right to practice before the ITAT is not a condition of service. Our attention was drawn to para 34 of the judgment. In fact in the case of P.C. Jain (supra), their Lordships were dealing with the legislative provision in the form of Section 129(6) of the Customs Act and not the condition of service. According to him, Rule 13E must be ignored as it cannot be made under the proviso to Article 309 of the Constitution of India. Our attention was drawn to the decision of Supreme Court in the case of D.R. Yadav & Another Vs. R.K. Singh & Another AIR 2003 SC 3935, wherein it was held that on a plain reading of the said provision, there cannot be any doubt whatsoever that rules framed thee under would apply so long as a statute or statutory rules or any other subordinate legislation governing the conditions of service are not enacted or made or not otherwise operating in the field. According to him, rules made under proviso to Article 309 of the Constitution are for a transitory period and the same would give way to the special rules once framed. The provisions of Section 288 lay down the qualification of a person who may appear as an authorized representative of an assessee who is entitled or required to attend before any Income Tax authority including Income Tax Appellate Tribunal. It also prescribes the persons who are not permitted to represent the assessee as an authorized representative. According to him, both qualification as well as disqualification for practicing before the Tribunal have been covered by the provisions of section 288. That being so, there is no room for framing of any rules, in exercise of any power under proviso to Article 309 of the Constitution by the Executives of the Government. According to him, for insertion of Rule 13E there is no mandate to the Union Government under Article 309, as long as there is no space provided by section 288, there is no scope for making any rule 13E to fill that gap or space. Our attention was drawn to the decision of Punjab & Haryana High Court in the case of Smt. Jaswant Kaur & Another Vs. state of Haryana AIR 1977 (P&H) 221 and also the decision of Supreme Court in the case of H.S. Srinivasa Raghavachar & others Vs. State of Karnataka & others (1987) 2 SCC 692, wherein it was held that the state legislation of Haryana and Karnataka could not trench upon the right to practice conferred on the advocates by the Advocates Act, which is a law enacted by the Parliament. In para 26 of the Delhi High Court’s decision in the case of P.C. Jain & others (supra), their Lordships have clearly observed that in case of sec. 129(6) of the Customs Act, the impugned provision is incorporated in a central statute, hence the said ratio of the aforementioned decision would not apply to the instant case. In this case, if a state legislature cannot trench upon the right to practice conferred by a law enacted by the parliament, much less a Rule framed by the Executive acting under proviso to Article 309 of the Constitution can claim a status superior to a State Legislature or claim itself as an ‘Act of Parliament’. In other words, the right to practice conferred by the Act by the parliament can be taken away only by another Act of parliament which is not the case here. The qualification of the interveners, according to him, are duly supported by sec. 288 of the Income tax act, 1961 and section 14 of the Bar Councils Act and section 30 of the Advocates Act and therefore cannot get adversely affected by Rule 13E of the ITAT (Recruitment and Conditions of Service) Rules, 1963.

47. Shri Tiwari further pointed out that the provisions of Section 129 of the provisions of customs Act are in pari materia with the provisions of sec. 252 of the Income-tax Act word by word. They are bodily lifted provisions. Nothing prevented the Parliament from inserting in the provisions of section 252 which is in pari materia with section 129 of the Customs Act. If that course would have been adopted by the Parliament, it could be argued that the decision of Delhi High court in the case of P.C. Jain & others (supra) settles the matter in all fours. The provisions are not made that way. Nor the provisions of section 288 of the I.T. Act are amended to bring in the disqualification into the Act. The executives wanted to insert Rule 13E in the Service Conditions which, according to him, as already stated earlier, does not apply to the persons who have already retired and there is a vast difference in the language of section 129(6) and Rule 13E inserted by the impugned Notification. Drawing these differences, the learned intervener wanted us to keep these differences in mind before denying the interveners who are duly qualified from assisting the court in the matters of appeal arising under the Income-tax Act. Mr. Tiwari has listed some of the names of persons who have retired and who are practicing:

1. Shri G.C. Khanna 24-6-1949

2. Shri A.N. Kirpal 23-2-1950

3. Shri A.R. Agarwal 1-8-1958

4. Shri S A L Narayana Rao 18-7-1956

5. Shri N.D. Karkhanis 8-8-1961

6. Shri S.K. Aiyar 16-1-1964

7. Shri Harnam Shankar 1-11-1976

8. Shri J. Sen 24-5-1962

9. Shri v.P. Tiwari 31-7-1979

10. Shri A.M. Rao 31-3-1982

11. Shri Bishan Lal 30-9-1983

12. Dr. S. Narayanan 31-7-1987

13. Shri B.S. Ahuja 19-6-1987

14. Shri Dalip Singh 31-5-1981

15. Shri D.D. Vyas 4-5-1971

16. Shri K.C. Srivastava 19-6-1988

17. Shri S.N. Rotho 19-7-1988

18. Shri V. Balasubramanian 7-8-1980

19. Shri K.P. Bhatnagar 31-3-1982

20. Shri Anand Prakash 31-7-1990

21. Shri O.P. Garg 31-12-1983

22. Shri C.B. Rathi 30-12-1978

23. Shri D.V. Junakar 31-10-1984

24. Shri Rajendra 17-1-1980

25. Shri B. Gupta 31-1-1987

26. Shri S.K. Jain 26-10-1993

27. Dr. O.N. Tripathi 2-2-1996

48. The learned intervener further pleaded that there are several other retired Members who are in practice and whose names are not included in the above list. In the case of ITO Vs. Ramakrishna Bajaj (1992) 43 TTJ (Bom) (Special Bench) 400, the retired Member of the ITAT, Dr. V. Balasubramaniam, in the said Bench, appeared not for the assessee but for the revenue . Rule framed under proviso to Article 309 of the Constitution, cannot turn back the clock by over 50 years to the prejudice of the members who have accepted in past the post of members of Income tax Appellate Tribunal with post retirement career in their mind. According to him, Notification No. GSR 389(E) cannot be given retrospective effect and if at all it has to become applicable only in relation to the members of the ITAT who are appointed after the publication of Notification GSR 389(E). The retired Members of the Tribunal practicing before 3-6-2009, before the Tribunal, cannot be debarred all of sudden after about 50 years. The Notification GSR 389(E) itself states that they same shall come into force on the date of their publication in the official gazette, meaning thereby that this cannot have a retrospective operation in the manner pleaded on behalf of the Ministry of Law & Justice. Reliance was placed on the ratio of decision of Supreme Court in the case of P. Mahendran Vs. State of Karnataka 1990 AIR SC 405, wherein their Lordships have observed as under:

“It is well settled rule of construction that every statute or statutory Rule is prospective unless it is expressly or by necessary implication made to have retrospective effect. Unless there are words in the statute or in the rules showing the intention to affect existing rights the Rule must be held to be prospective. If a Rule is expressed in language which is fairly capable of either interpretation it ought to be construed as prospective only. In the absence of any express provision or necessary intendment the rule cannot be given retrospective effect except in matter of procedure.”

49. Shri Tiwari pointed out that when rules are framed under proviso to Article 309 of the Constitution, the courts have always read a severe limitation to their retrospective operation. The retrospective operation of a rule shall not prejudice a person already appointed to a service or post and it shall not take away any vested rights in the person already appointed to a service or post. Our attention was drawn to the ratio laid down by the Supreme Court in the cases of T.R. Kapur & others Vs. State of Haryana & others 1987 SCR (1) 584; D.P. Sharma & others Vs. UOI 1989 SCR (1) 791; and R.S. Ajara & others Vs. State of Gujarat & others (1997) 2 SCC 641.

50. Shri M.V.R. Prasad, another Intervener, appeared and argued on the same lines. He drew our attention to the Rules of Interpretation given at pages 493 to 505 of ‘Interpretation of Statutes’ by G.P. Singh 11th  Edition . He also drew our attention to the provisions of section 288 of the Income-tax Act, 1961 which prescribe the qualifications and also disqualifications from appearing as representative before the income-tax authorities including the ITAT. According to him, it contained a provision similar to sec. 129(6) of the Customs Act in the form of sec. 288(3) which was brought to achieve the similar object as these, read as under:

“(3) Notwithstanding anything contained in this section, if the authorized representative is a person formerly employed as an income-tax authority, not below the rank of Income-tax Officer, and has retied or resigned from such employment after having served for not less than three years in any capacity under this Act or under the Indian Income-tax Act, 1922 ( 11 of 1922), from the date of his first employment as such, he shall not be entitled to represent any assessee for a period of two years from the date of his retirement or resignation, as the case may be.”

