JUNE 14, 2023

Birth of a Tribunal

By Vijay Kumar

GST is six years old and we are still without an appellate tribunal. Tribunalisation in taxation is not exactly new in India - the Income Tax Appellate Tribunal started functioning from 25th January 1941. But Tribunal came to the indirect tax field much later in 1982 and that too not that easily. There is talk of the GST Appellate Tribunal coming into operation soon. While eagerly waiting for that, let's take a peep into the birth of the existing version of appellate tribunal for indirect taxes - the CESTAT, which actually started as the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT).

In the primitive days that is before 1982, appellate mechanism in the department was also primitive. After the appellate commissioner, it was the Joint Secretary (review), who was almost the final authority and there were hardly any publications for reference. Maybe the idea was that it is not merely of some importance but is of fundamental importance that justice should not only be not done but should manifestly and undoubtedly be seen to be not done.

In his 1980 Budget speech, the then Finance Minister R. Venkataraman stated,

116. Before I leave the field of indirect taxes, I have a major declaim of policy to announce. For the past couple of decades, there has been a persistent public demand for the setting up of an independent Appellate Tribunal for customs and central excise matters, somewhat similar to the set-up on the Direct Taxes side. This demand has recently been endorsed by the Estimates Committee of Parliament. Government has, in the past, not been in favour of such a system, as it was felt that it would not be appropriate in the case of indirect taxes, and that the present departmental machinery was in fact adopting an objective approach. I think a time has come when we should gracefully accept the common view, which is based on the dictum that justice should not only be done but should also seem to be done. It is in this spirit that provision has been made in the Finance Bill for setting up an Appellate Tribunal to hear appeals in respect of customs, central excise and gold control matters. This Tribunal will be independent of the executive machinery charged with the responsibility of day-to-day administration of revenue laws. I have no doubt that this measure will meet with the whole-hearted approval of Parliament and of trade and industry.

Replying to the debate on the Bill, the Finance Minister told the Lok Sabha on 30th July 1980:

After this provision was placed before the House, a large number of representations have been received, which point out that the Income Tax Appellate Tribunal which is of equal importance and which performs equally responsible functions is put in a slightly lower category than that of the Customs Appellate Tribunal, with regard both to the status and emoluments. The emoluments have been mentioned only in the Financial Memorandum attached to the Bill. I want to make it clear that when the two institutions come into being, i.e., when the Customs Appellate Tribunal comes in to existence, which I expect will be around the 1st of January 1981, the law relating to the Income Tax Appellate Tribunal will be amended so as to bring the status as well as the emoluments and the position of the Income Tax Appellate Tribunal on par with the Customs Appellate Tribunal. I am sure this will allay the fears and doubts expressed by a large number of people. People may ask, "why do you say that the Customs Appellate Tribunal will be able to function only from January 1981?" After the passing of the Bill to select the location, accommodation for the tribunals, choose the personnel and frame rules etc will take a few months. So, I am hopeful that the new tribunal will come into existence on the 1st of January.

But this was only a hope; the Tribunal did not materialise for more than two years.

The CEGAT created by the Finance Act of 1980 started functioning only from 11th October 1982. The Notification constituting the tribunal with effect from 11.10.1982 was actually issued on 12.10.1982. There was no internet in those days and just imagine the time it must have taken for the notification to reach remote parts of India.

The Tribunal was constituted by Notification No. 223/82-Customs, dated 11.10.1982:

MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION

New Delhi, the 11th October, 1982

No. 223/82-CUSTOMS

G.S.R. 595(E). -In exercise of the powers conferred by section 129 of the Customs Act, 1962 (52 of 1962), the Central Government hereby constitutes the Customs, Excise and Gold (Control) Appellate Tribunal with effect on and from 11th day of October, 1982.

(F. No 437/11/82-Cus IV]

Now, the Tribunal was officially constituted and it needed Members to function. So, with the same date, 11.10.1982, the Revenue Department issued Notification No. 76/82 appointing the following Members.

