MONDAY, NOVEMBER 19, 2007

By Dr S L Peeran, Member(J), CESTAT

I begin in the name of the Lord whose Mercy and Compassion encompasses us and enables us to render justice to one and all with our good conscience, fair-mindedness without fear or favour.

It gives me immense pleasure to participate in this auspicious occasion of celebration of Silver Jubilee of our honoured Tribunal. Initially, the Tribunal was known as Customs, Excise and Gold Control Appellate Tribunal (CEGAT). After abolition of Gold Control Act, and on the introduction of Service Tax by the Parliament, the Tribunal's nomenclature has now changed to Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

The Tribunal was set up as a result of studies made by several committees to examine the delays in revenue matters being disposed of by the High Courts and other bodies dealing with the same. A need arose to constitute a separate body, as a last fact-finding institution; to evolve and develop the law of Indirect Taxes for the smooth administration and to bring in uniformity in the application of Indirect Taxation Laws. After due deliberations, the amendment to the Customs and Excise Acts was made to set up the Appellate Tribunal. The Principal Benches were situated at Delhi with Regional Benches at Bombay, Chennai and Kolkata. The Principal Bench was to deal with all aspects pertaining to the classification and valuation of the goods both on Customs side and on the Excise side, while, the Regional Benches at Bombay, Kolkata and Chennai were entrusted only with matters pertaining to contravention of the provisions of the Acts and Rules. Now this distinction has been removed and all benches of the Tribunal deal with all matters except matters pertaining to Anti-dumping duty, which is dealt by President's Bench. The Tribunal came into existence on par with the Income Tax Appellate Tribunal which was established in the year 1941. The Tribunal was established on 6.12.1982. The Constitution of the Tribunal comprised of Members drawn from the Indian Revenue Service of the rank of Commissioners and above to be referred to as Member-Technical. The Member-Judicial were to be Advocates having put in a minimum practice of 10 years in the High Courts or a District Court judge with more than 3 years of experience or legal officers in the Government of India above the rank of Deputy Secretary in the Department of Legal Affairs. The selection of the candidates for the post of Member-Judicial was done on the recommendation of the candidates of respective judges of Supreme Court and Chief Justices of High Courts. The senior most judge of the Supreme Court was constituted by Chief Justice of India as a Chairman of the Selection Committee. The Committee comprised of Law, Finance and Revenue Secretaries to the Government of India. The first Selection Committee was headed by Supreme Court's then senior most judge, Hon'ble Justice Syed Murtaza Fazal Ali accompanied by Finance, Law and Expenditure Secretaries. The initial Members who were selected were the Members of the CBEC and leading Members of the bar viz., Shri S. Venkatesan, Ms. Santhosh Duggal, Shri S.D. Jha, Shri S. C. Jain and others. Shri S. Venkatesan was appointed as a Senior Vice President Mr. Justice F.S. Gill, a retired judge of Delhi High Court took charge as President on 22.12.1982. Shri S. Venkatesan was in-charge from 30.9.1982 till the day Mr. Justice F.S. Gill took charge as the President of the Tribunal. Under their stewardship, all matters which were pending before the High Courts and then Revisionary Authority of Government of India were taken over for adjudication.

Today we are seeing the effect of globalization. A world trade body has been constituted to regulate the system of taxation to be adopted among the trading countries. Thus, we have Anti-Dumping Duty on goods dumped in India by trading countries levied as per the provisions of Anti-Dumping Act. Disputes arising under this Act are also dealt with by the Tribunal.

The jurisdiction of Bangalore Bench comprises of three southern states of Karnataka, Andhra Pradesh and Kerala. The CESTAT has disposed of since its inception more than 2 1/2 lakh appeals and 90% and more of our orders and judgments are upheld by the Apex Court. Presently, the total pendency of all the benches including the newly set up bench at Ahmedabad is less than 32000. Bangalore Bench came into existence on bifurcation of work of Chennai Bench in 14 th December 2000 with Shri G.A. Brahma Deva and Shri S.S. Sekhon as its first members. They have retired after a glorious stint.