51. This was omitted by the Taxation Laws (Amendment) Act, 1984 w.e.f. 1-10-1984. But, however, officers belonging to Indian Revenue Service, who have retired from government service, were again prohibited under Central Civil Service, Pension Rules, from practicing after retirement under Rule 11 of the CCS (Pension) Rules. The said Rule was challenged before the Central Administrative Tribunal (‘CAT’) in OA no. 1445 of 1995 wherein the CAT vide judgment dated 30-11-1995 held that the ban imposed under the said Rule, denying liberty to a retired Income Tax Officer the right to practice any profession within two years after retirement was held unconstitutional and invalid, leading to quashing of Rule 11 itself. The said decision of the CAT was considered by the Supreme Court in the case of R Kapoor AIR 1987 SCC 415, wherein the Supreme Court itself has struck down the rule as unconstitutional, meaning thereby such restrictions on the retired employees was not held to be valid as the same is infringement of Article 19 of the Constitution. This decision is relied upon in support of the contention that amendments of the service conditions in relation to the retired employees are liable to be held not valid. The invalidity even for a limited period was not allowed to prevail whereas in the instant case, the learned intervener pointed out, is a life long ban on retired employee who is caught unaware. Again our attention was drawn to the Halsbury’s Laws of England on “Retrospective effect of a Statute”. The distinction was also drawn between retrospective and retroactive legislation. It is a cardinal rule of Principle of Construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations.. Unless there are words in the statute sufficient to show the intention of the Legislature to affect existing rights, it is deemed to be prospective only. Our attention was also drawn to the decision of the Supreme Court in the case of K.S. Paripoornan Vs. State of Kerala AIR 1995 SC 1012, wherein it deals with the rules of interpretation in this regard. Our attention was drawn to the decision of the Supreme Court in the case of State of U.P. Vs. Shivnarain AIR 2003 SC 49, wherein, according to him, relationship of master and servant terminates the moment the servant retires from service. He can no longer be governed by any recruitment rules and the present Rule 13E cannot, therefore, regulate anything in relation to the employees who have retired. Our attention was drawn to the ratio of decision in the case of Uday Pratap Singh Vs. State of Bihar AIR 1994 Supl. 3 SCC 451 and also to the decision of Supreme Court in the case of U. Raghavendra Vs. State of Karnataka AIR 2006 SC 2145. In all these cases it was pleaded that an executive order cannot operate retrospectively to destroy any crystallized/ vested right. Our attention was also drawn to the decision of Apex Court in the case of State govt. Pensioners Association Vs. State of AP AIR 1986 SC 1907, wherein it was held that amended provision relating to gratuity cannot apply to those who retired before commencement of the rule. Our attention was also drawn to the decision of Apex Court in the case of Eramma Vs. Veerupana AIR 1966 SC 1879 (1) that rule introduced in Hindu Succession Act can only be prospective. Our attention was drawn to the decisions of Supreme Court in the cases of P. Ganeshwar Rao Vs. State of AP AIR 1988 SC 2068; and Y.V. Rangaiah Vs. J. Srinivasa Rao AIR 1983 SC 852(1), wherein amendments that are brought out later cannot be made good for vacancies arising out after appointment.

52. Shri K.C. Singhal, advocate, another intervener, pointed out that the impugned notification No. GSR 389E dated 3-6-2009 inserting Rule 13E in the ITAT Members (Recruitment and Conditions of Service ) Rules, 1964, has been issued by the President of India under Article 309 of the constitution of India. Such powers under the aforesaid Article can be exercised either for making recruitment Rules or for providing conditions of Service in respect of the persons appointed in connection with the affairs of the Union of India or the state. Therefore, any rule made therein should be in conformity with the provisions of Article 309 of the Constitution of India. It was conceded by the Law Ministry before the Delhi High court in the case of P.C. Jain & others (supra) that the amendment brought in sec. 129(6) of the Customs Act was not a condition of service. If the amendment brought in that Act was not a condition of service, it is strange that the Ministry has taken a stand that Rule 13E of the ITAT Members (Recruitment and conditions of Service) Rules, 1963 falls within the scope of words “conditions of service”. According to him, the recruitment rules can be made applicable to the persons who are to be recruited thereafter and cannot be applied to the persons who have already retired from service before the date of the impugned notification. For these reasons the Addl. Solicitor General who argued the case before the Delhi High Court in the case of P.C. Jain (supra), conceded that bar to practice imposed on ex-members was not a condition of service. Therefore, that being the position, it cannot be permitted to argue here that such a rule is a condition of service when it came to the identical provisions in the case of ITAT. According to him, the expression ‘condition of service’ itself was construed by the Apex court in the case of State of Punjab Vs. Kailash Nath ( supra) (AIR 1988 SC 448), classifying the services falling within the purview of ‘condition of service’ ( as reproduced in earlier part of the order). In view of the above judgment, it cannot be said that the bar to practice falls within the term ‘condition of service’ as it is not in connection with any of the items spelt out as a condition of service, explained by Apex Court in the case of Kailash Nath (supra).

53. The learned intervener submitted that Rule 13E has been inserted on the statute with effect from the date of publication i.e. 3-6-2009. Admittedly all these persons who argued as interveners have retired prior to this date. It cannot be presumed that such rule would apply to the persons who have already retied. In fact, according to him, unless such rule was there at the time of recruitment, the same cannot be applied at the time of retirement.

54. He pointed out that a provision can be said to be retrospective if it is declaratory of law. In this case, neither rule 13E expressly states it to be retrospective nor such rule can be considered as declaratory of law. Hence, by no logic, such rule can be said to be on the statute when the interveners were in service. Hence, this rule cannot be applied to persons who retied prior to 3-6-2009. Even assuming, for the sake of argument, though not admitted, the learned intervener pleaded that Rule 13E is retrospective in nature, it cannot take away the accrued or vested rights acquired before 3-6­2009 as held by the Supreme Court in the cases of P.D. Aggarwal & others Vs. State of U.P. AIR 1987 SC 1676; and Chairman, Railway Board & others Vs. R. Rangadhamaiah & others AIR 1997 SC 3828 (Constitution Bench). Accordingly, it is the duty of the court of the Tribunal to interpret the service rules in the manner that the interpretation does not take away the vested rights acquired by any public officer. According to him, he was carrying on the legal profession since 1969 and as an advocate and appearing before the ITAT till 1994 when he joined the service as Judicial Member of the ITAT. According to him, he had a vested right to practice before the Tribunal by virtue of Section 288 of the I.T. Act 1961 and section 14 of the Bar Council Act 1926 till joining the service which remained under suspension till his retirement and again got revived immediately after the date of retirement. According to him, he had a vested right to practice before the ITAT before the publication of the notification. According to him, therefore, the said notification cannot be applied in such a manner so as to take away such existing right. It was also pleaded by the intervener that after the date of retirement he ceased to be the Vice President or the Member of the ITAT and therefore rules or conditions of service applicable to the serving employee cannot be applied to persons no longer in service.

