2005 (2) TMI 460 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Tribunal to admit the case.
2. Requirement of clearance from the "Committee on Disputes."
3. Interpretation of Supreme Court judgments regarding disputes involving Public Sector Undertakings.
4. Application of the Income-tax Act and Companies Act definitions to Public Sector Undertakings.
5. Mechanisms for dispute resolution between government departments and Public Sector Undertakings.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal to Admit the Case:
The preliminary issue was whether the Tribunal had the power to admit the case, considering previous judgments and a communication from the Hon'ble President in a similar case. The Tribunal referred to multiple judgments, including Oil & Natural Gas Commission v. CCE (1992) and (1995), Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT (2004), and State of Rajasthan v. ITAT (2003). These cases emphasized that disputes between government departments and Public Sector Undertakings (PSUs) should not be litigated in courts but resolved through a "Committee on Disputes."

2. Requirement of Clearance from the "Committee on Disputes":
The Tribunal noted that the assessees, being PSUs owned by the State Government, argued that their disputes did not fall within the jurisdiction of the "Committee on Disputes" as contemplated by the Supreme Court for Central Government PSUs. However, the Tribunal, citing the Supreme Court's judgments, held that the disputes involving State Government PSUs also required clearance from the "Committee on Disputes." The Tribunal emphasized that the objective was to avoid wasting public money and time on litigation.

3. Interpretation of Supreme Court Judgments:
The Tribunal extensively quoted the Supreme Court's judgments, which directed that litigation between government departments and PSUs should not proceed without clearance from the "Committee on Disputes." The Tribunal highlighted that the Supreme Court intended to prevent frivolous litigation and ensure that disputes were resolved amicably. The Tribunal also referred to the Hon'ble Prime Minister's statement, reinforcing the need for an alternate dispute resolution mechanism.

4. Application of the Income-tax Act and Companies Act Definitions:
The Tribunal rejected the assessees' contention that they were not PSUs as contemplated by the Supreme Court. It referred to the definitions under the Income-tax Act and the Companies Act, which do not distinguish between companies owned by the Central Government and those owned by the State Government. The Tribunal concluded that both types of companies are considered PSUs under the relevant laws.

5. Mechanisms for Dispute Resolution:
The Tribunal discussed the need for an alternate dispute resolution mechanism, as emphasized by the Supreme Court and the Hon'ble Prime Minister. It noted that the "Committee on Disputes" should act as an arbitration and reconciliation mechanism, not merely a permitting authority for litigation. The Tribunal also mentioned the Authority for Advance Rulings, which provides a faster resolution mechanism for disputes involving PSUs.

Conclusion:
The Tribunal concluded that it did not have the power to proceed with the appeals without the necessary clearance from the "Committee on Disputes." It emphasized that the objective was to resolve disputes amicably and avoid unnecessary litigation. The Tribunal dismissed the Stay Petitions in limine, stating that the assessees should seek clearance from the "Committee on Disputes" or approach the Authority for Advance Rulings for a faster resolution.