Background Material on

Litigation Management

The Institute of Chartered Accountants of India

(Set up by an Act of Parliament)
New Delhi
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First Edition : August, 2016

Committee/Department : Indirect Taxes Committee, ICAI

E-mail : idtc@icai.in

Website : www.idtc.icai.org

Price : 140/-

ISBN : 978-81-8441-844-6

Published by : The Publication Department on behalf of the Institute of

Chartered Accountants of India, ICAI Bhawan, Post Box No.
7100, Indraprastha Marg, New Delhi - 110 002.

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August/2016/ 500 Copies (New)
 Foreword
The laws governing taxation, especially indirect taxes, have undergone several
changes on account of globalization, liberalization and privatization in India. Members
have been practicing Service Tax and VAT for quite some time now. They would also
embrace GST in emerging scenario. Frequent changes and complexities in indirect
taxes law lead to scope for disputes and litigations which are required to be dealt
intelligently.

Our members with their expertise can help trade and industry by preventing and
resolving the disputes. Considering the expertise of the members and the opportunities
available in the area of litigation, the Indirect Taxes Committee of the Institute of
Chartered Accountants of India has come out with a Course on Litigation Management
and has also developed Background Material for the same. The material covers
principles of evidence, drafting and pleadings, ethics and etiquette, litigation strategy
and mock tribunal etc. which seems very comprehensive.

I congratulate CA. Madhukar N. Hiregange, Chairman, CA. Sushil Kumar Goyal, Vice
Chairman and other members of the Committee for their efforts in bringing out this
highly useful publication. I am sure that the members, specifically those who are
involved in area of litigation in indirect taxes would find this material immensely useful.

I wish the readers wonderful learning experience.

Date: 24th August, 2016 CA. M. Devaraja Reddy

Place: New Delhi President, ICAI
 Preface
The reforms in the indirect tax regime have been continuously throwing up newer
challenges and opportunities for our members. It has now become imperative for the
members to continuously sharpen their skills as they are looked upon to assume a
leadership role in assessing and managing tax risks.
There is a need to skill and empower the members in the area of dispute prevention
and resolution. It has further decided to organise focused Course on Litigation
Management to help members in enhancing representational skill. This Background
Material is divided into nine segments covering introduction, principles of evidence,
drafting and pleadings, ethics and etiquette, litigation strategy and mock tribunal etc.
The material, in appendices, also provides selection of statutory provisions and
landmark decisions.
I am thankful to CA. M. Devaraja Reddy, President and CA. Nilesh Vikamsey, Vice-
President, ICAI for their guidance and encouragement to the initiatives of the Indirect
Taxes Committee. I must thank CA. A. Jatin Christopher, CA. Naveen Rajpurohit, Adv.
Naveen Kumar K S, CA. Deepak Kumar Jain and CA. Bhanu Murthy J S for preparing
of this material. I also complement and appreciate the Indirect Taxes Committee
secretariat for their proactive support.
I look forward to feedback from members for further improvements in it at idtc@icai.in
Welcome to an enjoyable learning.

Date: 24.08.2016 CA. Madhukar N. Hiregange

Place: New Delhi Chairman
Indirect Taxes Committee
 Index
Chapter I: Introduction 1
Chapter 2: General Principles 5
Chapter 3: Principles of Evidence 15
Chapter 4: Statutory Provisions 22
Chapter 5: Drafting and Pleadings 70
Chapter 6: Appearance 81
Chapter 7: Ethics and Etiquette 91
Chapter 8: Litigation Strategy 96
Chapter 9: Mock Tribunal and Logistics of the Course 104
Annexure A: Selection of Statutory Provisions 107
Annexure B: Landmark Decisions 111
 Chapter 1
Introduction

1. Introduction
The word ‘representation’, in the context of indirect tax litigation, would mean the act of
appearing in a client’s cause to offer explanation, information or defense in relation to
proceedings before the authorities or Tribunal.
Representation (discussed in detail later), is a legal right that upholds one’s right to personal
liberty which has beengranted to us by various statutes including taxation relatedstatutes, to
provide the client (the person represented) the benefit of professional assistance in presenting
his defense. But for the specific provisions in the taxing statutes permitting appearance
through a representative, the party or assessee has to appear in person, which may not be
very effective due to reasons like lack of knowledge of the subject, lack / absence of legal and
communication skills, inadequate time at disposal etc.

