In ONGC vs. CCE 104 CTR (SC) 31, the Supreme Court directed the Central Government to set up a `Committee on Disputes’ to monitor disputes between the Government and Public Sector Enterprises and give clearance for litigation. It was held the no litigation could be proceeded with in the absence of COD approval. This was followed in ONGC vs. CIDCO (2007) 7 SCC 39 and it was held that even disputes between PSUs and State Governments would require COD approval. HELD doubting the correctness of this law and referring the matter to a larger bench for reconsideration:
“In our experience, the working of the COD has failed. Numerous difficulties are experienced by the COD which are expressed in the letter of the Cabinet Secretary, dated 9th March, 2010. Apart from the said letter, we find in numerous matters concerning public sector companies that different views are expressed by COD which results not only in delay in filing of matters but also results into further litigation.
In the circumstances, we find merit in the submission advanced before us by learned Attorney General that time has come to revisit the orders passed by the three Judge Bench of this Court in the case of Oil & Natural Gas Commission vs. Collector of Central Excise (supra)”.
Note: In Shivshahi Punarvasan Prakalp vs. UOI (Bombay High Court) it was held that state govt undertakings do not require COD approval for income-tax matters. See Also: Gujarat Mineral Development Corp vs. ITAT 25 DTR 241 (Guj)
I am in agreement with the views expressed by B.Aravindan and others inasmuch as the CoD was ill-conceived and hence proved to be ineffectual.For heaven’s sake, let the PM and the right(no bias against the Left,let me clarify) thinking political leaders like Prof.Mukherji,our F.M.should seriously ponder over the dangers of stacking our decision-making machinery with the self-acknowledged all-knowing generalists.Taxation disputes,of both Direct & Indirect taxes,should be left to a National Tax Court consisting of Supreme Court Judges with taxation expertise and meritorious subject experts drawn from the concerned departments and professionals.The inclusion of aseasoned Administrative expert can also be thought of.
T.N.T.
The pressure of mounting tax arrears, coupled with the stand taken by the CAG on various legal issues and interpretation of the laws, the workload on the ITAT, etc., led to the creation of this system of resolving disputes between the assessing officers (or, say, the CAG actually) and the PSUs. Even the then the controlling body of the PSUs recommended this shortcut, which was welcomed by the Courts also.
Yes, perhaps, instead of the present constitution, the committee ought to have been constituted instead of taxation experts. But the precise purpose was to cut short the time for litigation and the pressure on the department to recover the outstanding tax dues.
The entire matter should be seen in this proper perspective.
well at last you can feel the shy of relief. Let judiciary alone handle its own work.
Mr. Acharya is correct. What was the necessity in the first place of superseding Parliament laws by the administrative fiat of ignorant and impatient bureaucrats who claim to know everything? When will this hegemony of the super-wise bureaucrats end? It is much better to have the politicians decide everything, even if we have 3Gs everyday. They are consistently corrupt but at least once a year (unless ruling from the safe haven of the Upper House) they face the public unlike the Constitutionally-protected IAS babus.
Usurping the powers even of lawfully created statutory authorities by ouster of their jurisdiction from their legal position has been part of the game of the generalist but all-knowing IAS for acquiring absolute supremacy over all arms of State power. The keen students of Law all over the country must be grateful to the Supreme Court for voicing their concern, for the umpteenth time, over the systematic, planned and deliberate weakening of the judicial structure in the country. But the pressure of the IAS will compel the government to ignore even the Supreme Court’s warnings.
The creation of the institution of COD is the brainchild of the IAS, with the intention inter alia of having its controlling power over the PSUs as well as (mainly) the income tax department. There are specialists and specialists galore in the world, but the specialism of the IAS is its omniscience. And, therefore, without any knowledge of or training in a most ticklish and highly specialised area of tax laws also the powerful IAS lobby wanted control through surrogate means. It is unthinkable, therefore, for the COD to know if the intricacies of the principles of jurisprudence, interpretation of statutes and of decisions, precedents on various issues in the form of case laws, etc. Thus one decision would run contrary to another and this comedy of errors has been running for years, with the COD blissfully oblivious of the maxim of “per incuriam” or of the principle of “stare decisis” or, even, the simple rule of “judicial prededent”. That is because they are above law and their decisions are binding and cannot be challenged in any court of law by a petty attached office of the Department of Revenue, viz., the income tax department.
This was a long felt necessity to review the supreme court decision of 1991. The COD may be facing problem as per letter of Cabinet secretary. But fact also remain that within two / three minutes time, the COD disposes the disputes expeditiously at the cost of consistency and point of law with a permission or refusal. They donot resolve the disputes which was essence of court decision.As a result, the PSUs especially in matter of income tax & excise disputes , are loosing at the interest of revenue
THE OLD LAW OF OBTAINING COD CLEARANCE HAS PROVED TO BE INEFFECTIVE OVER THE YEARS. COD, MOST OFTEN THAN NOT, SITS TIGHT OVER THE APPLICATIONS FOR CLEARANCE WHICH REMAIN PENDING AND IN SUSPENDED ANIMATION FOR YEARS TOGETHER TO THE PREJUDICE OF THE WARRING GOVT/PSU LITIGANTS.THE EARLIER LAW, NOW IN FORCE,ENUNCIATED BY THE APEX COURT IN ONGC BADLY REQUIRES RELOOK AND REPLACEMENT.
ADJUDICATION IS A MATTER WHICH MAY BE BEST LEFT TO THE COURTS AND TRIBUNALS FREE FROM EXECUTIVE REFERENCE. GOVT. MAY EVEN CONSIDER FORMATION OF SPECIAL COURTS AT THE HIGH COURTS LEVEL TO EXCLUSIVELY DEAL WITH ALL GOVT-PSU LITIGATIONS .