2010 (6) TMI 161 - HC - Central Excise

Tribunal upholds penalty decision, stresses importance of focusing on significant legal issues

COMMR. OF CENTRAL EXCISE Versus TECHNO ECONOMIC SERVICES PVT. LTD.

The appeal challenging the Customs, Excise, and Sales Tax Appellate Tribunal's decision to impose a penalty on the respondent was dismissed as the ... The attitude, “let the Court to decide” - Maintenance of appeal – small amount is involved – revenue appeal / petition – Held that: - long proceedings results in payment of heavy professional charges to the advocates appearing for the department. Sometimes the expenses incurred by the Revenue are disproportionate to the stakes involved in the appeal and/or petition filed by the department - It has, therefore, become necessary for the Board to impress upon the departmental heads not to go for appeals and litigation wherein tax or duty impact is not substantial, otherwise it results in harassment to the assessees and creates unnecessary burden on the infrastructure of the Revenue department. - The “let the Court to decide” attitude needs to be given go bye. - On the aforesaid backdrop, we hope that the Chairman of the Central Board of Excise and Revenue shall consider the necessity of issuing circular, on the lines of the circulars issued by the CBDT, so as to reduce litigations arising out of indirect tax legislations. This will definitely go a long way to reduce pendency of the cases in the various Courts and at the same dine will help the officers of the department to concentrate more on the cases involving heavy stakes. Eventually, litigation expenses, burden of the Courts as well as that of the Revenue department to a considerable extent would get reduced. Issues:1. Imposition of penalty on the respondent by the Customs, Excise, and Sales Tax Appellate Tribunal.2. Policy decision regarding filing cases with negligible duty/tax impact.3. National Litigation Policy (NLP) and its implications on government litigation.4. Judicial scrutiny of policy decisions in reducing litigation.5. Necessity of reducing litigations arising from indirect tax legislations.Issue 1: Imposition of PenaltyThe appeal challenged the order of the Customs, Excise, and Sales Tax Appellate Tribunal regarding the imposition of a penalty on the respondent. The Tribunal's decision was found reasonable, and no substantial question of law was identified to support the appeal. The Tribunal's view on the penalty issue was considered acceptable, leading to the dismissal of the appeal.Issue 2: Policy Decision on Filing CasesThe judgment highlighted the increasing number of appeals filed with negligible duty impacts, causing delays and significant expenses for the Revenue department. It referenced the National Litigation Policy (NLP) aimed at reducing government litigation. The judgment urged the Chairman of the Central Board of Excise and Revenue to consider adopting a policy similar to the CBDT's decision not to file cases with insignificant tax effects. This approach was seen as a means to reduce litigation, focus on high-stakes cases, and minimize unnecessary burden on the Revenue department.Issue 3: National Litigation Policy (NLP)The judgment emphasized the need for the government to address its status as the largest litigant, with a substantial number of cases pending in various courts. It discussed the NLP introduced by the Central Government to alleviate this issue. The judgment suggested that adopting a policy to avoid filing cases with minor duty/tax impacts could help reduce the volume of litigation, allowing officers to concentrate on more significant cases.Issue 4: Judicial Scrutiny of Policy DecisionsThe judgment referred to previous cases where the courts had examined the impact and validity of policy decisions aimed at reducing litigation. It highlighted the importance of considering the plain language and objectives of such instructions, emphasizing the need to avoid burdening courts and tribunals with matters of minimal tax effect. The judgment underscored the significance of focusing on issues involving substantial questions of law and recurring matters, rather than pursuing cases with negligible impacts.Issue 5: Reducing Litigations in Indirect Tax LegislationsThe judgment concluded by urging the Chairman of the Central Board of Excise and Revenue to issue a circular akin to those by the CBDT, aiming to diminish litigations arising from indirect tax legislations. This approach was seen as a step towards reducing case backlogs in various courts, enabling departmental officers to concentrate on high-stakes cases. Ultimately, it was believed that such measures would lead to a reduction in litigation expenses and alleviate burdens on both the courts and the Revenue department.