Concept Of Cross-Objections Under Indirect Taxes

This Article pertaining to concept of cross-objection under indirect taxes is Authored by A. Rangadham, Superintendent (AR), Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad.

The law provides a statutory right of ‘appeal’ to any aggrieved person against an order passed by an authority in a lis. The ‘right to appeal’ is a statutory right and not an inherent right. In an appeal, the judiciousness of the order passed by a lower authority is examined by a higher authority.

Generally, the aggrieved person is entitled to file an appeal as provided under the statute. The various scenarios of filing an appeal is elucidated below.

Scenario 1 – Where order is completely in favour of a party:

If an order is completely against a party, the person aggrieved will be only the party who has to suffer the consequences of the order and the other party, who has the order in his favour will not be treated as aggrieved person and will have no cause to file appeal. When the aggrieved party files an appeal, the defendant will have the right to defend his case by way of filing counter-affidavit or rejoinder or para-wise comments as per the procedure prescribed under the relevant statute.

Scenario 2 – When an order is partly in favour of both the parties:

In the above scenario both the parties are at a liberty to file an appeal as both the parties are aggrieved to a certain extent. The appeals filed by both the parties will be treated as cross-appeals and will be heard together for uniformity of decision.

In case only one of the aggrieved party files an appeal, the law may provide an opportunity to the other party to file cross-objection upon receipt of the appeal within a time limit provided under the Statute.

Scenario 3 – When an order is in favour of a party but certain observations in the order are adverse:

In the above case situation, when the aggrieved party files an appeal, the respondent can file cross-objection, if provided under the Statute, on that part of the order, challenging the adverse observations against him.

Note: It may be noted that in both Scenario 2 & 3 the defendant is always at liberty to defend the appeal filed against him by way of filing counter-affidavit or rejoinder or para- wise comments or written submissions in addition to filing cross-objections.

The provisions under which cross-objections can be filed:

1. Central Excise Act, 1944: Section 35B(4) – On receipt of notice that an appeal has been preferred under this section, the party against whom the appeal has been preferred may, notwithstanding that he may not have appealed against such order or any part thereof, file, within forty-five days of the receipt of the notice, a memorandum of cross-objections verified in the prescribed manner against any part of the order appealed against and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub- section (3).
2. Customs Act, 1962 – Section 129A(4) – On receipt of notice that an appeal has been preferred under this section, the party against whom the appeal has been preferred may, notwithstanding that he may not have appealed against such order or any part thereof, file, within forty-five days of the receipt of the notice, a memorandum of cross-objections verified in such manner as may be specified by rules made in this behalf against any part of the order appealed against and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3).
3. Chapter V of the Finance Act, 1994 (Pertaining to Service Tax) – The Principal Commissioner of Central Excise or Commissioner of Central Excise or any Central Excise Officer subordinate to him or the assessee, as the case may be, on receipt of a notice that an appeal against the order of the Principal Commissioner of Central Excise or Commissioner of Central Excise or the Commissioner of Central Excise (Appeals) has been preferred under sub-section (1) or sub-section (2) or sub-section (2A)] by the other party may, notwithstanding that he may not have appealed against such order or any part thereof, within forty-five days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Principal Commissioner of Central Excise or Commissioner of Central Excise or the Commissioner of Central Excise (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3)
4. The Central Goods and Services Tax Act, 2017 – Section 119(5) – On receipt of notice that an appeal has been preferred under this section, the party against whom the appeal has been preferred may, notwithstanding that he may not have appealed against such order or any part thereof, file, within forty-five days of the receipt of notice, a memorandum of cross-objections, verified in the prescribed manner, against any part of the order appealed against and such memorandum shall be disposed of by the Appellate Tribunal, as if it were an appeal presented within the time specified in sub-section (1).

It would not be out of place to make a reference to Civil Procedure Code at this juncture. Rule 22 Order XLI of Code of Civil Procedure 1908 with the heading “Upon hearing respondent may object to decree as if he had preferred a separate appeal”. This provides for a detailed provision regarding cross-objections.

How to file Cross-objections:

1. The procedure prescribed for filing of cross-objections for under Central Excise act, 1944 and Customs Act, 1962 and Chapter V of the Finance Act, 1994 is under CESTAT (Procedure) Rules, 1982 – RULE 15. Filing of memorandum of cross- objections, applications or replies to appeals/applications — Every memorandum of cross-objections filed, and every application made, under the provisions of the Acts, shall be registered and numbered, and the provisions of these rules, relating to appeals shall, so far as may be, apply to such memorandum or application.
2. The procedure prescribed under Central Goods and Services Tax Act, 2017 is as per The C.G. & S.T. Rules, 2017. Rule 110 prescribes that – (2) A memorandum of cross-objections to the Appellate Tribunal under sub-section (5) of section 112, if any, shall be filed electronically in FORM GST APL-06:

Provided that the memorandum of cross-objections may be filed manually in FORM GST APL-06, only if the Registrar allows the same by issuing a special or general order to that effect, subject to such conditions and restrictions as specified in the said order.