55. Shri Keshav Prasad, Advocate, fairly admitted that as regards the main contention is concerned, he is with all other interveners. He drew our attention to the decision of Delhi High Court in the case of P.C. Jain (supra) and submitted that in the aforesaid decision a brief history leading to the insertion of sub-section (6) to section 129 of the Customs Act has been given. In the year 1986 the Parliament enacted the Customs and Excise Revenue Appellate Tribunal Act (“CERAT” Act in short) for setting up a Tribunal in consonance with the power contained in Article 323B of the Constitution of India. Section 11(C) of the said Act barred the President, Vice President or the Members from appearing, pleading before the said Tribunal or CEGAT after their retirement. However, due to the decision of Apex Court in the case of L. Chandrakumar Vs. Union of India (1997) 3 SCC 261, the said CERAT Act was repealed in 2004. Since then the issue was being discussed at the highest level and sub-section (6), which was inserted by Finance Act, 2007, is the result of such deliberations. The High Court took note of these developments which started in 1986. It was pointed out before us that the provisions of section 129 of the Customs Act and section 252 of the Income-tax Act are almost similar. The Parliament took a conscious decision to insert sub-section (6) to Section 129 of the Customs Act, but did not insert similar provision in Section 252 of the Income-tax Act. No such provision has been brought in the Income-tax Act till date, meaning thereby, the Parliament itself wanted the difference in both the Acts to continue. The reason is obvious, according to him. The provision of sub­section (3) to section 288 existed in the Income-tax Act. As per the said sub­section, the retired income tax officials were not permitted to appear before income tax authority including the ITAT upto two years from the date of their retirement. The validity of the said sub-subsection was challenged in the court and the Hon’ble Punjab & Haryana High Court in the case of Kulwant Singh 75 ITR 99, held the said provision to be constitutionally valid. Still the Parliament in its own wisdom deleted sub-section (3) from the statute by Taxation Laws Amendment Act, 1984. Thereafter Rule 11 was inserted in the Central Civil Services (Pension) Rules, 1972 in 1984. As per that rule, the retired income-tax officials could not set up practice for 3 years. This rule was held to be ultravires by the Apex Court and presently this rule is non-existent. According to him, the amendments that are made in the conditions of service, in the light of the principle laid down by the Apex Court in the case of Keshvan Madhvan Menon 1951 AIR (SC) 128, can only be prospective in nature. The Law Ministry in their affidavit have conceded the rule to be prospective, but they also stated that it would be illogical to make distinction between the members who retired prior to this date or after the date of notification, forgetting the fact that Notification itself is declared to be prospective. Article 309, according to him, has two limbs-one relating to recruitment and the other relating to conditions of service. The rules relating to recruitment can only apply to those persons who are serving the Union on the date of the Notification or who would serve the Union or the state in future. It cannot apply to persons who are not serving on that date. According to him, no rule can be made under Article 309 in relation to persons who have already retired from service. The proviso of this Article, according to him, is nothing but delegation of powers of rule making to subordinates, instead of being made by the appropriate legislature. Forcibly it is pleaded that the said rule cannot be made to those persons who have already retired. Any amendment to the rules of recruitment can be made to the persons who are joining the service after that date. As regards the conditions of service, it can be for the persons who are serving the institution or who will be serving in future, but definitely not to the persons who have already retired. He gave an example. Rule 3(2) of the ITAT Members (Recruitment & Conditions of Service) Rules, 1963 prescribes the qualification for appointment as an Accountant Member. Clause (ii) of sub-rule (2) of the original Rule had provided that the person who had worked as an Asstt. Commissioner of Income-tax for three years, was eligible for appointment as Member. It was amended by amendment in the above rules and it provided that persons who have worked as commissioners of Income Tax for 3 years were eligible for appointment as accountant members. Does it mean that those persons who were working as members selected on the basis of earlier eligibility would cease to be members? But it did not happen, meaning thereby, such amendment as regards the recruitment rules, can be made to the appointments made afterwards. As regards the meaning of term “conditions of service”, he relied upon elaborate discussions in the decisions of Apex Court in the cases of State of Punjab Vs. Kailashnath AIR 1989 SC 558 and State of Madhya Pradesh Vs. Shardul Singh 3 SCR 303.

56. Shri T.N. Chopra, advocate pleaded that notification issued by the Law Ministry being in the nature of subordinate legislation, cannot conceivably amend, modify or override the statutory provision of section 288 of the Act. The Notification is outside the domain of the Income Tax Act and merely relates to administrative and disciplinary jurisdiction of the Law Ministry and cannot interfere with the judicial functions of the Tribunal. Our attention was drawn to the decision of the Supreme Court in the case of ITAT Vs. V.K. Agarwal 235 ITR 175 (SC). Our attention was also drawn to the decision of Delhi High Court in the case of Chairman CBDT Vs. S. Malhotra 128 ITR 543 (Del.), wherein it was held that provision to debar an income-tax practitioner can only be prospective in character where the person commits an act or default complained of after the amendment has come into force and not before. It was also pleaded by Shri T.N. Chopra that Notification imposes a life ban on the retired members for practice before the Tribunal, whereas Section 288 of the I.T. Act as well as section 30 of the Advocates Act declare that every advocate whose name is entered in their roll, shall be entitled as a matter of right to practice in all the courts and Tribunal. Therefore the Law Ministry is not competent to make rule repugnant thereto. Our attention was also drawn to the decision of Supreme Court in the case of Legal air & Advice Vs. Bar Council of India (1995) 82 AIR 691. Special emphasis was placed to the decision of Supreme Court in the case of Kailash Nath (supra) and according to him the present Rule 13E is outside the scope of Article 309 of the Constitution.

57. Shri Prakash Narain, Advocate, relied upon the written submissions, largely reiterating on the arguments of the other interveners.

58. The learned Sr. Central Govt. counsel Shri A.K. Bhardwaj in relation to the Members who retied before 3-6-2009, vehemently contended that in the light of the decision of the Delhi High Court in the case of P.C. Jain (supra) to which jurisdictionally this bench of the ITAT falls is binding upon it. He submitted that the contentions of several interveners including the one who retired have all been answered by the Delhi High Court and therefore the principle laid down therein is applicable retrospectively to the Members who have already retired. Reliance was placed on the decision of Supreme Court in the case of State of Punjab Vs. Kailash Nath (supra) and contended that in the aforesaid case the Apex Court approved the prosecution of a government servant for an act committed while in service, even after the retirement, meaning thereby, the retired employees can be subjected to the conditions of service like the one as is being made out in the present Notification and such conditions of service, as the Apex Court itself has held, are binding upon the retired government employees. According to him, the ratio of the Supreme Court’s decision clearly supports the view taken by the Ministry of Law & Justice and on other points he relied upon the detailed affidavit filed by the Ministry in support of the stand taken by the Ministry. He vehemently argued that the ITAT Members should be guided by the principle of purposive interpretation as was done by the Delhi High Court while construing the identical provisions in the Customs Act, the purpose of both the pieces of the legislation is the same and that being to maintain the independence of the judiciary and to save the reputation of the institution free from charge of bias. On account of ex-members who once presided over the judicial body, are arguing their cases before it, the charge of bias can always be raised. Rather, it is always presumed. The judicial body should be free from such charge on its reputation. That according to him should be taken note of and the members of the ITAT who retied long back should therefore not practice before the ITAT after their retirement from now onwards. As regards the contention that it applies only to the Members who are recruited after the issuance of Notification, he vehemently argued that it will be against the principle laid down by the Delhi High court in the case of P.C. Jain (supra). The learned Sr. Central Government counsel heavily relied upon the decision of the Apex Court in the case of Vishnu Narain Mishra Vs. State of U.P. AIR 1965 SC 1567 to contend that the provision, like the one made in Rule 13E is applicable to all the persons who have even retired prior to the coming into force of the said Notification. This decision is of 5 Members Bench of the Apex Court and is binding on the ITAT and therefore the ratio laid down by the Delhi High Court in the case of P.C. Jain (supra) is applicable to all the retired people whether they have entered into service prior to 3-6-2009 or after 3-6-2009. So the plea that it applies only to those persons who are recruited after 3-6-2009 should be rejected in the light of the ratio laid down by the Supreme court in the aforesaid case.

59. We have carefully considered the submissions of the learned counsel for the assessee, interveners as also the Sr. Central government counsel and gone through the case laws which have been relied upon by the parties and deal with the submissions and issues as under:

60. As regards arguments of some of the interveners that the Ministry of Law & Justice has no locus standi in the matter and therefore they should not be permitted to argue on behalf of the government, according to us cannot be accepted. The notice was issued by the Special Bench to the Ministry of Law & Justice and the Ministry has in fact assisted the Bench by filing the affidavit and has also directed the appearance of the Sr. Central Government counsel to plead its case, we appreciate their concern and assistance in the matter. In our view, the Tribunal is entitled to hear the Ministry of Law & Justice, who has in fact issued the notification. Ultimately the decision has to be of the Bench and we are not guided by the contentions of the Ministry of Law & Justice as made out by their counsel or in their affidavit. We would definitely look into all these contentions in the light of law that prevails on the issue. The spirit with which they appeared to assist the Bench is appreciated and the objections put up in this regard by some of the interveners are, therefore, rejected, as untenable. After all it must not be forgotten that the Tribunal in its judicial proceedings are entitled to draw assistance from all persons. It cannot be said that Ministry of Law & Justice becomes stranger after the issuance of notification.

