TIOL-DDT 508
08.12.2006
Friday

Government servants are protected against vexatious and frivolous prosecution against acts discharged by them in their official capacities. Before taking cognizance of an “offence” by a government servant in discharge of his official duties, the court has to ensure that sanction has been given by the appropriate authority.

++ A DRI sleuth beats up a person summoned by him.

++ A police officer rapes a woman arrested by him.

++ A commissioner takes a bribe to pass an order.

++ A minister abuses his position to cheat the treasury.

Are the above cases covered under the immunity granted to government servants from prosecution?

Section 40 of the Central Excise Act, Section 155 of the Customs Act and Section 293 of the Income Tax Act grants immunity from prosecution for any bona fide acts done under the Acts. The IPC and The Prevention of Corruption Act have similar provisions. Now does it cover rape, Bribe, and pure unadulterated third degree torture? The Supreme Court day before yesterday held that they do not.

In matters concerning important politicians like Prakash Singh Badal, LaluYadav and their respective wives and the Kerala patriarch Karunakaran, the Apex Court held that illegal activities were not covered under the immunity. And our news hungry TV channels went to town with the news. They said it was bad news for the politicians and corrupt officers. But this was always the position. The Supreme Court had only reiterated the position. Nobody can claim that taking bribe was part of discharging official duties! Or that beating up people was part of investigation. The Supreme Court had a nice way of explaining the situation when it observed,

++ Where a criminal act is performed under the colour of authority but which in reality is for the public servant's own pleasure or benefit then such acts shall not be protected under the doctrine of State immunity.

++ The Section does not extend its protective cover to every act or omission done by a public servant in service but restricts its scope of operation to only those acts or omissions which are done by a public servant in discharge of official duty.

++ official status only provides an opportunity for commission of the offence.

So obviously a policeman who rapes a suspect or a revenue officer who beats up a summoned person cannot take shelter under state immunity.

To our friends in the DRI and other investigating agencies who have made it a hobby to beat up people to extract nonsensical statements, DDT has an unsolicited advice – please don’t. You have no immunity against prosecution and if a complaint is made against you in a court, you will be the accused and the State will be against you. The State will support the person who has made the complaint against you and you will have to defend your case in your individual capacity. And you will lose your job if you are found guilty. Is it worth taking such huge risks for the fun of beating up people?

Today we are carrying the three Supreme Court judgements pertaining to Badal, Lalu and Karunakaran. In tune with its traditions, TIOL is proud to bring you these Supreme Court judgements delivered just day before yesterday. We are indeed fast and the first to bring you the latest.

1. Badal

2. Lalu

3. Karunakaran

Audit based Show Cause Notices

In DDT 474, the Board’s direction that the government should not take two different stands before appellate authorities and Audit was covered. Today a netizen writes to us with the following questions.

1. Why the direction to issue Show Cause Notice is there in the first place? Does it presume that CERA is mostly correct and the Revenue is mostly wrong?

2. Is not issuing a Show Cause Notice itself a quasi judicial function? Can it be directed for issue generally?

3. What if the Audit objection is accepted by the Ministry? Is the Adjudicating Authority to fall in line or he is free to decide?

4. What if the Audit objection is not accepted by the Ministry but accepted by the Adjudicating Authority? Which one survives?

5. How long it will take to reach a conclusion? For the Ministry or PAC or who ever it is? What happens to the uncertainity, both for the Revenue and the Tax payer?

6. What is the fate of such SCNs all along? Are the SCNs Wherever the Ministry of Finance differed with the CAG’s Audit Objectionto sleep permanentlyin Call Book? Is it still a grey area?

1. No sir, the presumption is not that CERA is correct. Most often, the presumption is that CERA is not correct, but the “protective” Show Cause Notices are issued as a “save your skin” technology. If finally the CERA objection survives and then demands are hit by time bar, there would be another objection that huge amounts were lost because Show Cause Notices were not issued on time.

2. Issue of Show Cause Notice is certainly not a quasi judicial function; if it is held so, there has to be a notice as to why a notice cannot be issued and that notice has to be preceded by another similar notice and that by another one – meaning there can be no notice at all.

3. The adjudicating authority is certainly not required to fall in line with the Board’s acceptance of the Audit objection, but if the Board issues directions on the issue, the Adjudicating Authority is bound by them, but the whole problem is – this is not the way the Board works. The section that deals with Audit objections is different from the one that gives clarifications – And the twain shall never meet.

4. If the Audit objection is accepted by the Adjudicating authority and not accepted by the Ministry, the lawyers make money. Litigation can go on merrily.

5. There is absolutely no time limit. There are objections which are live for more than two decades. Even the PAC is not the final authority. Litigation can be unending.

6. The ghosts are sometimes resurrected from the call books and assessees suddenly find themselves stuck with Show Cause Notices on issues which they had forgotten long ago. Fortunately in many offices, call books are not traceable. In fact the CAG once conducted a special audit on call book cases.

There was an Audit objection that Show Cause Notices are pending for adjudication for more than ten years involving huge revenue running into Crores of rupees. Why were the Show Cause Notices kept pending? Because of an audit objection which was yet to be resolved!

Of late, even the department has started emulating the CAG’s Audit. Frivolous issues are raised by overzealous Audit teams and the department is issuing Show Cause Notices. There are cases where the same Commissioner has given a clarification and later given a Show Cause Notice on the same issue, because his Audit team raised an objection.  

What is the solution? A clever assessee told us, “When the auditors come, give them good food and treat them well but as far as possible, don’t give them any records”

Food for thought?

Until Monday with more DDT

Have a nice week end.

Mail your comments to vijaywrite@taxindiaonline.com