(3) The appeal and the memorandum of cross objections shall be signed in the manner specified in rule 26.

From the above provisions of law, it is discernible that –

1. Cross-objection can be filed on receipt of notice that an appeal has been preferred against an order.
2. The party who has not filed an appeal against such order or any part thereof is alone entitled to file cross-objections. This makes it clear that if the order is completely in favour of a party, he cannot file cross-objections.
3. The time limit for filing cross-objections is forty-five days from receipt of notice.
4. As there is no consequence prescribed for not filing cross-objections within 45 days, the right to seek condonation of delay is available, by showing proper reasons for delay in accordance with the provisions of Limitation Act, 1963.
5. The cross-objections shall be treated as an Appeal by the Tribunal and shall be numbered separately.
6. For the purpose of uniformity the appeal and cross-objections shall be heard together and disposed off.

Judicial Pronouncements on Cross-objections:

1. Cross-objections cannot be taken if order appealed against entirely in favour of party. Collector Of Central Excise, Kanpur Versus West Glass Works, Firozabad – 1984 (17) E.L.T. 368 (Tribunal); Collector Of Customs, Bangalore Versus Decorative Laminates (India) Private Limited – 1986 (26) E.L.T. 399 (Tribunal); Shamshuddin Akbar Khan & Co. Versus Collector Of C. EX. – 1989 (43) E.L.T. 684 (Tribunal); Punjab State Electricity Board Versus Collector Of C. Ex. – 1990 (46) E.L.T. 388 (Tribunal).
2. Cross-objections may be treated as written submissions, if there is no occassion for the party to file cross-objections. Commissioner of C. Ex., BBSR Versus Ispat Chrome Limited – 2000 (123) E.L.T. 1105 (Tribunal); Essar Steel Ltd. Versus Commissioner of Customs, Jamnagar
3. Cross- objections are to be treated as cross-appeal. Commissioner of Cus. (Prev.), West Bengal Versus Overland Agency – 2004 (175) E.L.T. 552 (Tri. – Kolkata)
4. Registry not to register cross-objections, if order entirely in favour of party. Any fee collected from the party is to be refunded. Commissioner of Customs, Chennai Versus ADJ Agro Exports Pvt. Ltd. – 2007 (217) E.L.T. 273 (Tri. – Chennai) 
5. Cross-objections to be heard together with the main appeal and is to be disposed of in the same manner as an appeal. Gujarat Steel Rolling Mills Versus Commissioner of C. Ex., Rajkot – 2002 (150) E.L.T. 1035 (Tri. – Mumbai)
6. Application for Rectification of Mistake can be entertained if cross-objections are not disposed of with main appeal. Commissioner of C. Ex., Surat-II Versus Mittal Texo-Fab Pvt. Ltd. – 2009 (240) E.L.T. 699 (Tri. – Ahmd.)
7. Cross-objection filed cannot be treated as disposed when the cross-objection is not listed before the Tribunal on the date of disposal of the main appeal. Cross-objection needs to be restored for deciding it on merits. Commr. of C. Ex., Cus. & S.T., Mysore Versus Rajesh Tours And Travels – 2017 (358) E.L.T. 1211 (Tri. – Bang.)
8. Cross-objections are maintainable before the High Court in matters pertaining to Central Excise as provisions of Civil Procedure Code relating to appeals before High Court are applicable. Order 41 Rule 22 of Code of Civil Procedure, 1908 is applicable and cross-objections maintainable. C.C.E., C. & S.T., Raipur Versus Chhattisgarh State Industrial Development Corpn. Ltd. – 2018 (17) G.S.T.L. 593 (Chhattisgarh)
9. Cross-objections to be decided by Tribunal independently on merits and the other Party has the right to raise defence. Rishi Steels Pvt. Ltd. Versus Asstt. Commr. of C. EX. & Customs – 2017 (346) E.L.T. 544 (Bom.)

The Hon’ble Supreme Court while examining the scope of cross-objections under Order 41 Rule 22 of Code of Civil Procedure, 1908 in Dheeraj Singh Vs. Greater Noida Industrial Development Authority and Ors in C.A.No. 4172 of 2023 decided on 04-07-2023 held –

(i) where the decree passed by the court of first instance is in favor of the respondent in whole, in such circumstance, no remedy exists in favour of the respondent to appeal such decree, since no right to appeal can be vested onto a party, which is successful.

(ii) in cases where the decree given by the court of first instance, is partly in favour of the respondent, but is also partly against the respondent, two remedies within Order 41 Rule 22 remain with the respondent, which are (i) To file their cross objections and, (ii) To support the decree in whole. A third remedy in law also exists, which is the right to file a cross appeal.

Read More: Collegium Recommends Chief Justice Of Delhi High Court Manmohan As Supreme Court Judge: Know His Contribution In Indian Taxation