61. In para 21 of the decision of Hon’ble Delhi High Court in the case of P.C. Jain & others (supra), the validity of the provision of section 129(6) of the Customs Act were objected on the charge of violation of Article 14, 19(1)(g) and 21 of the Constitution. The said legislation was challenged on being discriminatory inasmuch as the Members of other Tribunals, such as, the Income tax Appellate Tribunal and the Appellate Tribunal for foreign Exchange are not barred from appearing, acting or pleading before Tribunals of which they were once Members. The High Court specifically dealt with the issue in para 24 of its Judgment again on the ground that such clear discrimination was untenable. In the opinion of the High Court the step taken in amending the Customs Act was reformatory and not discriminatory, as contended by the petitioner. It was also based on the recommendation of the President of the CESTAT. In the opinion of the High court a bar has been made in the provision in respect of some Tribunals such as CESTAT and CAT, leading to their conclusion that the intended provisions were not discriminatory. The Hon’ble High Court also appreciated the fact that Addl. Solicitor General (‘ASG’ in short), who brought to their notice an interdepartmental letter dated 20-09­2007,exchanged between the Ministry of Law & Justice, Department of Legal Affairs and the Department of Revenue, which suggested that the government was in principle agreed that steps should be initiated to bring about a suitable amendment so that similar bar is incorporated in the Income tax Act, in respect of Members of the Income Appellate Tribunal. In fact the ASG submitted that this was an aspect which was pending for consideration since 1986 and for one reason or the other, it could not be brought on the statute book. The ASG contended that the government was contemplating such like amendment in other pari materia statutes, in consonance with the provisions of section 129(6) of the Customs Act, which barred the Members and the Chairman of such Tribunals from appearing, acting or pleading before the Tribunal of which a person served as a chairman or a member. We have kept this background in our mind.

62. Some of interveners questioned the charge/ fear of bias upon the ITAT. According to them in the case of P.C. Jain (supra), President of CESTAT himself placed on record the charge against its former members and raised such issues before the Ministry. Although we are not aware of any such material with regard to ITAT but that hardly is material/ significant. Still the executive/ Parliament can take cognizance of Public perception of the matter and legislate so as to take the institution out of it. They have questioned how the bias be raised upon persons who have retired long long back, for according to them the new generation of members may not even know them by person/ face. They felt the imagination of the Ministry is too much theoretical and based on hearsay is not on any substance or material. We do not agree with the contention of the interveners that legislation cannot be made on the public perception of bias. The legislation can perhaps be made even to prevent the institution from getting into a cloud. After all it is the duty of the government to protect the judicial body from being charged with such impressions. But the question that arises now is as to whether the Notification that is before us, can be interpreted which is on the basis of some hearsay, gossips or media hype. Definitely not. The interpretation, in our view, cannot be solely based upon these considerations, but has to be on the solid principle of law, as interpreted by the Supreme Court and different High Courts.

63. Now important offshoots of the provisions of Rule 13E are being discussed. The first offshoot would be whether it applies to the Members who resigned from a temporary post during probation period. We have already extracted the terms of offer issued to the interveners, which is more or less the same. The post is stated to be temporary for a particular period, stated therein and also the post itself treated as probationary with an option that the government may extend the probation on its discretion. Except in the case of Shri Y.K. Kapoor, in all other cases of the interveners at sl. No. 1 to 4, mentioned in the caption, resigned from their service much before their confirmation. In case of Dr. Rakesh Gupta the offer was with further condition, subject to the final orders in certain civil writ petitions pending before the High Court. That means the offer of appointment given in all these cases was purely for a temporary post and the post itself was subject to probationary period of two years.

64. The Hon’ble Supreme Court in the case of Pushotam Lal Dhingra Vs. UOI, AIR 1958 SC 36, have explained the terms ‘temporary post’ as well as ‘probation’, as under:

“17. Articles 310 and 311 are two of the articles which have been grouped under the heading “Services” in chapter I of Part XIV which deals with the “Services under the Union and eh Sates”. It is well known hat there are different species of Government services. In the absence of a contract to the contrary the terms of employment of persons in different services are governed by rules made by the appropriate authorities to which reference will hereafter be made. The strength of a service or a pat of a service sanctioned as a separate unit is, in the Fundaments Rules, s. III, ch. II, r. 9(4), called the cadre. Each cadre consists of a certain number of posts. According to r. 9(22) of the Fundamental Rules, a permanent post means a post carrying a definite rate of pay sanctioned without limit of time. In each cadre there may be and often is a hierarchy of ranks. Due to rush of business or other exigencies some “temporary posts” are often created. A temporary post is defined in r. 9(3) to mean a post carrying a definite rate of pay sanctioned for a limited time. These temporary posts are very often outside the cadre and are usually for one year and are renewed from year to year, although some of them may be created for a certain specified period. The conditions of service of a Government servant appointed to a post, permanent or temporary, are regulated by the terms of the contract of employment, express or implied, and subject thereto, by the rules applicable to the members of the particular service.

18. The appointment of a Government servant to a permanent post may be substantive or on probation or on an officiating basis. A substantive appointment to a permanent post in public service confers normally on the servant so appointed a substantive right to the post and he becomes entitled to hold a “lien” on the post. This “lien” is defined in Fundamental Rule s. III, ch. II, r. 9(13) as the title of a Government servant to hold substantively a permanent post, including a tenure post, to which he has been appointed substantively. The Government cannot terminate his service unless it is entitled to do so (1) by virtue of a special term of the contract of employment, e.g., by giving the requisite notice provided by the contract or (2) by the rules governing the conditions of his service, e.g., on attainment of the age of superannuation prescribed by the rules, or on the fulfillment of the conditions for compulsory retirement or, subject to certain safeguards, on the abolition of the post or on being found guilty, after a proper enquiry on notice to him, of misconduct, negligence, inefficiency or any other disqualification. An appointment to a permanent post in Government service on probation means, as in the case of a person appointed by a private employer, that the servant so appointed is taken on trial. The period of probation may in some cases be for a fixed period, e.g., for six months or for one year or it may be expressed simply as “on probation” without any specification of any period. Such an employment on probation, under the ordinary law of master and servant, comes to an end if during or at the end of the probation the servant so appointed on trial is found unsuitable and his service is terminated by a notice. An appointment to officiate in a permanent post is usually made when the incumbent substantively holding that post is on leave or when the permanent post is vacant and no substantive appointment has yet been made to that post. Such an officiating appointment comes to an end on the return of the incumbent substantively holding the post from leave in the former case or on a substantive appointment being made to that permanent post in the latter case or on the service of a notice of termination as agreed upon or as may be reasonable under the ordinary law. It is, therefore, quite clear that appointment to a permanent post in a Government service, either on probation, or on an officiating basis, is, from the very nature of such employment, itself of a transitory character and, in the absence of any special contract or specific rule regulating the conditions of the service, the implied term of such appointment, under the ordinary law of master and servant, is that it is terminable at any time. In short, in the case of an appointment to a permanent post in a Government service on probation or on an officiating basis, the servant so appointed does not acquire any substantive right to the post and consequently cannot complain, any more than a private servant employed on probation or on an officiating basis can do, if his service is terminated at any time. Likewise an appointment to a temporary post in a Government service may be substantive or on probation or on an officiating basis. Here also, in the absence of any special stipulation or any specific service rule, the servant so appointed acquires no right to the post and his service can be terminated at any time except in one case, namely, when the appointment to a temporary post is for a definite period. In such a case the servant so appointed acquire a right to his tenure for that period which cannot be put an end to unless there is a special contract entitling the employer to do so on giving the requisite notice or the person so appointed is, on enquiry held on due notice to the servant and after giving him a reasonable opportunity to defend himself, found guilty of misconduct, negligence, inefficiency or any other disqualification and is by way of punishment dismissed or removed from service or reduced in rank. The substantive appointment to a temporary post, under the rules, used to give the servant so appointed certain benefits regarding pay and leave, but was otherwise on the same footing as appointment to a temporary post on probation or on an officiating basis, that is to say, terminable by notice except where under the rules promulgated in 1949 to which reference will hereafter be made, his service had ripened into what is called a quasi-permanent service.

19. The position may, therefore, be summarized as follows : In the absence of any special contract the substantive appointment to a permanent post gives the servant so appointed a right to hold the post until, under the rules, he attains the age of superannuation or is compulsorily retired after having put in the prescribed number of years’ service or the post is abolished and his service cannot be terminated except by way of punishment for misconduct, negligence, inefficiency or any other disqualification found against him on proper enquiry after due notice to him. An appointment to a temporary post for a certain specified period also gives the servant so appointed a right to hold the post for the entire period of his tenure and his tenure cannot be put an end to during that period unless he is, by way of punishment, dismissed or removed from the service. Except in these two cases the appointment to a post, permanent or temporary, on probation or on an officiating basis or a substantive appointment to a temporary post gives to the servant so appointed no right to the post and his service may be terminated unless his service had ripened into what is, in the service rules, called a quasi-permanent service. The question for our consideration is whether the protections of Art. 311 are available to each of these several categories of Government servants.

