Rajesh Kumar, Advocate
A tax assessee has to deal with the problem of delay almost every time it interacts with the tax authorities. This delay is sometimes due to the system of tax administration, which imposes unnecessary and unreasonable restrictions in the name of checking evasion of taxes. Sometime it is arbitrary whim of the tax administrator, employed to harass an assessee. Sometimes it is a trick to extort corrupt money from the assessee. For whatever purpose this delay is employed, it always results in cost escalation in the normal business process, which is extremely harmful to any economy in the fiercely competitive world. This paper seeks to examine the various steps taken by the state to curb this delay and various remedial measures available to an assessee in case of unreasonable and inordinate delay.
In the administration of Custom, Central Excise and Service tax; the corruption money is euphemistically called “SPEED MONEY”. This phrase refers to the fact that bribe is paid to speed up your file in the taxation department. Thus if you pay the speed money, your files will be speedly cleared and if you refuse, your files will not be cleared on one ground or the other. If the tax administrator is smart enough, he will raise some objection in your documentation, he will call for more documents to examine your case and numerous other tricks he has under his sleeve. Even when he is not smart, he can always make your file missing.
Although numerous circular has been issued by the CBEC directing its officers to work efficiently and expeditiously. There are numerous judgments of superior courts castigating inordinate delays. There are many provisions in the statute itself fixing a time limit. Nevertheless delay occurs. And every assessee knows it happens due to malafide of the departmental officers. Sometime the assessee shows the courage to bring such delay into the notice of the superior officers. But no person has ever been held responsible for any delay. This author is not aware of any instance where any action was ever taken against any officer of the department for delay. This state of affairs clearly points out to the fact that whatever remedies are available against delay, is available on paper only. This paper also seeks to examine the reasons for this state of affairs and suggest remedial measures against this malaise.
The Citizen Charter has been issued by the Central Board of Excise and Customs as its commitment to the responsive and efficient tax administration. It gives a right in the hand of the assessee to force the tax administration to comply with their duty. The text of the citizen charter reads as,
This Charter is a declaration of our mission, values and standards, and our Commitment to achieve excellence in the formulation and implementation of Customs and Central Excise policies and procedures for the benefit of the Trade and Industries, who are our partners in progress.
We shall carryout our tasks with
• Integrity and Judiciousness
• Courtesy and Understanding
• Objectivity and transparency
• Promptness and efficiency
We shall encourage and assist Voluntary tax compliance by our Clients.
We expect you to be prompt and reasonable in fulfilling your duty and legal obligations and be true and honest in furnishing information to us.
• Acknowledge declarations intimations, applications, returns and all communication on the spot and in any case within 7 days of their receipt.
• Respond to all communication within 15 working days of its receipt.
• Settle any disputes relating to declarations or assessment within 10 working days of written or oral explanation.
The importance of the charter has been explained by the Commissioner of Central Excise (Appeals), in the matter of Thanjavur Spinning Mills [2004 (163) E.L.T. 278 (Commr. Appl.)], wherein the Commissioner (Appeals) declares,
“This Citizen’s Charter is a Magna Carta reflecting the higher aspirations of the Department. It is a noble document propounding the Department’s ideals, vision and to frame and mould the thinking of the officials to the challenges of democracy, freedom, transparency and human dignity. Every official needs to act with profound conviction to dedicate his official life to the attainment of these objectives. If we have the courage to make the right decisions and if we have an abiding faith that only the right will ultimately survive, we shall know that we are helping to build a nation in which the finer values of man’s spirit may flower. The Citizen’s Charter is a vision of something great and tremendous, a call to a heroic mission, the challenge of a truly national message. It is a time of challenge and change. Let us apply ourselves to that which is presented to us, as our appropriate object, and let the sacred obligations, which have devolved on our Department sink deep into our hearts. There is opened to us a noble pursuit, to which the spirit of the times strongly invites us. Let our conceptions be enlarged to the circle of our duties. Let us convince the people that our system is the best, let us extend our ideas over the whole of the vast field in which we are called to act. In keeping with the noble ideals enshrined in the Citizen’s Charter the Appellant deserved to get a prompt reply for their petition dated 27-8-2001. However, the mystical secrets of office procedure denied them a timely reply. We have to push aside the fateful and inexorable realism of such complacency. The Appellants, seem to be asking the Department whether in this time of relentless challenge do we have those qualities of adjustment, those characteristics of a dynamic office, which are requisite to meet the accelerating rate of change, which is the overriding characteristic of our time? The highest ethical concepts is enshrined in our Citizen Charter but if we fail to perform our share of duties and responsibilities, the visions enshrined and displayed will mean no more than a name carved deeply into marble on an expensive crematory mausoleum. There is no particular inspiration in reading headstones in a graveyard.”