2. Importance
Representation in tax litigation proceedings before the authorities or Tribunal is an important
service which a CA can provide to his client. Having used the services of the CA in compliance
function, they would also look forward to assistance by the same CA in case of litigation later.
In fact, representation can also be a stand-alone assignment undertaken by a CA and he can
specialize in handling litigation matters upto the Tribunal level. If the matter advances to High
Court or Supreme Court, although a CA cannot legally represent the client, the CA can provide
valuable assistance to lawyers in handling the matters before such fora.

3. Opportunities for CAs

Conventionally, apart from audit and accounts functions, CAs have been practicing in the area
of Income tax for decades. For income tax purposes, a CA would provide various services
ranging from assisting the client in filing returns, advising on critical issues, assistance in
assessment, drafting and filing replies to notices and appeals and representing before
authorities and Tribunal. Majority of the litigation under income tax upto the Tribunal level
isbeing handled by CAs.
With changing economic scenario leading to increase in manufacturing and service activity
and widening of tax base under the service tax regime, the scope for CAs under indirect tax as
a whole has enlarged. The Institute of Chartered Accountants of India (i.e. ICAI) has been
making efforts to empower the CAs with knowledge of Indirect taxes covering Customs,
Central Excise, Service Tax and VAT, among others. In this regard, a certification course on
2 Background Material on Litigation Management

Indirect tax was introduced close to five years ago and has been conducted successfully
across the country. More recently, the certificate courses are being conducted with a
specialization in the field of indirect tax i.e. Certificate Course on Service Tax.
It is thus felt that CAs could have enormous opportunities in handling indirect tax litigation. In
general, CAs can provide assistance to their clients in the following areas:
(a) Assisting the client to prepare for departmental audit and due diligence audits.
(b) Advising the client during audit and investigation and assistance in clarifying the issues
raised by the audit/investigation team, preparation of statements/ reports to be
submitted to audit/ investigation team, preparation and submission of documents
requested by the department, drafting of letters, correspondence and reply to audit
observations.
(c) Advising the client on the course of action to be adopted i.e. whether to litigate or not on
the issues raised by the department in the course of audit/ investigation.
(d) Representing clients in adjudication proceedings by drafting reply to show cause notice,
submissions and attending hearings and post-hearing filing of submissions/evidence (if
needed).
(e) Representing clients in appellate proceedings before the first appellate authority or
Tribunal. The professional assistance would encompass drafting of appeal including
statement of facts and grounds and appearance before the authority or Tribunal.
(f) Support functions in (a) and (b) supra, by assisting the other Counsel (CA or Advocate)
in the above areas including preparation of notes and briefing other Counsel.
(g) Assisting Advocates in matters before the High Court/Supreme Court including in
understanding facts for preparation of grounds for appeal, counter, rejoinder and legal
research.

4. Historical background
If we go back in history then we have record of vakils appointed to represent others’causes
before the Courts and other Officers. The concept slowly developed and as the laws were
codified, specific provisions were introduced to provide for appearance / representation by
authorized representative holding prescribed qualifications.

5. Who can represent?

The relevant statutes contain specific provisions for representation by authorized
representatives, which have been elaborately dealt with later. Only if a CA is authorized by a
particular statute, he can act as an authorized representative in litigation proceedings and not
otherwise.

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Introduction 3

6. How to represent?
While representing before the Tribunal like CESTAT, there is a dress code prescribed which is
specifically dealt with later. There is no ‘right way’ of representing a case. There are various
skills and methods employed by an authorized representative while representing his client
before authorities and Tribunal. By experience, observation and thinking, each person
develops his own method of representation.

7. When to represent?
Representing a client in an investigation is neither generally permitted nor advisable, as the
representative becomes a witness. Attending summons on behalf of a client and giving
statements should be avoided, as the CA is not integrally involved in the operations of the
client, and as such, may not possess the required firsthand information and the expertise to
provide evidentiary statements.

8. Skills and knowledge required

(a) Knowledge of concerned tax laws is a sine quo non for effectively representing the
client in litigation.
(b) Knowledge of basic rules of evidence and administrative law isnecessary.
(c) Communication skills should be an area of strength.
(d) Law exists in language and hence, there is a need to develop both speakingand writing
skills. Knowledge of literature (legal and English) would enhance such skills.
(e) Knowing the case law developments relating to the concerned laws helps in keeping
abreast of current interpretations by Courts and Tribunal.

9. Ethics and integrity

Practice sans integrity and ethics brings disgrace not only to the profession but also harms the
society. Maintaining high standards of professional integrity and ethics is a must.