65. Therefore, the nature of contract of the government with these interveners has to be understood in the sense in which it is interpreted by the Supreme Court in the aforesaid case. In all these cases the interveners were appointed for a temporary post and they resigned during the probation period except in the case of Shri Y.K. Kapoor. Now the question is as to whether these people, whose services were terminated by the government by accepting their resignation can be treated as having been retired, which is the necessary condition for roping them within the ambit of rule 13E. Again the Hon’ble Supreme Court in the case of State of U.P. Vs. Kaushal Kishore Shukla (1991) 1 SCC 691, has observed as under:

“7. A temporary govt. servant has no right to hold the post, his services are liable to be terminated by giving him one month’s notice without assigning any reason either under the terms of the contract providing for such termination or under the relevant statutory rules regulating the terms and conditions of temporary govt. servants. A temporary Govt. servant can, however, be dismissed from service by way of punishment. Whenever, the competent authority is satisfied that the work and conduct of a temporary servant is not satisfactory or that his continuance in service is not in public interest on account of his unsuitability, misconduct or inefficiency, it may either terminate his services in accordance with the terms and conditions of the service or the relevant rules or it may decide to take punitive action against the temporary Government servant. If it decides to take punitive action it may hold a formal inquiry by framing charges and giving opportunity to the Govt. servant in accordance with the provisions of Article 311 of the Constitution. Since, a temporary Govt. servant is also entitled to the protection of Article 311(2) in the same manner as a permanent Govt. servant, very often, he question arises whether an order of termination is in accordance with the contract of service and relevant rules regulating the temporary employment or it is by way of punishment. It is now well settled that the form of the order is not conclusive and it is open to the Court to determine the true nature of the order. In Parshotam Lal Dhingra v. Union of India MANU/SC/0126/1957 a constitution Bench of this Court held that the mere use of expressions like ‘terminate’ or ‘discharge’ is not conclusive and in spite of the use of such expressions, the court may determine the true nature of the order of ascertain whether the action taken against the Govt. Servant is punitive in nature. The Court further held that in determining the true nature of the order the Court should apply two tests namely: (1) whether the temporary Govt. servant had a right to the post or the rank or (2) whether he has been visited with even consequences; and if either of the tests is satisfied, it must be held that the order of termination of a temporary Govt. servant is by way of punishment. It must be borne in mind that a temporary Govt. servant has no right to hold the post and termination of such a Govt. servant does not visit him with any evil consequences. The even consequences as held in Parshotam Lal Dhingra’s case (supra) do not include the termination of services of a temporary Govt. Servant in accordance with the terms and conditions of service. The view taken by the constitution Bench in Dhingra’s case has been reiterated and affirmed by the constitution Bench decisions of this Court in The State of Orissa And Anr. V. Ram Narayan Das MANU/SC/0311/1960; R.C. Lacy v. The State of Bihar and Ors. CA No. 590/62 decided on 23.10.1963; Champaklal Chimanlal Shah v. The Union of India MAN/SC/0274/1963; Jagdish Miner v. the Union of India MANU/SC/0277/1963; A.G. Benjamin v. Union of India C.A. No. 1341/66 decided on 13.12.1966 and Shamsher Singh and Anr. V. State of Punjab MANU/SC/0073/1974, These decisions have been discussed and followed by a three Judge Bench in State of Punjab and Anr. V. Shri Sukh Raj Bahadur MANU/SC/0182/1968.

66. Having seen the interpretation of the terms ‘temporary posts and probation’, now we will proceed to see whether such persons, who are on probation, holding such temporary posts could be said to have retired in terms of Rule 13E. The term ‘retirement’ itself is a subject matter, which was judicially noticed and has to be understood differently from the term ‘resignation’. The sum and substance of the first set of 5 interveners who have resigned is that they are the one who have not retired from the service of the tribunal because they resigned before they were confirmed in the post.

67. The Hon’ble Supreme court in the case of UOI Vs. Gopal Chandra Misra & others (1978) 2 SCC 301, in para 23 of the judgment, has referred the dictionary meaning of the term ‘resignation’ as under:

“23. ‘Resignation’, in the Dictionary sense, means the spontaneous relinquishment of one’s own right. This is conveyed by the maxim: Resinatio est juris propii spontanea refutatio (See Carl Jowitt’s Dictionary’s of English, Law). . In relation to an office, it connotes the act of giving up or relinquishing the office. To ‘relinquish an office’ means to ‘cease to hold’ the office, or to ‘loose hold of the office’; and to ‘loose hold of office’ (cf. Shorter Oxford Dictionary); and to “loose hold of office”, implies to ‘detach’, “unfasten”, “undo or untie the binding knot of ink” which holds one to the office and the obligations and privileges that go with it.”

68. The term ‘resignation’ as understood in the above case is a deliberate act of relinquishment of service, whereas the ‘retirement’ has a different connotation. The term “retirement” itself is used by different service regulations as an event that takes place on attaining the superannuation. Voluntary retirement is also provided which can be obtained on completing prescribed years of service. Sometimes an employer may compulsory retire an employee. Fundamental Rule 56 provides that every government servant shall retire from service on the afternoon of the last day of the month in which he attains the age of sixty years, which means that the retirement takes place on the superannuation or in case of voluntary retirement, on completion of qualifying period of service.

69. In the case of the Members of the Income Tax Appellate Tribunal, Rule 11 of the aforesaid ITAT Members (Recruitment and Conditions of Service ) Rules, 1964, provide that the date of retirement of a Member shall be the date on which he attains the age of 62 years and not the last day of the month as in the cases of other government servants. That means retirement in relation to ITAT Members is different from the retirement in relation to other government servants to which large class they belong. Here the Member retires when he attains the age of 62 years. In the date of retirement, there is no reference to the last day of the month in which the other government servants normally retire. The Rule has been subsequently amended to provide for a different age of retirement of the office of the President, which is now at 65 years that means retirement as a Member takes place in the Tribunal only upon attainment of superannuation as retirement does not take place prior to that. Of course, retirement is also cessation of service but that is not at the event of retirement but an act of resignation on the part of the employee concerned, which is, of course, subject to acceptance by the employer in accordance with rules prescribed therein.

70. The difference between the “retirement” and the “resignation” has been noticed by the Supreme Court in the cases of Jaipal Singh Vs. (Smt.) Sumitra Mahajan (supra); and UCO Bank & others (supra). The Supreme Court in the aforesaid cases noticed that there was a difference between “retirement” and “resignation”. It also noticed that such difference was already accepted by the Apex Court in the case of Reserve Bank of India Vs. Cecil Dennis Solomon & Another (2004) 9 SCC 461, wherein the Apex Court has held that in service jurisprudence, the expressions superannuation, ‘voluntary retirement, compulsory retirement and resignation convey different connotations. The Apex Court held that in the case of resignation, it can be tendered at any time but in the case of voluntary retirement, it can only be sought for after rendering prescribed period of qualifying service.

71. Now we will advert to the decision of the Supreme Court in the case of UCO Bank & others Vs. Sanwar Mal (supra), wherein the Hon’ble Supreme Court has observed as under:

“9. We find merit in these appeals. The words “resignation” and “retirement” carry different meanings in common parlance. An employee can resign at any point of time, even on the second day of his appointment but in the case of retirement he retires only after attaining the age of superannuation or in the case of voluntary retirement on completion of qualifying service. The effect of resignation and retirement to the extent that there are severance of employment but in service jurisprudence both the expressions are understood differently. Under the Regulations, the expressions “resignation” and “retirement” have been employed for different purpose and carry different meanings. The pension scheme herein is based on actuarial calculation; it is a sell-financing scheme, which does not depend upon budgetary support and consequently it constitutes a complete code by itself. The scheme essentially covers retirees as the credit balance to their provident fund account is larger as compared to employees who resigned from service. Moreover, resignation brings about complete cessation of master and servant relationship whereas voluntary retirement maintains the relationship for he purposes of gnat of retrial benefits, in view of the past service. Similarly, acceptance of resignation is dependent upon discretion of the employer whereas retirement is completion of service in terms of regulations/ rules framed by the bank. Resignation can be tendered irrespective of the length of service whereas in the case of voluntary retirement, the employee has to complete qualifying service for retrial benefits. Further, there are different yardsticks and criteria for submitting resignation vis-à-vis voluntary retirement and acceptance thereof. Sine the pension regulations disqualify an employee, who has resigned, from claiming pension the respondent cannot claim membership of the fund. In our view, Regulation 22 provides for disqualification of employees who have resigned from service and for those who have been dismissed or removed from service. Hence, we do not find any merit in the arguments advanced on behalf of the respondent that Regulation 22 makes an arbitrary and unreasonable classification repugnant to Article 14 of the Constitution by keeping out such class of employees. The view we have taken is supported by the judgment of this Court in the case of Reserve Bank of India and Anr. V. Cecil Dennis Solomon and Anr. Reported in [2003 (10) Scale 49]. Before concluding we may state that Clause 22 is not in the nature of penalty as alleged. It only disentitles an employee who has resigned from service from becoming a member of the Fund. Such employees have received their retrial benefits earlier. The pension scheme, as stated above, only provides for a second retrial benefit. Hence there is no question of penalty being imposed on such employees as alleged. The pension scheme only provides for an avenue for investment to retirees. They are provided avenue to put in their savings and as a term or condition which is more in the nature of an eligibility criteria the scheme disentitles such category of employees out of it.”