The Board has always emphasized the needs of an assessee friendly and responsive tax administration. In Circular No. 24/2000-Cus., dated 30th Mar. 2000, the board says, “the Hon’ble Minister of State of Finance (Revenue) has expressed his anguish over the indifferent and unresponsive approach and lack of sensitivity of our officers even to the genuine representations/complaints by general public. The field officers did not even bother to forward representation to the Government and recommend condonation at their own initiative till the matter was brought to Minister’s notice by a VIP. The Hon’ble Minister has observed that the rule and regulations should be used to the benefit of our citizens rather than applying them mechanically creating more work for everybody.”
To make the tax administration real efficient and responsive to the need of public the CBEC issued Circular No. 393/26/98-CX, dated 2-6-1998, wherein it directed that,
1.All declarations, intimations, etc. when sent by FAX, E-mail, by Post or by Courier shall be accepted by the filed formations;
2. Appointments should be given also on E-mail on request from the trade;
3. All queries by E-mail should be accepted and the answers should be sent by E-mail;
4. Any query received from the trade must be answered within a maximum of four weeks from the date of receipt.
The above directions have been reiterated by the CBEC Central Excise Manual of supplementary instructions in para 3.4.These instructions give certain very important right to the assessee.
The law has always been very clear on the exercise of powers and discretion conferred by a rule of law. The Citizen Charter re-enforces these values and give them a strong and clear legal footing. Integrity, judiciousness and reasonableness are not mere legal rhetoric but sound legal principles on which our constitution is based upon.
The Right to Information Act, 2005.
The department of Central Excise and Customs is a public authority within the meaning of the Right to Information Act, 2005 and hence, they are bound by the provisions of the Act. As per Section 4(b)(iii) of the Act, the authority has to publish the norms set by it for discharge of its functions. As per Section 4(b)(ii) of the Act it has to publish the power and duties of its officers and employees and the procedure followed by then in discharge of its functions. The citizen charter is, at the most, a skeleton of the norms set by the CBEC. Further the Central Board of Excise and Customs has not prepared any document, which specify the duties of its officers and employees. Nevertheless, certain information has been made public on the CBEC web site, which again give valuable rights to the assessee.
The Governance in India has largely been a declaration of powers of the officers and employees of the Government. This is probably a colonial legacy when the government was British and the “native public” was there to be ruled. There cannot be any declaration of rights of people or duty of the Government towards people, who are “Ghulam” of a foreign power. Unfortunately even after independence the mindset continues. Thus every Act provided for the powers of the officers but was invariably silent on the duties of the officers. Off course, the gap was filled by the judicial pronouncements, but these are neither sufficient nor expresses the will of the elected legislatures. The Central Board of Excise and Customs have not notified till now the duties of its officers and employees till now. The duty imposed by the Right to Information Act is a public duty, which must be done, sooner than later.
