Doctrine of Precedence:
Doctrine of Precedence would be applicable in case of tax laws. The following principles which govern the rule of precedence may be noted.
- Supreme Court:
1. The Supreme Court judgments are absolutely binding on all the courts, Tribunals and authorities.
2. Not only the ratio decidendi, but also obiter dicta of the Supreme Court are binding on all the Courts.
3. When there are two irreconcilable decisions of the Supreme Court on some point of law, the decision of a larger Bench shall prevail.
4. When there are two irreconcilable decisions of two Benches of similar strength, the decision later in time will have to be followed by the lower courts.
5. The Supreme Court judgments cannot be ignored by the lower courts though such judgments are per incuriam.
6. The Supreme Court, though expected to follow its own judgments, is not bound to follow them and in appropriate cases it can review its earlier judgment .
- High Courts:
1. A Division Bench of a High Court is generally bound by its earlier decision, but it may refuse to follow the same if the earlier judgment is per incuriam.
2. If the Division Bench of a High Court does not agree with its earlier judgment it will have to either follow the same or refer the issue to a Full Bench.
3. A Division Bench of High Court is bound to follow a decision of the Full Bench of the same High Court.
4. A single judge of a High Court is bound by a decision of a Division Bench or of the Full Bench of the same High Court.
5. A single judge of a High Court is not bound to follow the decision of another single judge, though he is expected to follow the same.
6. All the lower authorities, courts and tribunals are absolutely bound to follow the decision of a High Court within whose jurisdiction they function. Here, the High Court decisions include decision of a single judge.
7. The lower authorities and courts can ignore a decision of a High Court only if it is overruled by a larger Bench of the same High Court, or by the Supreme Court or by a later enactment.
Others:
1. The Assessing Officer and the Commissioner, while acting under section 263, cannot refuse to follow the decision of High Court. They cannot pass orders which are inconsistent with the decisions of the High Court within whose jurisdiction they function, even for the purpose of keeping the issue alive.
2. In all Indian Acts like the Income-tax Act, 1961, to keep the uniformity of law, a High Court should normally follow the decision of another High Court, unless it finds an overriding reason not to follow the same.
3. The lower appellate authorities are bound to follow the decision of another High Court, though they do not function within the jurisdiction of the said High Court, if there is no contrary decision of any other High Court.
4. The Assessing Officer or the Commissioner need not follow the decision of another High Court if the department has not accepted the said decision and has taken the matter to Supreme Court.
5. The Bench of the Appellate Tribunal, should generally follow the orders of other Benches of the Tribunal, unless those orders of the Tribunal are per incuriam.
6. An order of a Full Bench of a Tribunal is binding on the ordinary Bench of the Tribunal.
7. If an ordinary bench of a Tribunal does not agree with an order of another Bench of the Tribunal, and that order of the another Bench of the Tribunal is not per – incuriam, the Bench cannot differ from the view taken by the other Bench. It can only get the matter referred to a larger Bench. But this is subject to the general rule that as far as possible, the Bench should try to follow the orders of the Benches.
8. The Tribunal orders are binding on the Commissioner (Appeals) falling within the territorial jurisdiction of the Tribunal passing the order in question.
9. The Assessing Officer and the Commissioner are bound by the order of the Tribunal (falling within the jurisdiction of the Tribunal unless the Department has not accepted the decision of the Tribunal.)