72. In the light of the aforesaid decisions it is difficult to say that Dr. Rakesh Gupta and other such like interveners have retired from service. They have resigned and terminated their contract of employment with the Government. In other words, they do not hold any post and no question of any conditions of services that can be made applicable to them after once they resigned from their office. The effect of resignation during the probation period is forfeiture of service. The past service rendered by the employee concerned becomes non est as the same got forfeited the moment they have resigned from office, particularly when the employee was not confirmed in service and was still on probation that too on a temporary post.

73. It has already been held by the Apex Court in the case of Parshotam Lal Dhingra Vs. UOI (supra), extracted above, that when a person is appointed on probation, even on a permanent post, that servant is to be taken as appointed on training. The Supreme Court again in the case of State of U.P. Vs. Kaushal Kishore Shukla (1991) 1 SCC 691 has held that the probationer does not have any right to hold the post and has right to continue would arise only on confirmation. Again in the case of State of UP Vs. Akbar Ali Khan (supra), has held that when a person continues on probation, he acquires no substantive right to hold the post.

74. In our view, these persons who have resigned from service during the probation period itself cannot be treated as having been retired from service within the meaning of sec. 13E or 11 of the ITAT Members (Recruitment and Conditions of Service ) Rules, 1963. In our opinion they definitely cannot be hit by the provisions of Rule 13E which is brought in the statute book much after they have relinquished their posts and got their past service forfeited. In our view by following the above principles and in the light of the Supreme Court decisions, discussed herein, we cannot accept the theory that they should be treated as having retired from service as a Member and they should be disqualified from appearing before the ITAT, if they are otherwise qualified to appear, as that will be only be in violation to the ratio laid down by the Supreme Court in the case of UCO Bank & others, cited supra.

75. Coming to the plea of the Ministry that the spirit behind P.C. Jain’s case (supra), required to be applied in the larger interest of the Institution, cannot also be accepted. Having regard to the fact that in the case of P.C. Jain (supra), the Delhi High Court was not at all concerned with any employee who was appointed on temporary post and on a probationary period and resigned from service during the probation period. The instances mentioned in the case of P.C. Jain (supra), do not even deal with such type of cases. A judgment is an authority for a law that is pronounced on the facts of that case. It cannot be used to sweep all other cases irrespective of the facts concerned therein.

76. Moreover, it must be appreciated that in the case of P.C. Jain (supra), the Hon’ble Delhi High Court proceeded with interpretation for he provision of statute and not a condition of service as has already been discussed earlier. Therefore, what we are basically required to interpret here is Rule 13E which is part of ITAT Members (Recruitment and Conditions of Service ) Rules, 1963, as a part of conditions of service. Therefore, the ratio laid down therein may not strictly apply to a case where amendments are to the conditions of service. Admittedly, conditions of service can only be in relation to the employees who are in service and not to those persons who lost the right to the post long back much before the same was brought by way of amendment made subsequently. We, therefore, unhesitatingly answer question nos. 5 & 6 in favour of the interveners. Thee is nothing in the Rule 13E to debar such persons.

77. Now as regards Shri Y.K. Kapur is concerned, he was relinquished of his post in the ITAT w.e.f. 1-7-2004 having joined the service on 3-12­2001, after two years’ of service. The terms of appointment of Shri Y.K. Kapur are almost the same as that of other interveners, who resigned. The post is stated to be purely temporary but likely to be continued. Shri Y.K. Kapur was supposed to be on probation for a period of 2 years, but the said period could be extended at the discretion of the appointing authority. In this case it was submitted on behalf of Shri Y.K. Kapur that no confirmation order was issued to him. The office record does not show that he was confirmed in service. That means his post did not become permanent. He resigned to the post after 2 years but before the confirmation took place. That means he resigned during probation period. In identical situation the Apex Court in the case of Wasim Beg Vs. State of U.P. & others (1998) 3 SCC 321 itself has answered the question, whether an employee at the end of probationary period automatically gets confirmation in the post or whether an order of confirmation or any specific act on the part of the employer confirming the employee is necessary, would depend upon the provisions in the relevant service rules relating to probation and confirmation. In those cases where the Rules provide for a maximum period of probation and which probation cannot be extended, the Apex Court has observed as under:

“15. Whether an employee at the end of probationary period automatically gets confirmation in the post or whether an order of confirmation or any specific act on the part of the employer confirming the employee is necessary, will depend upon the provisions in the relevant service rules relating to probation and confirmation. There are broadly two sets of authorities of this Court dealing with this question. In those cases where the Rules provide for a maximum period of probation beyond which probation cannot be extended, this Court has held that at the end of the maximum probationary period there will be a deemed confirmation of the employee unless rules provide to the contrary. This is the lie of cases starting with State of Punjab v. Dharam Singh MANU/SC/0183/1968, M.K. Agarwal v. Gurgaon Gramin Bank & Ors. MANU/SC/0899/1987, Om Parkash Maurya v. U.P. Cooperative Sugar Factories Federation, Lucknow & Ors. MANU/SC/0476/1986, State of Gujarat v. Akhilesh C. Bhargav & Ors. MANU/SC/0707/1987.

16. However, even when the Rules Prescribe a maximum period of probation, if there is a further provision in the Rules for continuation of such probation beyond the maximum period, the courts have made an exception and said that there will be no deemed confirmation in such cases and the probation period will be deemed to be extended. In this category of cases we can place Samsher Singh v. State of Punjab & Anr. MANU/SC/0073/1974 which was the decision of a Bench of seven judges where the principle of probation not going beyond the maximum period fixed was reiterated but on the basis of the Rules which were before the Court, this Court said that the probation was deemed to have been extended. A similar view was taken in the case of Municipal Corporation, Raipur v. Ashok Kumar Misra MANU/SC/0332/1991. In Satya Narayan Athya v. High Court of Madhya Pradesh & anr. MANU/SC/0202/1996, although the Rules prescribed that the probationary period should not exceed two years, and an order of confirmation was also necessary, the termination order was issued within the extended period of probation. Hence the termination was upheld.

17. The other line of cases deals with Rules where thee is no maximum period prescribed for probation and either there is a Rule providing for extension of probation or there is a Rule which requires a specific act on the part of the employer (either by issuing an order of confirmation or any similar act) which would result in confirmation of the employee. In these cases unless thee is such an order of confirmation, the period 0f probation would continue and there would be no deemed confirmation a the end of the prescribed probationary period. In this line of cases one can put Sukhbans Singh v. State of Punjab MANU/SC/0356/1962, State of Uttar Pradesh v. Akbar Ali Khan MANU/SC/ 0231/1966, Shri Kedar Nasth Bahl v. The State of Punjab & Ors. MANU/SC/0593/1972, Dhanjibhai Ramjibhai v. state of Gujarat MANU/SC/1385/1997, Municipal Corporation, Raipur v. Ashok Kumar Misra (supra) and State of Punjab v. Baldev Singh Khosla MANU/SC/0520/1996. In the recent case of Dayaram Dayal v. State of M.P. and Anr. MANU/SC/0824/1997 (to which one of us was a party) all these cases have been analysed and it has been held that where the Rules provide that the period of probation cannot be extended beyond the maximum period there will be a deemed confirmation at the end of the maximum probationary period unless there is anything to the contrary in the Rules.”

