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Report No. 115

3.6. Chapter VIA was introduced in the Central Excises and Salt Act by the Amending Act 44 of 1980 with effect from 11th October, 1982. Section 35 envisages a Collector (Appeals) to whom an appeal would lie at the instance of an aggrieved person against any decision or order passed under the Act by a Central Excise Officer lower in rank than a Collector of Central Excise. Section 35A prescribes procedure for hearing of the appeals. Section 35B provides for appeals to the Appellate Tribunal, which has been defined to mean Customs, Excise and Gold (Control) Appellate Tribunal constituted under section 129 of the Customs Act, 1962. After the decision by the Appellate Tribunal, there is a provision for reference to the High Court under section 350 and an appeal to the Supreme Court of India against the decision of the High Court under section 35L.

3.7. Section 81 of the Gold (Control) Act, 1968 provides for an appeal to the Appellate Tribunal meaning the Customs, Excise and Gold (Control) Appellate Tribunal constituted under section 129 of the Customs Act, 1962 against any of the orders enumerated therein. Section 82B is in pari materia with section 130 of the Customs Act and section 350 of the Central Excise and Salt Act providing for a procedure for reference to the High Court by the Tribunal. Section 82C is in pari materia with section 130A of the Customs Act which enables the Tribunals to make a reference direct to the Supreme Court in the circumstances mentioned therein.

3.8. The Customs, Excise and Gold (Control) Appellate Tribunal has been set up on October 16, 1982. It has a heavy backlog of cases. Roughly 25,000 appeals were pending on 31st March, 1986.

3.9. The Appellate Tribunal was conceived on the same lines as the Appellate Tribunal under the Income-tax Act and identical reference procedure is prescribed for the direct and indirect taxes under the relevant statutes. While the Appellate Tribunal under the Income-tax Act has numerous Benches, the Benches of the Customs, Excise and Gold (Control) Appellate Tribunal have been set up at Bombay, Madras, Calcutta with Headquarter at Delhi. However, even if the appeal is filed at Delhi and is heard and disposed of by a bench at Delhi, the reference, if any, to the High Court will have to be made to the High Court of that State from which the appeal before the Appellate Tribunal arose. (See section 131C of the Customs Act, 1962). The fall out of this parallel procedure is the same as in the case of Appellate Tribunal under the Income-tax Act.

A Bench of the Customs, Excise and Gold (Control) Appellate Tribunal at Delhi may hear appeals from Delhi, Rajasthan, Madhya Pradesh, Uttar Pradesh etc. Depending upon the decision of the aforementioned High Courts, the Bench will have to render conflicting decisions on the same point depending upon the State from which the appeal arises and relevant to which the High Court of that State has rendered its decision. The Appellate Tribunal will not be able to provide an all-India perspective, as it has to render conflicting and contradictory decisions depending upon the conflict of opinion amongst various High Courts. Till the matter reaches the Supreme Court, an all-India perspective will not develop. The reasons therefore, given for setting-up Central Tax Court for direct taxes will mutatis mutandis apply for setting-up a Central Tax Court for indirect taxes.

The benefits accruing from the setting up of such a court would far outweigh the additional costs that may have to be incurred in setting-up the Central Tax Court. Once the Central Tax Court is set up for the reasons mentioned in Chapter II, the reference procedure has to be abolished under various provisions of the various statutes herein indicated. The reference procedure, it is generally conceded is the prime cause of delay. It entails an additional disadvantage in that the private party seeking the reference shall move for interim stay of the recovery proceeding till such time as the reference is disposed of. There is enormous delay in disposing of the references. The revenue is held captive during this period causing dislocation in budgetary estimates. A chart compiled by the office of the Finance Ministry on the question of delay and blocked recovery of revenue revealed the following position:

(Rs. in lakhs)

Customs

Central Excise

No. of Cases

Amount Blocked

No. of Cases

Amount Blocked

Supreme Court

925

4178.19

2181

78288.99

High Courts

6974

21640.3

5389

277489.23

7899

25818.49

7570

355778.22

No. of Cases

Amount Blocked

Grand Total of Customs & Central Excise

7899

25818.49

In Supreme Court & High Courts (Both)

7570

355778.22

15469

381596.71

Approximately, 15,000 cases involving indirect taxes are pending in the High Courts and the Supreme Court blocking roughly a revenue of Rs. 3816.17 crores. It may incidentally be mentioned that the Central Govt. spent on litigation Rs. 22,96,000 in cases arising under the Customs Act and Rs. 22,17,000 in cases arising under the Central Excises and Salt Act. This information reinforces the case for abolition of reference procedure to High Courts which has in fact now totally outlived its utility.

3.10. In the discussion with the officers dealing with indirect taxes in the Ministry of Finance, it transpired that a model Bill has been drafted to provide for setting-up Customs, Central Excises Revenue (Appellate) Tribunal. The whole thinking appears to have been influenced by the provision in Article 323B(2). For the detailed reasons given in Chapter II of this report recommending a Central Tax Court for direct taxes and not a Tribunal, the Commission is of the firm opinion that no Tribunal should be set-up as envisaged in the draft Bill, but a Central Tax Court for indirect taxes on the lines set-out in the Chapter II of the report be set-up. While the power and jurisdiction of such a Central Tax Court in both the cases must be identical, they must maintain separate and distinct identity because there will be no functional integrality between them.

3.11. Clause 16 of the draft Bill provides for an appeal to the Supreme Court against the decision of the Central Tax Court For the reasons set-out in Chapter II of the report this provision deserves to be deleted. In fact, the bill will have to be recast to bring it in conformity with various aspects dealt with in this report.



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