10. Different forms of representation

(a) Representation in adjudication proceedings: A CA is expected to provide assistance by
advising the client on the course of action to be adopted, drafting the reply to show
cause notice and additional submissions and entering appearance before the
adjudicating authority.
(b) Representation in appellate proceedings: A CA can render professional assistance by
drafting the appeal with statement of facts, grounds and prayer, and appearing before
the appellate authority or Tribunal and filing additional submissions, if any.

Indirect Taxes Committee

4 Background Material on Litigation Management

11. Conclusion
At this juncture, it would also be relevant to refer to the Constitution of India, which is the
supreme law of the country. Articles 14 and 21 of the Constitution have been interpreted by
the Courts to confer the right of being heard in any of the proceedings. In Maneka Gandhi v.
UoI 1978 AIR 597 (SC), the Hon’ble Supreme Court had interpreted these Articles and stated
that the right of being heard is part of the principles of natural justice and the procedure
established by law should be followed.

The Institute of Chartered Accountants of India

 Chapter 2
General Principles

1. Principles of natural justice

It warrants that the person, against whom an allegation is leveled or made, should be given a
reasonable opportunity of being heard before taking any action. In a tax proceeding, the
Officer is required to hear the other side before proposing any action and to do so, the said
person must be served a notice detailing the allegations and the basis on which certain
actions are proposed or compliance demanded.

2. Contents of notice
The notice should not be vague and should clearly spell out the charges against the noticee. It
should draw reference to the relevant statutory provisions that are allegedly contravened by
the noticee. This would enable the noticee to admit or rebut the allegations and charges
contained in the notice. Further the notice should be served on the person chargeable to tax.

3. Contents of order
The order should contain findings on the issues raised in the notice and contentions and
submissions made by the noticee. The order should specifically address the contentions urged
by the noticee including judicial decisions cited. The adjudicating authority should apply his
mind to the facts, issues, contentions urged by the noticee and evidence on record and reach
a finding which forms the substance of his responsibility before passing the order.

4. Hearing
Indirect tax laws specifically contain provisions for conduct of hearing. Hearing is mainly
granted to understand, in person, the contentions of the noticee and identify the reasons for
differences. If a personal appearance by the noticee or through Counsel aides in this exercise,
that must be facilitated. It is not an empty formality as it enables the noticee to place on record
his submissions (in oral or in writing) and to lead evidence and cite precedents. The process
of appeal is not concluded until the last forum hears the matter.

5. Duties/powers of investigating authority

The main intention of the investigating authority (DRI or Preventive Wing or DGCEI) is to
unearth certain facts and muster evidence to prove evasion of tax, if any. The investigating
authority has no powers to collect tax or compel the person, whose affairs are investigated, to
pay taxes. During the course of investigation, the authority may summon witnesses and record
6 Background Material on Litigation Management

statements, search the premises and seize documents. The information collected is thereafter
used as a basis to issue show cause notice and not to conclude the process of tax recovery
without giving the noticee the opportunity of being heard.
No administrative power can exist unsupervised. Any exercising authority having investigative
powers necessarily comes under the administrative supervision of a designated person who
has finite powers specified in law. Infinite powers or unspecified powers are both
impermissible. Administrative law is a salutary development in a society that operates on the
basis of ‘rule of law’. Restrictions in the powers of investigative authorities are not only
expressive but also implicit based on the purpose for which those powers have been
conferred. And no such power can be conferred by excluding judicial review.
Illustration 1: Service tax authorities visited the New Delhi branch premises of an assessee
and identified themselves as officers of the ‘audit wing’ of the tax department. They were
seeking some information about the business activities, details of taxable value of services,
service tax paid, etc., for the past five years. Assessee issued a copy of registration certificate
showing ‘centrallized’ registration at Bangalore HO and politely refused to provide any further
information. Officers were understandably taken aback and left. Assessee issued a letter to
the said officers with copy to Commissioner of ST, Bangalore referring to their visit and that no
other information other than RC copy was submitted. The matter concluded there because
having a centralized registration precludes every other office to exercise audit jurisdiction over
all branch offices.
Illustration 2: DGCEI authorities had visited the registered office of an assessee and had
soughtinformation about the business activities, details of taxable value of services, service
tax paid, etc., for the past five years. Assessee made note of the details required and asked
for some time to supply information that needed to be compiled and submitted (although new
reports or information not maintained need not be provided) but provided the audited financial
statements, half-yearly returns with working calculations and ledger extract of income
recognized, input credit and taxes paid. The officers worked out some tax liability and insisted
that some tax payment has to be made. The assessee politely expressed inability to make
payment at such short notice in a sudden inspection-led-demand. The officers left after making
their displeasure known. Assessee visited the office after a few days to submit the information
that was to be prepared. At that time, payment of tax (as computed by them) was discussed
and the same reply was given. After more than six months, a show cause notice was issued
which presently is pending adjudication and experts have advised that the issue raised is not
sustainable and there are favourable decisions passed by Tribunal.