78. In the light of the above discussions, the said offer of appointment itself prescribes 2 years as a period of probation with a discretion to the employer to increase such period on its discretion. Here, whether discretion was exercised to extend such period of probation is not forthcoming from the records. It was confirmed by Shri Y.K. Kapur that he was not confirmed during the period prior to resignation. In the light of this, we also hold, by taking support by the ratio of decisions of the Apex Court, cited above, that he resigned from service much before his confirmation took place and will fit into the same other cases of interveners who have resigned before the date of confirmation, during the probation period. Accordingly, the answer that is given to their cases will equally apply to Shri Y.K. Kapur.

79. Before parting with this issue, we may mention that the Ministry of Law & Justice in their affidavit in relation to the resigned members have drawn our attention to Article 220 of the Constitution in relation to High Court Judges, wherein it is provided that permanent judge of a High court shall not plea or act in any court or before any authority except the Supreme court and the other High Courts. In other words all such persons who are not permanent judges of the High Court and have resigned before becoming permanent, may not be subjected to debar under Article 221 of the Constitution but at the same time they pleaded that the spirit of P.C. Jain’s case (supra) be applicable even to them. However, the Ministry suggested that a magnanimous view be taken in relation thereto. In our opinion, in the light of the decision of the Apex Court in the case of UCO Bank (supra), their case does not fall within the meaning of the expression ‘retirement’ used in Rule 13E of the ITAT Members (Recruitment & Conditions of Service) Amendment Rules, 2009 and therefore do not fall within this category. We are not taking any magnanimous view but we are only clarifying the position of law as we understand. Here it must be appreciated, the persons have resigned from service when they were only a temporary post and that too during their probation period. So they do not have any right to hold the post as construed by the authorities discussed in earlier paragraphs and on their resignation they have forfeited their service and therefore debarring them under any conditions of service, that comes to play much after their retirement, in our opinion, cannot be applied to them.

80. We now take up the cases of other interveners who have retied on superannuation. The provisions of section 129 except for 129(6) and provision of section 252 of the Income-tax act, 1961, are pari materia. The provisions of Income tax Act are broadly lifted into the Customs Act. The legislation brought certain amendments to disqualify the President, Vice President and Members of that Tribunal to practice before CESTAT after ceasing to hold such office. The said disqualification is brought into statute by way of an amendment to Sec. 129(6) of the customs Act, which reads as under:

“129(6) – On ceasing to hold office, the President, Vice President or other Member shall not be entitled to appear, act or plead before the Appellate Tribunal.”

81. In relation to ITAT, the legislature has taken a different route in bringing such amendment. Although the intention to make such an amendment was admittedly common, but the way the legislation wants to achieve the said purpose, are entirely different and rather capable of different interpretation because amendments to the statute are not brought by the wisdom of the Parliament. There is no condition of service as such, as rightly pointed out by the ASG when the mater was argued before the Delhi High Court in the case of P.C. Jain (supra), whereas when it came to the ITAT members, the legislature has taken a different route, in our view, rather a risky route. They did not go to the Parliament but used the powers of the President that were vested in her under the provisions to Article 309 of the Constitution, which, in our view, are limited either to the recruitment or to the conditions of service. This aspect of the matter had already been amply discussed and threshed out by the Supreme Court in State of Punjab Vs. Kailash Nath (supra). In fact, the Apex court in the said case took pains to enumerate as to matters which would fall within the purview of “conditions of service” (see extract in para 32). The Ministry, which has filed the affidavit, has stated that these amendments are in the sphere of conditions of service. Now when once it is stated so which should strictly fall in the light what could be a condition of service, as interpreted by the Supreme Court in the case of State of M.P. Vs. Shardul Singh (supra); I.N. Subbareddy Vs. Andra University; and State of Punjab Vs. Kailash Nath (supra), in our considered opinion Rule 13E cannot be treated as one falling within the meaning of conditions of service but going beyond it.

82. We agree with contention of the intervener that the legislature cannot ignore the march of events over a period of time and the rights accruing as a result thereof. After all, notification or the law must satisfy the requirements of constitution today taking into account the accrued or acquired rights of the parties as on the date of such notification or legislation. That would be most arbitrary, unreasonable and negation of history if such recognition is not made, as observed by Apex Court in State of Gujarat Vs. Raman Lai (supra) as also in P.D. Agarwal Vs. State of M.P. (supra).

83. Any how, we can do nothing about this, except interpret the provision as it is spelt out by the Notification. We accept the plea made by the Sr. Central Govt. Counsel that Rule 13E brings about amendments to the conditions of service. The next question that immediately strikes to us is whether it can apply to the Members who are in service now or who are going to join the service from now or who were in service earlier. Before answering that issue, the common intention and purpose in bringing the amendment to section 129(6) of the Customs Act could have been carried out by bringing like amendments in the Income-tax Act either in section 252 or in section 288 of the Income-tax Act, instead of choosing the route of amending the conditions of service.

84. In fact the legislature in Sec. 288 of the Income-tax Act itself had such provision u/s 288(3), which provided as under (prior to its deletion):

“(3) Notwithstanding anything contained in this section, if the authorized representative is a person formerly employed as an income-tax authority, not below the rank of Income-tax Officer, and has retied or resigned from such employment after having served for not less than three years in any capacity under this Act or under the Indian Income-tax Act, 1922 ( 11 of 1922), from the date of his first employment as such, he shall not be entitled to represent any assessee for a period of two years from the date of his retirement or resignation, as the case may be.”

85. This legislative provision was deleted by the taxation Laws (Amendment) Act, 1984 w.e.f. 1-10-1984. that means, when these provisions were deleted, the Parliament thought in its wisdom not to bar any such persons from practicing before the income-tax authorities to which category they once belonged to. It may be pointed out at this stage that the validity of the sub-section was challenged before the Punjab & Haryana High Court in the case of Kulwant Singh (supra), which held the provision to be constitutionally valid. Still the Parliament used its higher wisdom to delete sub-section (3) of section 288 of the I.T. Act from the statute by the Taxation Laws Amendment Act, 1984. The larger public interest which the legislature has envisaged while dropping the provision that already existed cannot merit ignorance merely because the executive authority felt otherwise, perhaps wiser than the higher wisdom of the Parliament.

86. After having removed those provisions, they tried to enforce same objective by taking recourse to amendment in pension rules (a type of conditions of service). That piece of the legislation which was brought to pension rules and which prohibited the employees of the Central Government from appearing and practicing before the same income tax authorities to which they belonged while they were in service, was challenged before the CAT and the CAT struck down the said provision as unconstitutional and invalid. The matter went to the Supreme Court and the Supreme Court affirmed the view of the CAT, meaning thereby the limited ban imposed under Rule 11 of the CCS(Pension) Rules, denying liberty to a retired Income tax Officer the right to practice in profession within two years of retirement was held to be unconstitutional and invalid [ R.Kapoor Vs. State of Haryana (supra)]. As a result of this legislative exercise, now it is difficult to say that identical provision under conditions of service can still pass the test of validity in the eyes of law. This interpretation rendered by the Supreme Court in connection with CCS(Pension) Rules, cannot merit ignorance or be slighted merely because the executive’s attempt in bringing Rule 13E is in the direction of bringing some reformative provisions to free the judiciary from the charges of bias in their judicial functions. The executive if permitted in this manner will only set naught the judicial interpretation rendered by the highest court of the land and also bypass the higher wisdom of the Parliament. We must be conscious of the fact that limited ban of two years on retired income tax employees was not approved by the Supreme Court. Now the present Notification under the garb of conditions of service seeks to enforce a life ban of ex-members will it receive a judicial sanction in the background of R. Kapoor’s case. It is difficult to imagine or accept. Now we will be able to appreciate the importance of the means to ends. The purpose of section 288(3) of the Income-tax Act and Rule 11 of the Pension Rules was to achieve a common objective and to ensure the same result. As in our case section 129(6) of Customs Act and Rule 13E of the ITAT Members (Recruitment and Conditions of Service ) Rules, 1963. But look how the judiciary appreciated the difference. Punjab & Haryana High Court in the case of Kulwant Singh (supra) has held 288(3) amendments are constitutionally valid. But rule 11 of the Pension Rules was held to be otherwise by Supreme Court in R. Kapoor’s case. Exactly, their Lordships of High Court in P.C. Jain’s case upheld the validity of sec. 129(6) of Customs Act as it proceeded on the basis that the right to practice is not a condition of service, but a legislative amendment to Customs Act. The difference has become apparent and revealing and cannot be just overlooked.

