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Does your Decision represent viewpoint of Department?

JULY 30, 2014

By Dr G Sreekumar Menon

THIS Article is a humble response to Shri S Sivakumar's learned Article "Some Out Of the Box Thinking For Reducing Litigation". With all modesty and humility I state that having had the distinction of having passed a record 7000+ Orders-in-Appeals, and having passed 1000 Orders-in-Appeal for two consecutive years, I can take the liberty of expressing my views, on this contentious topic.

Why is tax-litigation increasing by leaps and bounds and pendencies accumulating at every level? The problem lies in the interpretational chaos generated across the nation, by, officers at all levels, Advocates, Tax-practitioners, Quasi-judicial officers and Judges. Every rule/circular/notification issued by the Department becomes the subject matter of a multi-pronged interpretational assault, lasting for well over a decade. There is a marked reluctance to accept any interpretational decision as the final word, hence, necessarily, matters have to end up at the footsteps of the Apex Court. Strangely, the Department, which conceived the rule/circular/notification, has absolutely no opinion of its own. It watches with supine indifference the chaotic drama that unfolds before every adjudicating authority. Reviewing authorities spread across the country add to the litigation bonfire by routinely filing Appeals. The situation has reached unmanageable proportions and the Department's only response is to seek more officers for adjudications, more Commissioner Appeals, and more CESTAT Benches. This has not ameliorated the situation but rather aggravated the problem.

"We do not give any decision

Nor will we accept anybody's decision"

This appears to be the guiding philosophy of the Department.

Why this problem?

A few years back, a Lawyer, narrated to me the aggressive posture of an Assessee who was summoned by an Income Tax Officer. They got into a verbal spat about whose interpretation was correct. Ultimately, after prolonged altercation, the Assessee stumped the officer by confronting him as to whether his interpretation represented the official view of the Department?Herein lies the crux of the litigation chaos plaguing the Department.

Should we not stop this mass meaningless interpretational chaos? Why can't we have a Single Authority for the entire country, which will pronounce its decision and will be binding on all Departmental authorities? This will obviate multiple litigations before multiple authorities and mass churning of Show Cause Notices. Litigations will then be initiated only by the Assessee, who would need to challenge the Department's view before a Single designated Court. Department being the initiator of countless Show Cause Notices, across the country will become a thing of the past, as also, superfluous adjudications and wasteful reviews. Litigation would get slashed and would become issue based and we can become a litigation free Department.

It is also necessary to address the issue of revenue biased adjudications (though it will become redundant if the Single Authority system is adopted) which has become like an epidemic and creating a mirage of crores of rupees locked up in litigation. We need to explore the creation of a new cadre of specialist Tax Adjudicators, distinct from the present system of Tax collectors cum adjudicators. The dual role of tax collectors cum adjudicators have become incompatible in the present work culture. Also, vindictive superiors often initiate vigilance proceedings to intimidate subordinates. Personal vendetta is sought to be settled through official files.

The new government, at the helm of affairs, can give a new direction to unshackle the self made chains that is incapacitating the Department in performing its preeminent role as tax collectors.

(The author is Director General, National Academy of Customs, Excise & Narcotics, Faridabad.)

(DISCLAIMER: The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site..)

 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Endless litigations

A well represented article on the country wide litigations in tax matters. It applies to all whether central, state or at munciple levels. Bur the remedy suggested that to form a single authority appears to be impracticable. The only thing that could be done is that any change in taxation should be done only once in a year after clearance by a scientific committee that will examine the repercussions in detail. Issue being unnecessary time and money for all the connected stakeholder should be taken up on a national priority.

Posted by p muralidaran
 
Sub: Suggestions for reducing litigation

Very well written article, by Dr Menon. We wish, we have more Dr Menons, in the Department.

As regards his comment on the vindictive attitude of some senior officers towards honest and bright younger colleagues... in many instances, assesses find that the officers of the audit party/anti-evasion wing, at the level of Superintendents and Inspectors, are more knowledgeable and helpful, as compared to their superior officers. However, in most cases, the audit officers, while informally accepting the justifiable views of the assesses, express their inability to drop these issues in their Audit Note, on the basis that they have to 'follow the instructions of the superior officers'. One also comes across similar situations when appearing before bright, newly recruited IRS officers, who express their helplessness, given the 'instructions' given by their superior officers (obviously to the effect that refund claims have to be rejected, on any flimsy ground). It would seem that while the chunk of the work in the Department is done by Superintendents (right from conducting audits to drafting SCNs to drafting orders of the Commissioners including Appellate Commissioners), the quantum of officers at the rank of Asst Commissioners and above as compared to the quantum of Superintendents and Inspectors, seems to be rather high. In effect, the Department has become 'top heavy' and now, we will also have Principal Chief Commissioners. The ratio of officers supervising the work done by the Superintendents could be 3 : 1... this lopsided situation is one of the main reasons for the current mess.

Very unfortunately.... the tax Bureaucracy has a vested interest in maintaining litigation at high levels. The Government should not try to reduce litigation by demanding pre-deposit and imposing huge interest on assesses, which could kill the Industry. We cannot chop off the head to get rid of the headache.

Rather, the litigation should be reduced by restructuring the Department (which, of the course, is the biggest litigant) on the lines suggested by the learned author.

Thanks to Dr Menon again for writing yet another wonderful piece.

S Sivakumar, Advocate

Posted by SUBRAMANI SIVAKUMAR
 
Sub: Agreement with the Article

I fully agree with Dr, Menon views. I feel there is an urgent need to have some mechanism in place to reduce the never ending litigation in Customs, Central Excise and Service Tax matter.

Adv. Rajiva Srivastava

Posted by Rajiv Srivastava
 
Sub: Departmental Adjudication - Bugbear of assessees

A brutally honest article written by an officer with conviction.
The adjudicators in the Department coined the phrase "to err on the right side [or is it safe side?]of the law". I believe an error is an error which ever side it falls.
Recently the CBEC has issued a circular instructing the Departmental adjucating officers to follow the judicial discipline while passing orders. Yet I am afraid this circular would have any intended effect in improving the quality of adjudication orders. The assessees have completely lost faith in expecting fairness from the Departmental officers who perputuate frivolous litigation.

Posted by bommakantichakravarthi bommakantichakravarthi
 

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