6. Duties/powers of adjudicating authority

The adjudicating authority exercises quasi-judicial powers and is expected to act in a fair
manner while conducting adjudication proceedings. He is supposed to grant a reasonable

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General Principles 7

opportunity of being heard to the noticee. He conducts the hearing before passing the Order.
The adjudicating authority allows cross-examination of witnesses, if requested, by the noticee.
The adjudicator is expected to consider the facts, allegations, submissions and evidence in a
holistic manner and pass a speaking order. The proceedings culminate in an order fully or
partially accepting the submissions of the noticee or all the proposals in the notice may be
confirmed. The adjudicating authority cannot proceed beyond the parameters of the
allegations leveled in the notice and make out a new case against the noticee.

7. Duties/powers of first appellate authority

The first appellate authority (Deputy Commissioner, Joint Commissioner or Commissioner
(Appeals) as recognized under each law) is expected to look into the grounds of appeal and
pass a speaking order either accepting or rejecting the case made out by the Appellant. The
department also has the right to appeal before the first appellate authority. The first appellate
authority can permit submission of new grounds or evidence, if there is sufficient justification
for not producing it earlier. The first appellate authority hears the appeal and then proceeds to
pass an order. The procedure set out in the relevant Appellate Procedure Rules, such as,
Central Excise (Appeal) Rules, 2001, needs to be followed. Any delay in filing an appeal can
be condoned only up to a limited extent if sufficient reasonis shown.

8. Duties/powers of Tribunal
The Tribunal functions under the aegis of Ministry of Finance and has Benches at several
places. Matters are heard by the Division Bench (two members) or Single Member Bench. The
Tribunal has both Judicial Members and Technical Members. The Tribunal functions are
described as quasi-judicial functions. The procedures and manner of conduct of proceedings
are set out in the relevant Tribunal Procedure Rules, such as, CESTAT (Procedure) Rules,
2001. The Tribunal is the final ‘fact finding’ authority. Any delay in filing an appeal can be
condoned if sufficient cause is shown. The orders passed by the Tribunal are appealable
either before the High Court or Supreme Court.

9. Reference to IPC provisions

At this juncture, it would be relevant to refer to certain provisions of the IPC with respect to
matters involving interaction with public servants to understand offences against public
servants or offences by public servants. It may be noted that avoiding summons or obstructing
public servants in discharging their duties would invite punitive consequences including
imprisonment as stated in the table below. Further, the officers conducting adjudication or
investigative functions can be liable for punishment if they act beyond the scope of powers
conferred on them.

Indirect Taxes Committee

8 Background Material on Litigation Management

Section Description of Offence Punishment

166 Public servant disobeying law Simple imprisonment for a term up to one year, or
with intent to cause injury to with fine, or with both.
any person Illustration 3: Quite often we find excesses
committed by Tax Officers, who act according to
their whims and fancy. Such excesses, if proved
to be not done in good faith, can be punished.
167 Public servant framing an Imprisonment of either description for a term up to
incorrect document with intent three years, or with fine, or with both.
to cause injury Illustration 4: During the course of investigation if
the tax officer frames an incorrect document with
a view to implicating a tax payer, then this
provision may be invoked.
169 Public servant unlawfully Simple imprisonment upto two years, or with fine,
buying or bidding for property or both and the property, if purchased, shall be
confiscated.
Illustration 5: A property is auctioned and there is
a condition that the officer should not buy it
directly or indirectly. In case of breach, this
provision can be invoked.
170 Impersonating a public Imprisonment of either description for a term upto
servant two years, or with fine, or both.
Illustration 6: If aperson poses himself as a tax
officer or impersonates asofficer, he would be
punished under this section.
171 Wearing garb or carrying Imprisonment of either description, for a term upto
token used by public servant three months, or with fine upto Rs.200 or with
with fraudulent intent both.
Illustration 7: A person wears a garb of a CE or
Customs Officer or carries some token which
makes others believe that he is such an officer,
would be punishable