Section 4(d) of the Act provides that every public authority shall give reasons for its decisions, irrelevant of the fact that the decision is administrative or quasi-judicial. In UOI v/s Mohan Lal Kooper [AIR 1974 SC 87], the Supreme Court observed that reasons are the link between the materials on which certain conclusions are based and actual conclusions. They disclosed how the mind is applied to the subject-matter for a decision whether it is purely administrative or quasi-judicial and reveal a rational nexus between the facts considered and conclusions reached. Fair play in action requires that every authority should record reasons for its decisions, whether administrative or quasi-judicial. Every citizen has a right to know as to on what basis a decision has been taken which may affect his situation. Recording of reasons is an assurance of the fact that the authority has applied its mind to the facts and circumstances of the case before arriving at any decision. Further it fecilitates proper supervision on the authority concerned by higher administration or by the process of judicial review. An decision, action or order of any statutory or public authority, bereft of reasoning, would be arbitrary, unfair and unjust and violative of Article 14 of the Constitution of India, and would deemed to have been arrived at by unfair procedure offending Article 21 of the Constitution of India [Krishna Swami v/s UOI, AIR 1993 SC 1407]. The Right to Information Act, 2002 merely says what was always law of the land as per the binding judgments of the Supreme Court. However, enforcement of a statutory provision is always easier as compared to enforcement of a judge-made law.
Unjustified delay is an act of the authority for which citizens can seek information including reasons for delay. The Right to Information Act, 2005 gives valuable rights to the citizens against delay. Any delay in violation of Citizens Charter, in violation of the statutory provided time limit or otherwise inordinate delay has to be explained with reasons as per section 4(1)(d) of the Act. The citizen has a right to seek reasons for such delays and the authorities are bound to provide reasons. Further when any such delay is brought to the notice of superior officers, he has to take appropriate action against such delay. The assessee has a right to seek information from him as to what action has been taken.
There are various provisions in the law under which certain particular acts have to be done within a specified time schedule. For example a demand can be raised only within the time specified in Section 11A of the Central Excise Act, 1944 or under section 28 of the Customs Act, 1962. In certain other situations, like refund under Section 11B, there are provisions for interest as a penalty for delay. Certain other situations are covered by CBEC instructions and Citizen’s Charter. For example the Board has directed that adjudication order should be issued within 7 days of personal hearing (Circular No. ). Similarly the Board has directed that drawback claim should be decided within 3 days in case of EDI shipping bills and within 5 days in case of manual shipping bills. There is no need to repeat here that these circulars are known more for their violation than for implementation.
Nevertheless, there are many situations for which there is no time limit has been specified and assessees are at the mercy of the departmental officers. Due to such delaying tactics of the officers, the assessee suffers huge losses for which there is no provision under the Customs or Central Excise law. In some cases the assessees have raised this point before higher judiciary with favourable results.
When the goods are detained in port area, it results in huge demurrage liability on the importer. In Shipping Corporation v. C L Jain Woolen Mills, [2001 (129) ELT 561(SC)], the apex court held that if seizure and consequent detention was held to be illegal, the demurrage should be paid by the Customs department. Various High Courts took the same view. For example Delhi High Court in Trishul Impex v. UOI [1992 (58) ELT 182], In R C Fabrics v. UOI [1995 (76) ELT 9], Kolkata High Court in Surabhi Leather v. CC [1992 (59) ELT 253], Andhra Pradesh High Court in Sujana Steels v. CCE [2002 (141) ELT 343], Madras High Court in Anuma Precisions Tolls v. CC [2002 (121) ELT 309], took the view that Customs department is liable to pay demurrage in cases of unjustified seizure and detention of goods.
On its part, CBEC has issued various guidelines so that harassment of the importer is not done and demurrage charges do not become payable. Instructions have been issued in Chapter 16, para 5 of the CBEC Customs Manual, 2001. The circular, 42/2001 dated 31.07.2001 says that erring officers were held liable. However, this author is not aware of any case when any erring officer was ever found accountable. In fact, this author is aware of a recent case when goods were illegally detained by a premier investigating agency of the Customs and the goods were not released despite the provisions of law were brought to the notice of senior officers.
