Page 39 - ELT_15th August 2020_Vol 373_Part 4

2020 ] “SUBSTANTIAL QUESTION OF LAW” UNDER CUSTOMS ACT & INCOME TAX ACT A115

• Speaking on Section 103 of the CPC, Hon’ble Supreme Court in Af-
sar Sheikh v. Soleman Bibi [(1976) 2 SCC 142], held that this provision
enables the High Court in second appeal, where the evidence on the
record is insufficient to determine an issue of fact necessary for the
disposal of the appeal only -
(a) If the lower appellate Court has not determined that issue of
fact, or
(b) If it has determined that issue wrongly by reasons of any ille-
gality, omission, error or defect such as is referred to in
S. 100(1).
Before moving any further, it is important to bear in mind that both the provi-
sions, viz. Section 130 of Customs Act, 1962 and Section 260A of Income Tax Act,
1961 are in pari materia [means when two provisions of two different statutes deal
with same subject matter and form part of same subject matter], therefore, juris-
prudence developed by Courts on the expression “substantial question of law” in
the context of Section 260A of the Income Tax Act, 1961 shall be readily applica-
ble to understand the same expression as used in Section 130 of Customs Act,
1962.
In the following cases, Hon’ble Supreme Court and Hon’ble High Courts
have clarified the expression “substantial question of law” :
A Full Bench of the Supreme Court, in Santosh Hazari v. Purushottam [251
ITR 84], held :
“the word ‘substantial’ as qualifying ‘question of law’, means having sub-
stance, essential, real, of sound worth, important or considerable. It noted that
the expression ‘substantial question of law’ has not been suffixed by the
words ‘of general importance’ as has been done in other provisions such as
Section 109 of the Code of Civil Procedure or Art 133(1)(a) of the Constitution,
and therefore, the Apex Court held that the substantial question of law on
which a second appeal shall be heard need not necessarily be a substantial
question of law of general importance .”
Hon’ble Court further observed :
To be ‘substantial’, a question of law must be debatable, not previ-
ously settled by law of the land or a binding precedent, and must
have a material bearing on the decision of the case, if answered ei-
ther way, in so far as the rights of the parties before it are con-
cerned.
The Supreme Court and several High Courts have also laid down that
any of the following five tests can be applied to determine whether a substantial
question of law is involved [Arvind P. Datar, Kanga & Palkivala — The Law &
Practice of Income Tax — Vol-II, 2765, (Tenth edition, Lexis Nexis 2014)]. A ques-
tion is a substantial question of law, if :
(i) it directly or indirectly affects substantial rights of the parties; or
(ii) it is of general public importance;
(iii) it is an open question in the sense that the issue has not been settled
by a pronouncement of the Supreme Court;
(iv) it is not free from difficulty; or
(v) it calls for a discussion for alternate view.
EXCISE LAW TIMES  15th August 2020  39