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General Principles 9

Section Description of Offence Punishment

172 Absconding to avoid service of Simple imprisonment upto one month, or with fine
summons or other proceeding upto Rs.500 or with both. If it relates to Court of
Justice, with simple imprisonment upto six
months, or with fine upto Rs.1000, or with both.
Illustration 8: An evader of tax or a person who
has vital information about a tax case, who
absconds to avoid service of summons etc., would
be punished under this section.
173 Preventing service of Simple imprisonment upto one month, or with fine
summons or other proceeding, upto Rs.500 or with both. If it relates to Court of
or preventing publication Justice, with simple imprisonment upto six
thereof months, or with fine upto Rs.1000, or with both.
Illustration 9: A person prevents in any manner
service of summons or prevents its publication
would be punished.
174 Non-attendance in obedience Simple imprisonment up to one month, or with fine
to an order from public servant up to Rs.500 or with both. If it relates to Court of
Justice, with simple imprisonment up to six
months, or with fine up to Rs.1000, or with both.
Illustration 10: A tax officer issues an order or
summons to someone to appear before him and if
such person does not respond, he can be
punished.
175 Omission to produce Simple imprisonment up to one month, or with fine
document to public servant by up to Rs.500 or with both. If it relates to Court of
person legally bound to Justice, with simple imprisonment up to six
produce it months, or with fine up to Rs.1000, or with both.
Illustration 11: An assessee cannot refuse or omit
to provide documents to the tax officer. Doing
otherwise would invite punishment under this
section.
177 Furnishing false information Simple imprisonment up to six months, or with
fine up to Rs.1000, or with both. If it relates to
Court of Justice, with simple imprisonment up to
two years, or with fine, or with both.
Illustration 12: During any proceedings or
investigation if a person gives false information to
a public servant then this section can be invoked.

Indirect Taxes Committee

10 Background Material on Litigation Management

Section Description of Offence Punishment

178 Refusing oath or affirmation Simple imprisonment up to six months, or with
when duly required by public fine up to Rs.1000, or with both.
servant to make it Illustration 13: This can be invoked while
recording statements of witnesses.
179 Refusing to answer public Simple imprisonment up to six months, or with
servant authorized to question fine up to Rs.1000, or with both.
Illustration 14: Questions posed during recording
of statements should be answered. Refusing to
answer is an offence.
180 Refusing to sign statement Simple imprisonment up to three months, or with
fine up to Rs.500, or with both.
Illustration 15: After recording statement if a
person refuses to sign it, this provision could be
invoked.
181 False statement on oath or Imprisonment of either description for a term up to
affirmation to public servant or three years and fine.
person authorized to Illustration 16: Statement may be recorded during
administer an oath or investigation. If a false statement is made then
affirmation this provision can be invoked.
182 False information, with intent Simple imprisonment up to six months, or with
to cause public servant to use fine up to Rs.1000, or with both.
his lawful power to the injury Illustration 17: A competitor may give false
of another person information to a tax officer against another
businessman, which may be used in tax
proceedings. This is an offence.
183 Resistance to the taking of Imprisonment of either description up to six
property by lawful authority of months, or with fine up to Rs.1000, or with both.
a public servant Illustration 18: While seizing a property or when
recovery proceedings are initiated by a tax officer
any resistance by the tax payer/assessee not
within the framework of law would attract this
provision.

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General Principles 11

Section Description of Offence Punishment

186 Obstructing public servant in Imprisonment of either description up to three
discharge of public functions months, or with fine up to Rs.500, or both.
Illustration 19: Tax officers are public servants
and while discharging their functions, no person
could obstruct them. Otherwise it is would invite
punishment under this section.
189 Threat of injury to public Imprisonment of either description up to two
servant years, or with fine, or with both.
Illustration 20: Any threat of injury to a tax officer,
while discharging his duties would be a
punishable offence.
191-193 Giving or fabricating false If it is relating to judicial proceedings –
evidence imprisonment of either description for a term up to
seven years with fine. In any other case -
imprisonment of either description for a term up to
three years with fine
Illustration 21: Giving or fabricating false evidence
at any stage of the tax proceedings is an offence.
195A Threatening any person to Imprisonment of either description for a term up to
give false evidence seven years or fine or both.
Illustration 22: Similarly, if any other person (e.g.
Employee) is threatened to give false evidence,
that also is an offence.
196 Using evidence known to be If it is relating to judicial proceedings –
false imprisonment of either description for a term up to
seven years with fine. In any other case -
imprisonment of either description for a term up to
three years with fine
Illustration 23: Using any evidence in tax
proceedings, which the noticee knows to be false
is an offence.