S/Shri

On the same day, the government appointed three Members of the Tribunal as Vice-Presidents and Notification No. 77/82, dated 11.10.1982 was issued:

MINISTRY OF FINANCE
(Department of Revenue)

NOTIFICATIONS

New Delhi, the 11th October, 1982

No. 77/82 - The President is pleased to appoint the following Members of the Customs, Excise and Gold (Control) Appellate Tribunal as Vice-Presidents of the said Tribunal, with effect from the date of assumption of charge and until further orders.

S/Shri

1. S. Venkatesan Senior Vice-President

2. B.B. Gujral Vice-President (Technical)

3. S. Grover Vice-President (Judicial)

So, Mr. S. Venkatesan who was appointed a Member of the Tribunal on 11.10.1982 was appointed as a Senior Vice President on the same day, 11.10.1982.

Now we have the Members and Vice-Presidents, but we need a President. So, the next day, on 12.10.1982, Mr. S. Venkatesan was appointed as President for one month by Notification No. 78/82, dated 12.10.1982.

MINISTRY OF FINANCE
(Department of Revenue)

NOTIFICATIONS

New Delhi, the 12th October, 1982

No. 78|82. No A-I2026/82-Ad II (Trib). -- The President is pleased to appoint Shri S. Venkatesan, Member of the Customs, Excise and Gold (Control) Appellate Tribunal as the President of the said tribunal for a period of one month with effect from the forenoon of 12th October, 1982.

Thus, Mr. Venkatesan became a Member of the Tribunal on 11.10.1982, was promoted as Senior Vice-President on the same day and promoted as President for a month the next day. But a month is not too long. On November 12th, another notification was issued extending the tenure of Mr. Venkatesan by another month.

MINISTRY OF FINANCE
(Department of Revenue)

NOTIFICATION

New Delhi, the 12th November, 1982

No. 96/82

F. No. A-12026/2/82-Ad. II (Trib). -In continuation of this Ministry's notification No. 77/82 dated the 12th October, 1982, the President is pleased to extend the appointment of Shri S. Venkatesan as President of the Customs, Excise and Gold (Control) Appellate Tribunal for a further period of one month with effect from 12th November, 1982.

This ended on 11 th December 1982 and still there was no President. This time Mr. Venkatesan was appointed as Senior Vice-President again by another notification.

MINISTRY OF FINANCE
(Department of Revenue)

NOTIFICATIONS

New Delhi, the 11 th December, 1982

No. 98/82

No. 98/82. -The President is pleased to appoint Shri S. Venkatesan as Senior Vice-President of the Customs, Excise and Gold (Control) Appellate Tribunal with effect from the date he takes over and until further orders.

[F. No. A. 12026/2/82-Ad.II (Trib.)

Ten days later, Mr. Fauja Singh Gill, a retired High Court judge was appointed as a Member of the Tribunal.

And on the same day, he was appointed President:

Thus, by 22 nd December 1982, we had the President and Members in place.

Justice FS Gill, the President was a former Judge of the Delhi High Court and headed another Tribunal before he joined the CEGAT.

The Tribunal did not start with a clean slate. Nearly 15000 cases were transferred to it from the Revision Authority. In the last forty years, the Tribunal established itself as a citadel of justice and temple of knowledge with highly talented members sitting on the benches and eminent advocates assisting in cracking complicated legal issues.

Mr. ML Routh a former Collector of Central Excise and Customs wrote in the ELT in 1983, "if the decisions of the various High courts are a barometer about the dispensation of justice by the departmental officers, it would be observed that so far they failed miserably, which resulted in the rise in corruption, arrears and ultimately the birth of the tribunal." 1983(ELT)A143

On 14th May 2003, the CEGAT was renamed as Customs Excise and Service Tax Appellate Tribunal (CESTAT).

A Senior Advocate once told me this story:

For my first appearance before the CEGAT at New Delhi, I travelled from Madras with a lot of books and files and a couple of assistants. I had prepared the case well and hoped to make an impressive presentation for an hour or so. As I got up to make my humble submissions, the learned departmental representative intervened and told the court that the issue is already covered in my favour and that my appeal may be allowed. And there ended my grand entry in the Tribunal! I won my first case without arguing a word.

Let's wait for the GST Appellate Tribunal.