In case of North Eastern states, there are provisions in Notification No. 32/99 and 33/99 of Central Excise that the amount of duty paid in cash shall be refunded by 15th of next month. In case of any delay in verification, the amount should be refunded provisionally by that date. Despite such clear-cut provision, this author is ware of some cases where the amount has not been refunded, even when such acts were brought to the notice of senior officers.
It is difficult to imagine that whatever is happening at the ground level is not known to the senior officers or board. And if is really not known, it speaks of their competence. And if the law is not implemented despite the facts were brought to their notice, their bonafide is in doubt.
RIGHTS OF THE ASSESSEE HAS TO BE EXCERCISED BY THE ASSESSEE:
The protection of law is available only to vigilant citizens. Law cannot protect those persons who sleep over their right. If our citizens are of the opinion that their rights against government officers will be protected by the government, their rights against junior officers will be protected by senior officers- it is merely a wishful thinking. Unjustified delay by the department and its officers are negligence and dereliction of their duties. It is a “Civil Wrong”, an actionable claim in the court of law. In cases of unjustified delay, the erring officers personally and the department vicariously is liable to compensate the assessee.
Although we have inherited our legal system from the British Common Law, unfortunately the law of torts didn’t get enough attention in our country. Claiming compensation against the government was further made difficult by the doctrine of sovereign protection, procedural protection under Section 80 of the Code of Civil Procedure and “good faith” clause protection extended to government servants under various laws.
Section 155 of the Customs Act, 1962 protects the officers and government, if the action has been taken in good faith. The action can be initiated only after giving the person one month notice. The action can be initiated within three month from the date of cause of action. Similar provision has been made under Section 40 of the Central Excise Act. These provisions are extremely loaded against the assessee and gives too much protection to the government and its officers. Therefore it is not surprising that probably no proceeding has ever been initiated against any of the officers at any point of time. These laws are primarily responsible for rampant corruption in our government, rampant human rights abuses by our government agencies, rampant redtapism, rampant ignorance of pleas of common man in the power corridors and rampant lack of accountability and sincerety in the government officers.
Nevertheless, even these laws can be made to work, if the assessee is vigilant of their rights. Ignorance of laws and sleeping over your rights can never be justified on any ground. Despite such laws, the assessee is still empowered to move the civil court to claim compensation against any unjustified delay. Mere initiation of such action by the assessee will have a salutary effect on the administration of Customs and Central Excise.
The law should be amended to include certain sections, which protects citizens against the unlawful actions of the officers. Justice requires that in the administration of taxation laws, genuine concern of the citizens must be kept in mind. Justice is the sole purpose of any law. A law cannot be justified on the ground of existence of legislative power but it can be justified only when it furthers the ends of justice. Taxation can never be justified merely on the ground of revenue collection, but has be justified only on the basis of lager justice in the society. St. Augustine said in “The City of God”,
“JUSTICE BEING TAKEN AWAY, THEN
WHAT ARE KINGDOMS, BUT GREAT ROBBERIES?
FOR WHAT ARE ROBBERIES THEMSELVES,
BUT LITTLE KINGDOMS.”
A law devoid of justice is nothing but a tool of robbery.
Secondly, in the law there must be procedure through which citizens can enforce their rights. It will not be out of place to suggest that even Commissioner(Appeals) or CESTAT can be empowered to receive citizen’s complaints against various form of harassment and delay and may be empowered to issue directions or order compensation. Speedy adjudication of taxation issue is important, but speedy stoppage of harassment is even more important.
Unjustified delay is violation of basic spirit of the customs and central excise law, apart from being outright violation of Citizen’s Charter and CBEC instructions. It is civil wrong and an assessee can claim compensation for that. There is a need to amend the laws to make it more assessee friendly so that he may not face undue harassment in the hand of assessee.