It is a matter of pride for us to state that our stupendous work has been acknowledged. We are assisted in our functions by eminent lawyers of the country both from the assessee's side and from the Government's side. Eminent lawyers like S/Shri N.A. Palkhiwala, Soli J. Sorabjee, Fali S. Nariman, Harish Salve, Ashok H. Desai, E.P. Bharucha, Ravindra Narain, Atul Setalvad, G. Ramaswamy, Habibulla Basha, Dr. A.M. Singhvi, P.L. Parekh, Anil Dewan, Siddhart Shankar Ray, P. Chidambaram. M. Chandrashekaran, Joseph Vellapally, Arshad Hidayatulla, Somnath Chatterjee, Dr. Samir Chakraborty, A. N. Haksar, G.L. Rawal, Arvind Datar, C. Natarajan, C.S. Lodha, and many more eminent lawyers of very high reputation and knowledge appear before the Tribunal. Not a day passes, when one or the other eminent lawyer is not present before us in a complex case involving very huge revenue and complicated question of law coming up for interpretation. We have eminent Chartered Accountants who have taken up to practice before us and among them is Shri. K.S. Ravi Shankar who had been a visiting faculty Member to the National School of Law and also IIM-Bangalore and was Member in the Frauds Committee set up by the Reserve Bank of India. Another eminent lawyer who is now engaged by the several foreign countries to argue before the World Trade Centre and other International Forum is Shri. V. Lakshmi Kumaran. He started his career as a probationary Assistant Commissioner of Central Excise and Customs. Later, he joined the Tribunal as a Departmental Representative. Thereafter, he started his own practice and today, his office is located in all the centres of the Tribunal. Likewise many such departmental representatives like Shri. V. J. Sankaram, Shri R. Sampath, Mrs. Vijaya Zutshi, Sri L.P. Asthana, Shri A.K. Jain, Shri A.S. Sundar Rajan, former Commissioners and Members of the CBEC and many others have risen to high level to serve the field of Customs, Excise and Service Tax. A few of them have become eminent authors like S/Shri Arvind Dattar, B. N. Gururaj, V. Raghuraman and others.

From among our Tribunal Members, several of them have adorned the Benches of the High Courts. One Member, Ms. Rama Devi became the Chief Election Commissioner of India and later Governor of Himachal Pradesh and Karnataka. The Tribunal had the good fortune of being headed for the last more than a decade by retired Chief Justices of several High Courts. All Members have worked hard to enhance the honour and prestige of the Tribunal. We pay our tributes to S/Shri Justice U.L. Bhat, Chief Justice K. Sreedharan, Hon'ble Chief Justice Mrs. K.K. Usha, who were our past Presidents. Presently we have Mr. Justice R.K. Abichandani. Each one of them has contributed to the development of the Tribunal.

Our Tribunal is most advanced in its functioning with modern equipments like computers and work being done at expeditious speed. All our judgements are available on Tax India Online. Law journals like EL T, RLT have produced software and referencers. We are assisted in our functioning with enormous technical and scientific books. We are proud to say that our judgements are now being quoted in several countries like United States, United Kingdom, Germany, France, Canada and Australia.

The Technical Members are highly knowledgeable and only those who have expertise in their field are being appointed as Members of the Tribunal. They would have been adjudicating officers or holding high posts like Director General of Taxes and would have acquired legal expertise in the field of Indirect Taxation. My colleague Shri T. K. Jayaraman is an Electrical Engineer with a Law Degree along with Master's Degree in Philosophy and French Language. He is an expert in various fields of Indirect Taxation. Like-wise, we have Members who have obtained Doctorates in Indirect Taxation and various other fields. We have eminent Members having specialized in one field or the other including Literature, Philosophy, Medicine, Vedanta and Sufism. For instance, Shri G. Sankaran, Former President after his retirement took up the stupendous task of translating Bhagavatham from Sanskrit to English in three volumes. The work extended for over six years. It is considered as a classical work. We have developed a very rich culture and we are proud of our alma mater i.e., Customs, Excise and Service Tax Appellate Tribunal. We look forward for further future years of sustained hard work to give our best judgements to enable the assessees to get expeditious justice. We have adopted various means for speedy rendering of judgments without compromising on its quality. Members of the Tribunal work with scrupulous honesty and integrity, without fear or favour. We look forward to sustained guidance from various High Courts and Supreme Court. We wish and hope that the law of indirect taxation as set down by the Tribunal would be a precedent for various other advanced and less advanced countries.

I am thankful to my umpteen colleagues, past Presidents and Members for giving sustained help and assistance to carry out the onerous task of rendering justice without fear or favour. I welcome my Lord Chief Justice and the Judges of High Court, dignitaries, Members of the Indirect Tax Association to participate in this happy occasion of celebrating the Silver Jubilee of CESTAT. I specially thank the head of Indirect Tax Association Shri B. V. Kumar, former Member of CBEC for arranging this function. He has taken keen interest in the setting up of this bench and for its expansion. He deserves our special kudos.

