Precedents — One Bench cannot differ from the view of another Co-ordinate Bench — In case of difference in views, matter must be referred to a Larger Bench.

[Mercedes Benz India Pvt. Ltd. v. UOI, 2010 (252) ELT
168 (Bom.)]

One Bench of the Tribunal decided an appeal in favour of the assessee. However, another Bench refused to follow that decision
even though the facts were the same, on the ground that the earlier decision did
not address the grievance of the Revenue and did not consider all the facts and
did not lay down a clear ratio. The assessee filed a writ petition complaining
of breach of propriety on the part of the Tribunal by not referring the issue to
a
Larger Bench.

The Bombay High Court observed that in a multi-Judge Court,
the Judges are bound by precedents and procedure. They could use their
discretion only when there is no declared principle to be found, no rule and no
authority. The judicial decorum and legal propriety demand that where a learned
single Judge or a Division Bench does not agree with the decision of a Bench of
co-ordinate jurisdiction, the matter should be referred to a Larger Bench. It is
a subversion of judicial process not to follow this procedure. In the system of
judicial review which is a part of the Constitutional scheme, it is held to be
the duty of the Judges of the Courts and Members of the Tribunals to make the
law more predictable. The question of law directly arising in the case should
not be dealt with apologetic approaches. The law must be made more effective as
a guide to behaviour. It must be determined with reasons which carry convictions
within the Courts, profession and public. Otherwise, the lawyers would be in a
predicament and would not know how to advise their clients. Subordinate Courts
would find themselves in an embarrassing position to choose between the
conflicting opinions. The general public would be in dilemma to obey or not to
obey such law and it, ultimately, falls into disrepute.

The Court further held that the view taken by the Tribunal
was not the correct approach. If the Tribunal wanted to differ to the earlier
view taken by the Tribunal in an identical set of facts, judicial discipline
required reference to the Larger Bench. One Co-ordinate Bench finding fault with another Co-ordinate Bench is not a healthy way of dealing with the matters.

Note : In UOI v. Paras Laminates Pvt. Ltd., (1990) 186 ITR
722 (SC) it was held that an order which did not follow a Co-ordinate Bench
decision was ‘per incuriam’ i.e., not a binding judicial precedent.