It is high time the Central Board of Direct Taxes (CBDT) drafted a uniform policy regarding appeals in cases it had lost, the Supreme Court said last week. In some cases, it appeals to the higher court to claim taxes; but in some it does not. There are no definite criteria now, the court said in the case, Commissioner vs Doaba Steel Rolling Mills. “We are constrained to observe that the existing guidelines are followed more in breach, resulting in avoidable allegations of malafides etc on the part of the officers concerned,” the judgment said while deciding a batch of excise appeals from different high courts. There may be valid reasons to appeal or not to appeal, like the amount involved, divergent views of courts/tribunals and public interest. But there should be strict parameters for the guidance of the field staff for deciding whether to appeal or not. The judgment clarified that “merely because in some cases the revenue authorities have not appealed on the same issue, it would not operate as abar to challenge the order in another case.” Arbitrator can deal with counter claims The Supreme Court has set aside the ruling of the Bombay high court and declared that an arbitrator can consider a counter claim of one of the disputing parties, apart from other claims. There is no bar on the arbitrator to hear counter claims, if all disputes are placed before him. In this case, State of Goa vs Praveen Enterprises, the construction firm did not complete the work according to schedule and therefore the government terminated the contract. The contractor invoked the arbitration clause. He decided both the claims of the contractor and the counter claims of the government. On appeal, the civil court ruled that the arbitrator could not have decided the counter claim by enlarging the scope of the arbitration and deciding fresh disputes. This view was upheld by the high court. The government appealed to the Supreme Court. While allowing the appeal, the court held that while appointing an arbitrator, the Chief Justice or his designate is not required to draw up a list of disputes and refer them to the arbitrator. When the contract says that all disputes will be referred to arbitration, counter claims are included in them. However, the contract can exclude specific issues, the judgment said.
Case of the missing rail wagon carrying alcohol
The Supreme Court has set aside the judgment of the Allahabad high court and quashed the imposition of penalty on Kesar Enterprises Ltd which was engaged by Daurala Sugar Works to export 15 wagons of rectified spirit through Kandla port. It was found on the way that one wagon had “disappeared”. The Excise Commissioner demanded duty and interest on the spirit. The firm contested it saying that the goods were handed over to the railway at Daurala and the latter was responsible for the missing wagon. This explanation was rejected and penalty was imposed on the firm. It moved the high court. It ruled that the firm could be presumed to have diverted rectified spirit into potable alcohol. It also upheld the power of the state to impose penalty under the excise manual. The firm appealed to the Supreme Court. It ruled that penalty could not be imposed, especially without giving the firm a hearing.
Karnataka High Court took subjective view, says Supreme Court
Punishment of an employee of a bank is primarily the function of the management and the courts should avoid interfering with the quantum of punishment, the Supreme Court stated in the case, State Bank of Mysore vs M C Krishnappa. In this case, the employee was removed from service for causing fraudulent withdrawal of money from the bank. The decision of the disciplinary committee was reviewed later, and he was punished only with demotion and non-promotion for seven years. But the Karnataka high court removed the bar on promotion stating that the punishment was too harsh. The bank appealed to the Supreme Court. Allowing the appeal, the Supreme Court stated that the high court was wrong in interfering with the management’s decision taking a subjective view. It further remarked that the conduct of the bank employee involving financial irregularities for pecuniary gain for oneself was “one of the most serious offences”. MJ ANTONY
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