I wish to share a few of my experiences which are not without any sense of humour. The Indirect Tax is shared by one and all in our country both by citizens and non-citizens. The Government in its anxiety to increase its collection of Taxes has left no stone unturned to bring within its ambit all and sundry items for Taxation. We had an interesting case wherein the Government proposed to levy tax on ¶Prasadam¶ distributed by temples without exception to the ¶Prasadam¶ in the form of ¶ladoos¶ distributed by Tirupathi Devasthanam. The question before us was as to whether ¶Prasadam¶ can be taxed? So long as ¶ladoos¶ are sold in the market as goods, they are taxable. However, once they are presented before the deity and assume a form of ¶Prasadam¶ or ¶Taburruk¶ can it be taxed as commercial commodity? But, the tax authorities had a different view. They considered the ¶Prasadam¶ as commercial goods, as some money was being collected towards distribution of the ¶Prasadam¶. But the Tribunal applied the principles of sound reasoning, good conscience and fair mindedness to hold that offerings on the altar of the Lord cannot be considered as a commercial commodity. The Government later issued a notification exempting the ¶Prasadam¶ from Tax.

We all know that a commodity which is brought and sold in the market alone can be taxed as goods. The commodity has to arise as a result of change in its physical and chemical characteristics with a new nomenclature. Now, the Taxman without any scruples keeps on taxing on all and sundry items, which are not goods. Even coffee powder which is packed in smaller packets is considered as different goods. So also when pine apple was cut into smaller pieces and packed was considered as different commodity. Likewise, paper cut into smaller sizes and when water is bottled, it is considered by Taxman as separate goods for levy of duty. It went on like this in hundreds of commodities and this has been a point of dispute before us. The Government being dissatisfied with the definition of ¶Goods¶ as sold in the market as interpreted by the Apex Court in its judgment rendered in the classic case of DCM Cloth Mill resorted to bring in a legal fiction in the Tariff Act to consider such process as manufacture and bringing into existence new goods. In law ¶he¶ includes she. Therefore, there is no choice for the citizen but to pay the Tax. In the principle of Taxation, there is no equity in taxes. This is often quoted by the Taxman. But, we as Tribunal apply the principles of good conscience, fair mindedness and sound reasoning to set aside excessive Taxation and unfair levy of penalties. The Taxman has gone on to levy Service Tax on drycleaners, hair dressing saloons and on other umpteen services of sundry nature. They do not even spare temples or mosques, where worship is being carried on. In these cases, the Tribunal had to set aside Service Tax levied on such places under the category of ¶Mandapam¶. The Taxman has gone against the sovereign and legislative functions performed by the Government to bring such activity under Service Tax. For instance, the Election Commissioner of India issues identity cards to the citizens for voting purposes. This has been considered as 'Photographic Service'. The Taxman is oblivious of the fact, that the sovereign and legislative function of the Government performed under the Constitute of India or under any legislation cannot be brought within the ambit of 'Tax'. Likewise, Education Institutions and Universities have been proceeded against for levy of Service Tax. Here again, the Taxman being oblivious of the fundamental features of Taxation. It is in these arenas that justice is rendered by the Tribunal in all fours. The political morality is a new principle in jurisprudence and this has to be considered to set aside levy of unfair Taxation and penal consequences.

I happen also to be a poet writing in Indian English and Urdu. I have published nine volumes of poetry besides collection of short stories and work on Sufism. I close my speech with satirical poems on ¶Taxes¶.

CURRENCY - SOLE ENEMY

Go to the public bath to pay service tax.

Now the barber, beauty-parlour demand cuts.

Let's share ¶fifty-fifty¶, the taxman is at the door.

There is no need for safety-lockers these days.

My wedding-suit is not spared by the laundry.

Say ¶Namaz¶ at ¶Mandappam¶ then fleece him.

The Tiruathi ¶Ladoo¶ as ¶Prasad¶ is also squeezed.

The net is widening with shark like teeth.

¶Let's adjust¶, Let's adjust¶ is the wholesome cry

¶Cut the corners, here¶, ¶Cut it there, anywhere¶

Mistaken identity has become bane of the day!

Who will be dragged next by the collar? Keep fingers crossed!

The sole-enemy of the day is money.

The bull in the market is currency.

I have one more poem to read

TAKEAWAY

From whichever direction wind comes, let it come.

Let the light diffuse and come through thick fog.

Let the sea wave mingle with the yellow shore.

Let the rustling of the leaves charm the senses.

The freezing cold recedes, but slowly, mercifully.

The creaking bone can now move softly, firmly.

Now is the time to receive guests, to turn the thought

Sleepy shivering winter is on its way out.

The roles now get changed with noisy days.

The overseas travel is like fishermen at Sea.

To lose the way and land on enemies' shores.

The parameters of life keeps changing daily.

The taxman is on the prowl like a tiger.

To take away even the baked cookies.

I thank all the gathering for the patient hearing of my humble speech.