87. In the light of this background, we cannot say that the ratio laid down by the Delhi High Court in the case of P.C. Jain (supra) should be plainly applied to this piece of legislation which brings certain amendments in the conditions of service akin to CCS (Pension) Rules. Again we go back to the earlier question which was bothering us, if it is a condition of service and whether it applies to the members who are in service or who join the service from now or in relation to persons who were in service earlier and who are not in service on the date of notification. Now we first look to the plain words of Rule 13E which states that the President, Sr. Vice President, Vice Presidents and members of the Tribunal shall not practice before the Tribunal after retirement from the service of the Tribunal. That means it can apply to the persons who are President, Sr. Vice President, Vice Presidents and members on the date when the Notification was issued. The authorities relied upon by the interveners has shown that all amendments as to the conditions of service can only be prospective and in this case the Notification itself says that it is prospective. The hitch that now entered our minds is that interpretation is the decision of the Apex Court in the case of Bishun Narain Misra Vs. The State of U.P. & others (supra). The appellant in that case was in the service of state of U.P. as Sub-Registrar. He was born on 11-12-1905 and was recruited in service in July 1933. At the time of his recruitment the age of retirement (superannuation) for government servants of his class was 55 years. Normally he should have retired on 11-12-1960. But by a notification dated 27-11-1957, the government raised the age of retirement to 58 years. Thus, he would have retired on 11-12-1963. On 25-5­1961, government again reduced the age of retirement to 55 years by a notification of that date issued under Art. 309 of the Constitution. By second notification of the same date the government issued order the effect of which was that all government servants who would have retired because of the change in the age of retirement after 25.5.1961 and before 20-12-1961 were retained in service upto 31-12-1961 except those who reached the age of 58 years before 31-12-1961 in which case they were to retire at the age of 58 years. Accordingly Bishun Narain Mishra retied on 31-12-1961.It was argued by Shri Bishun Narain Mishra that the rule is retrospective and no retrospective rule can be made to his detriment. The Court did not find any retrospectivity in it. All that the rule provides is that from the date it comes into force the age of retirement would be 55 years. It would, therefore, apply from that date to all government servants, even though they may have been recruited before May 25,1961 in the same way as the rule of 1957 which increased the age from 55 years to 58 years applied to all government servants even though they were recruited before 1957. Now we will take a hypothetical provision and the situation and the answer becomes clear. Suppose instead of age being reduced to 55, say it was increased to 70 years. Does it mean the executive applies the amendment to those retied just before without crossing 70. Will all of them recalled to serve the union to the age of 70. That will simply be obnoxious. It never happened when the age was just increased from 55 to 58. It will never happen now because the amendments as to conditions of service can only apply to the persons serving on the date of amendment even applying the principle laid down by Supreme Court in Bishnu Naraian Mishra (supra). This decision of Apex Court, in our opinion, has repelled the contention of the interveners that these provisions are only applicable to those who join ITAT after 3-6-2009. At the same time, as already explained, it does not apply to those who have already retired prior to 3-6-2009. It does not disturb the historical facts or events that have already happened before or long time back.

88. The Ministry has resorted to issuance of the said Notification as it is claimed in the larger interest of the ITAT. They drew reference to the discussion in P.C. Jain’s case to say all these are in the direction of reformatory steps brought in to uphold the dignity of the Institution to free this institution from charges of bias in discharge of its judicial function. Ends are simply laudable. But we should see whether the means by which it is sought to be achieved stands the test of law laid down and explained by the Supreme Court from time to time in relation to Article 309 of the Constitution. No doubt the Ministry, as it were, built a nice palace so that all of us in the ITAT could lead a happy and blissful life hereafter, used strong bricks, good cement and ISI marked steel but they built, in our view, on a loose soil or sandy bed or say without taking ecological clearance. The palace so built, although of strong structural components, is likely to crumble. The same is true here. We were very anxious to apply the ratio laid in P.C. Jain’s case (supra) but refrained or shown caution because the base on which our palace is built is different from the one appreciated by the Delhi High Court. We can only accept the reality and envy our neighbours in the CESTAT.

89. The words used in Rule 13E read that the President, Sr. Vice President, Vice President and the Members of the Tribunal shall not practice before the Tribunal after the retirement from the service of the Tribunal. That means it can apply to those persons who are the President, Sr. Vice President, Vice Presidents and the Members on the date when the Notification was issued. In fact Rule 13F which was brought by the same amendment under the same proviso to Article 309 provides that the same persons would not undertake any arbitration work while functioning in those capacities in the Tribunal. That means, those persons cannot undertake any arbitration work while working in those capacities or undertake to practice before the Tribunal after their retirement from service from the Tribunal. That means, these service conditions, which are brought into the ITAT Members (Recruitment and Conditions of Service ) Rules, 1963, admittedly can be applied only to those persons who are presently President, sr. Vice President, Vice President or the Members of the Tribunal. They are persons who are presently serving and not to those persons who have long back retired. After all, a President who has retired cannot remain to be the president after retirement. In the same manner who retired as Sr. Vice President long back as of now cannot remain to be the Sr. Vice President. In the same manner who retired as Vice President long back cannot remain Vice President for applying these provisions after his retirement. Similarly, a Member who retied as a Member prior to the insertion, cannot be roped in to be again call a Member to whom the said provisions are made applicable. In other words, the plain language employed in Rule 13E and 13F jointly suggest that it only apply to those persons who were serving in that capacity on 3-6-2009. That means it can admittedly be applied to those persons who are in service in those capacities as on 3-6-2009. To all of us it definitely applies and all the Members who were on the service roll/ roaster of the I.T.A.T. as on 3-6-2009, when these are made applicable, definitely suffer from the present disqualification. If it is to be treated as condition of service. In our understanding even the plain reading of the provision of section 13E indicates that it can only apply to the members who have retied after 3-6­2009.

90. Before we part with the matter, the President had sent two representations received from ITAT Bar association Mumbai and ITAT Bar Association Rajasthan for consideration of the same as per law. They stated in the said representations that they support the notification by the Ministry in the light of the decision of P.C. Jain’s case. We would have certainly appreciated their personal appearance and arguments. We must say that no legal issue can be decided on the basis of some perception of the matter in one quarter of the society. We have to go by the judicial interpretation that the law enacted by the Parliament/ Rule making Authority has received. In the light of the discussions made, we feel that we have done it. After all no law can be interpreted in a manner that pleases one section or to achieve the objects which they feel is right unless the legislature wants it that way in the expressed legislation.

91. We are not for the moment holding anything about the legislative competence of the President to make the Rules in the manner it is done, but we have only interpreted the provisions that are made as part of conditions of service and from such conditions of service the ban on right to practice can only be made applicable to the employees who are presently serving the Union of India or in connection with the affairs of the state. In our view, having regard to the principle laid down in the decisions of Apex Court in Kailashnath; P. Mahandran; T.R. Kapur, Kaishav Madhavan Menon; R.S. Ajara & others; P.D. Aggarwal & others, Chairman Central Board, (cited supra), which have been discussed elaborately, we are of the view that these provisions are applicable to those persons who retired from the service on or after the date of publication of this notification.

92. Accordingly, in the light of the above discussion the reference is answered as under:

(1) In our view it does not apply to Members who have retired prior to the date of publication of notification.

(2) In   our view the question no. 2 is answered to the effect that it applies to the Members who retired from the Tribunal on or after the date of the publication of this Notification.

(3) That once the Member reties after the date of Notification, it certainly applies. It does not matter when the Members were recruited. Even it applies to the Members who are recruited prior to the date of Notification. Crucial date must be the date of retirement. If it is after 3rd  June, 2009, it applies.

(4) Question no. 4 is answered that the Members who retire on or after 3-6-2009, even if otherwise qualified to practice u/s 288 of the Act, would still be debarred to appear and argue before the Tribunal, in the light of Rule 13E of the ITAT Members (Recruitment and Conditions of Service ) Rules, 1963.

(5) Persons who have resigned from service prior to the date of Notification, without any retirement benefits would not be covered by this Notification because it applies to those persons who have retired after the date of Notification.

(6) As regards question no. (6), we say the notification does not apply to members who are appointed on a temporary basis and resign from service without being confirmed during probationary period.

93. Accordingly, the reference is answered as above. With these observations, we remit the appeal files before the regular Division Bench to be disposed off in accordance with law, after giving both the parties to appeal an opportunity of being heard.

Order pronounced in open court on 15-9-2009.

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