Indirect Taxes Committee

12 Background Material on Litigation Management

Section Description of Offence Punishment

197 Issuing or signing false If it is relating to judicial proceedings –
certificate imprisonment of either description for a term up to
seven years with fine. In any other case -
imprisonment of either description for a term up to
three years with fine
Illustration 24: Even a CA giving certificate may
be covered under this section, if it turns out to be
false. This is in addition to any disciplinary action
taken by the Institute.
198 Using as true a certificate If it is relating to judicial proceedings –
known to be false imprisonment of either description for a term up to
seven years with fine. In any other case -
imprisonment of either description for a term up to
three years with fine
Illustration 25: Even the client who uses such
false certificate knowingly would be guilty.
204 Destruction of document to Imprisonment of either description up to two
prevent its production as years, or with fine, or with both.
evidence Illustration 26: Destroying any incriminating
documents like books of accounts, vouchers etc.,
to prevent its production as evidence in any tax
proceedings, is an offence.
228 Intentional insult or Simple imprisonment up to six months, or with
interruption to public servant fine up to Rs.1000, or with both.
sitting in judicial proceeding Illustration 27: An authority conducting hearing is
intentionally insulted or interrupted by a CA, can
be punished under this section.

Illustration 28: Central Excise authorities issued summons to Director of a Company and
raised questions about levy of duty on certain transactions and after explaining the provisions
put the question to the Director ‘Do you accept that duty is payable on the …… transaction?’ –
To this, the Director replied ‘I do not know the law so well as I am an Engineer.As such, I am
in no position to express an opinion about the levy of duty’. It is the right answer because ‘I do
not know’ is factually accurate because a Director of Company is not competent to reach a
conclusion about the levy and is only required to ensure that competent people are appointed
to attend to such matters in the Company.

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General Principles 13

10. Legal Maxims

There are many legal maxims, which are commonly used, some of which are discussed in
brief:
(a) ActioPersonalisMoritur Cum Persona – A personal right of action dies with the person.
(b) Actus Curiae NeminemGravabit – An Act of the Court shall prejudice no man.
(c) Actus Non Facit Nisi Mens Sit Rea – Action should be accompanied by guilty mind.
(d) AllegansContraria Non EstAudiendus – He is not to be heard who alleges things
contradictory to each other.
(e) Audi Alterem Partem – No man shall be condemned unheard.
(f) ContemporaneaExpositioEst Optima Et Fortissimo In Lege – Contemporaneous
exposition or interpretation is regarded in law as the best and strongest.
(g) Cuilibet in Sua Arte PeritoEst Credendum – Credence should be given to one skilled in
his peculiar profession.
(h) De Minimis Non Curat Lex – The law does not concern itself with trifles.
(i) Ejusdem Generis – Of the same class, or kind.
(j) GeneraliaSpecialibus non derogant – General things do not derogate special things.
(k) Falsus in Uno Falsus in Omnibus – False in one aspect is false in all respects.
(l) IgnorantiaFactiExcusat – Ignorantia Juris Non Excusat – Ignorance of facts may be
excused but not ignorance of law.
(m) LegesPosterioresPrioresContrariasAbrogant – Later laws repeal earlier laws
inconsistent therewith.
(n) Lex Non Cogit Ad Impossiblia – The law does not compel a person to do that which he
cannot possibly perform.
(o) Nemo DebetEsseJudex in PropriaSua Causa – No man can be judge in his own case.
(p) Nemo DebetBisVexari Pro Una EtEadem Causa – A man shall not be vexed twice for
one and the same cause.
(q) Noscitur a Sociis – The meaning of a doubtful word may be ascertained by reference to
the meaning of words associated with it.
(r) Nova ConstitutioFuturisFormamImponereDebet, Non Praeteritis – A new law ought to
be prospective and not retrospective, in operation.
(s) NullusCommodumCaperePotest De Injuria SuaPropria – No man can take advantage of
his own wrong.
(t) Res Ipsa Loquitur – The thing speaks for itself.

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14 Background Material on Litigation Management

(u) Ubi Jus IbiRemedium – There is no wrong without a remedy.

(v) Vigilantibus Non-Dormientibus Jura Sub Venient – Law aids the vigilant and not the
dormant.
Note: There are many legal maxims, which are quite often used in any proceedings. The
above is only an illustrative list of a few important maxims. The participants are encouraged to
read and understand more such maxims from authoritative texts and judicial decisions and use
themin appropriate proceedings.
These legal maxims are a concise representation of legal principles that have guided judicial
thought for centuries. Undertaking a study ofthese legal maxims helps CAs to recognize the
role, relevant and authority including the boundaries thereof of the tax administration. There is
no room for fear when we recognize that the State, as much as the assessee / appellant , are
bound to operate within the four corners of the law and its implementation is limited by an
equitable procedure contain in law.

