COMMITTEE ON DISPUTES

[Mr. M. GOVINDARAJAN]

     Any aggrieved person against an order of order/judgment of any Authority or tribunal/court is having right to file appeal within the limitation period as specified in the concerned legislation.  The same rule is applicable if the aggrieved party is the Central Government Department or Public Sector Undertakings.  But this is not the position when there is a dispute between two or more departments or department and PSU or between two or more PSUs.  In respect of taxation matters if  any order is passed against the Government Department or PSU the same could not file appeal unless otherwise clearance is obtained from Committee on Disputes.  The main idea behind this is both are belonging to the Central Government and therefore unnecessary litigation should not be there which involve cost and time.

     The Supreme Court in 'Oil and Natural Gas Commission V. Collector of Central Excise' 1992 (61) ELT 3 (SC) directed that the Government of India shall set up a committee consisting representatives from Ministry of Industry, the Bureau of Public Enterprises and the Ministry of Law to monitor the disputes between the Ministry and Ministry of Government of India, Ministry and PSU of the Government of India and PSUs in between themselves, to ensure that no litigation comes to court or to a tribunal without matter having been first examined by the Committee and its clearance for litigation.   The Government may indulge a representative of Ministry concerned in a specific case and one from the Ministry of Finance in the Committee.   Senior Officers only should be nominated so that the Committee would function with status, control and capable.

     The Supreme Court further held that it shall be the obligation of every court and every tribunal where such a dispute is raised hereafter to demand a clearance from the Committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceeded with.

     As per the Supreme Court the Committee on Disputes has been established to decide the disputes.  In 'MTNL V. Chairman, Direct Taxes & another (2004) 267 ITR 647  a notice of reassessment under Sec.148 of the Income Tax Act, 1961 for the assessment year 1994-95 was issued against the appellant, therein, a PSU, the matter was referred to the High Powered Committee formed by the Government of India pursuance to the order of Supreme Court (supra), from which clearance had to be obtained for litigation by Government Departments or PSU.  The Committee resolved that the appellant was contemplating a writ petition against a show cause notice issued.   The appellant was advised to await the appealable order and accordingly did not permit the contemplated litigation.   The appellant, however, filed a writ petition challenging the notice and the High Court dismissed the same on merit.   On appeal the Supreme Court held that as the High Powered Committee had not given clearance to the appellant, the proceedings could not be proceeded with.   The High Court was wrong in dealing with the rulings of the matter. 

      In 'Union of India through Central Organization Railway V. Union of India through Secretary, Ministry of Finance and others (2006) 285 ITR 362' - When the two departments of Union of India, Railway and Finance brought out a litigation, the Allahabad High Court after referring the judgment of Supreme Court held that it was mandatory obligation of every court and every tribunal to demand a clearance from the Committee in case it has not been so pleaded and in the absence of clearance from the Committee in case it has not been so pleaded and in the absence of clearance the proceedings would not be proceeded with. 

      In 'Commissioner of Income Tax, Trichy V. BHEL 2007 -TMI - 2448 - HIGH COURT, MADRAS -  PSU represented for a foreign company.  The question raised here is whether the clearance of Committee on Dispute is required when appeal filed by foreign company represented by Indian PSU as its agent.   Impugned assessee being non resident it is not to be considered as PSU.  Requirements of clearance from Committee on Disputes cannot be extended to cases where assessee is represented by PSU as an agent.   Impugned tribunal order misconceived set aside.

     In 'IOC Ltd., V. Commissioner of Central Excise, Chennai' 2008 (9) STR 447 (Tri. Chennai)  the appellants are a Public Sector Undertaking who are required to obtain clearance from the High Powered Committee for prosecuting the appeal.   The application for such clearance is pending before the Committee since 26.12.2005.  The department threatened coercive act without clearance from the High Powered Committee as prescribed by CBE & C circular No. 316/32/97-CX, dated 02.06.1997.   It is imperative, the tribunal held that the tribunal should step in for the ends of justice to ensure that the departmental officers' act in the keeping with the Board's instructions by not proceeding with coercive action for recovery of dues from the appellants till their application is disposed of by the High Powered Committee.

     The Supreme Court wants to extend the said arrangement in State Governments also.   In the case 'Chief Conservator of Forests, Government of Andhra Pradesh V. Collector (AIR 2003 SC 1805) the Supreme Court held that to make out a strong case that there is a felt and need of setting up of similar committee by the State Government also to resolve the controversy arising between various departments of the state or the State and any of its undertakings.  It would be appropriate for the State Government to set up a committee consisting of the Chief Secretary of the State, the Secretaries of the Departments concerned, the Secretary of Law and where financial commitments are involved, the Secretary of Finance.   The decision taken by such a Committee shall be binding on all the departments concerned and shall be the stand of the Government.

     Now a days the Committee on Disputes are not giving permission to file appeal in CESTAT/High Court/etc., for the cases where the amount involved is below Rs.5 lakhs.