The Institute of Chartered Accountants of India

 Chapter 3
Principles of Evidence

1. Evidence
Evidence in the popular sense means “that by which facts are established to the satisfaction of
person enquiring”.

2. Importance under tax litigation

Litigation under indirect tax may be on account of dispute of exigibility to tax of a particular
transaction or dispute relating to claim of exemption or claim of credit of duty or tax paid.
At any stage i.e. during audit / investigation or adjudication or at appellate stage, claim for
non-taxability or for exemption, etc., must be supported with verifiable proof. Such proof in
simple language could be termed as evidence.
Illustration 29: Where a service provider claims that his services qualify as exports, he may
substantiate this claim by proving the following:
Facts Probable documents to be produced
The recipient of service is Agreement with the service recipient, his usual place of
located outside India residence and invoice would prove such fact
Place of provision of Place of provision of service depends on the nature of service
service is outside India: and hence documents shall show the nature of service and
explain as to why such services fall under a specific rule.
Receipt of consideration in Produce Foreign Inward Remittance certificate (FIRC) or Bank
foreign currency: realisation certificate (BRC) duly certified by the Bank
Provider and recipient of Invoice / contract/agreement may prove this fact.
service are two distinct
entities:
Meaning of Fact, Relevant Fact and Facts-in-Issue:
(a) “Fact” means and includes—
(1) anything, state of things, or relation of things, capable of being perceived by the
senses;
(2) any mental condition of which any person is conscious.
Illustration 30:
(a) That there are certain objects arranged in a certain order in a certain place, is a
fact.
16 Background Material on Litigation Management

(b) That a man heard or saw something, is a fact.

(c) That a man said certain words, is a fact.
(d) That a man holds a certain opinion, has a certain intention, acts in good faith, or
fraudulently uses a particular word in a particular sense, or is or was at a
specified time conscious of a particular sensation, is a fact.
(e) That a man has a certain reputation, is a fact

(b) “Relevant Fact” – One fact is said to be relevant to another when the one is connected
with the other in any of the ways referred to in the provisions of this Act relating to the
relevancy of facts
(c) “Facts in issue”. —The expression “facts in issue” means and includes—
any fact from which, either by itself or in connection with other facts, the existence, non-
existence, nature, or extent of any right, liability, or disability, asserted or denied in any suit or
proceeding, necessarily follows.
Explanation —Whenever, under the provisions of the law for the time being in force relating to
Civil Procedure, any Court records an issue of fact, the fact to be asserted or denied in the
answer to such issue is a fact in issue.
Illustration 31:
A is accused of the murder of B.
At his trial the following facts may be in issue:—
That A caused B’s death;
That A intended to cause B’s death;
That A had received grave and sudden provocation from B;
That A, at the time of doing the act which caused B’s death, was, by reason of unsoundness of
mind, incapable of knowing its nature.
Illustration 32:
There is an allegation that the XYZ Pvt. Ltd. engaged in construction activity has not paid
service tax on certain constructions undertaken by them. XYZ claims the said transaction
relates to construction of a building meant for religious use for a trust and is exempt from
service tax:
Facts Relevant Fact Facts in Issue
XYZ is a private limited Trust Deed / registration There is an entry in the
company certificate of the trust to notification exempting such
whom construction is transaction
undertaken

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Principles of Evidence 17

XYZ is engaged in the activity Registration certificate The entity to whom service is
of construction of buildings or issued by Income tax provided is a trust registered
civil structure department under section under 12AA of Income Tax
12AA Act
XYZ is paying service tax on Plan sanctioned by the local The building is meant for
its activities authority to construct the religious purposes
particular building
XYZ has not paid service tax
certain specified transaction

Definition evidence and its types:

“Evidence” means and includes—
(1) all statements which the Court permits or requires to be made before it by witnesses, in
relation to matters of fact under inquiry;
such statements are called oral evidence;
(2) all documents including electronic records produced for the inspection of the Court;
Such documents are called documentary evidence:
Indian Evidence Act, 1872 categorizes evidences into two types, oral evidence and
documentary evidences. Oral evidence means statements made before court by a witness in
relation to matters of fact. Documentary evidence means all documents produced for
inspection of the court. The documentary evidences include electronic records.
“Documents” means any matter expressed of described upon any substance by means of
letters, figures or marks, or by more than one of those means, intended to be used, or which
may be used, for the purpose of recording that matter.
Illustrations 33: (of documents as given in Indian Evidence Act, 1872)
A writing is a document;
Words printed, lithographed or photographed are documents;
A map or plan is a document;
An inscription on a metal plate or stone is a document;
A caricature is a document.

3. Cursory glance of provisions of the Indian Evidence Act, 1897

There are three parts in Evidence Act. All evidence shall pass through above three stages,
namely:
(a) Part I: To consider any matter or thing relevant, it must be en suite in the frame of
PART-I i.e. section 5 to 55.

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18 Background Material on Litigation Management

(b) Part II: Part II covering sections 56 to 100 provides as to what facts to be proved and
facts which need not be proved. Further, it also provides for the manner in which the facts are
to be proved.
(c) Part III: Remaining provisions i.e. Section 101 to 167 deals with burden of proof,
estoppels and provisions relating to witness.

4. Relevance of Electronic Records

With advancement of technology, the Evidence Act has been amended to recognize electronic
records also as evidences. Electronic records have been defined in Section 2(t) of Information
Technology Act, 2000 to mean, “data, record or data generated, image or sound stored,
received or sent in an electronic form or micro film or computer generated micro fiche”.
It shall be noted that Section 65A and 65B of the Indian Evidence Act provides that -
notwithstanding any of the provisions of the said Act, electronic record would be admissible as
evidence subject to certain conditions as placed under section 65B.
Further, the Evidence Act also provides for manner of verification of digital signature,
presumptions as to electronic agreements, electronic gazette, etc.

5. Burden of Proof
‘Burden of proof’ is a duty placed upon a person to prove or disprove a disputed fact. In terms
of Section 101 of the Evidence Act, person who desires any Court to give judgment as to any
legal right or liability on the basis of the existence of the facts to which he asserts, must prove
that those facts exist. When a person is bound to prove the existence of any fact, it is said that
the burden of proof lies on that person.
Burden to prove a particular fact is always on the person who alleges. However, once such
burden is discharged, the onus then shits to the other party. In A Raghavamma v. A
Chenchamma, AIR 1964 SC 136 – para 15, it was said that the burden of proof lies upon a
person who has to prove the fact and which never shifts. Onus of proof shifts, which is a
continuous process in the evaluation of evidence. In our opinion, in a suit for possession
based on title once the plaintiff has been able to create a high degree of probability so as to
shift the onus on the defendant, it is for the defendant to discharge his onus and in the
absence thereof the burden of proof lying on the plaintiff shall be held to have been
discharged so as to amount to proof of the plaintiff's title.
Under tax litigation, in the issues of classification of goods / services, the burden to prove that
the classification adopted by the assessee is wrong is always on the department. Similarly,
where the department alleges fraud, misrepresentation or existence of mens rea (culpable
state of mind) intention to evade for invoking extended period or imposing penalties, it is the
department whichhas to prove.
On the contrary, where it comes to claim for an exemption, the burden is on the assessee to
prove as to why and how he is eligible for exemption. However, once the same is proved by
the assessee, the onus then shifts to the department to disprove the same.

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Principles of Evidence 19

It shall be noted that, merely because the burden of proof is on the department, it does not
mean the assessee need not provide the evidences to support his case. Supplying of sufficient
evidence would support the case and the deciding authority, whether at the stage of
adjudication or appellate or Tribunal, would be able to appreciate and pass orders judiciously.

6. Degree of Proof
Degree of proof is that extent to which the fact shall have to be proved. It shall be noted that
under criminal matters, the proof shall be beyond reasonable doubt but the Tribunals have
held that in adjudicating proceedings, such degree of proof is not necessary. The adjudication
proceedings are to be determined on the facts and circumstances available in the particular
case. [Refer Kashi Prasad Saraff Vs. CC, 1993 (66) E.L.T. 409 (Trib.)]

7. Timing of Evidence
The assessee shall have to provide evidences supporting his contentions right from the stage
of investigation. However, providing of evidences at the stage of adjudication proceeding in
relation to show cause notice is very important and in terms of the rules governing appeal
procedures, new evidences may be rejected by appellate authority or Tribunal. (Refer Rule 5
of Central Excise (Appeal) Rules, 2001).
Illustration 34: Type and nature of evidence to be produced depends on nature of the dispute
and cannot be generalized. However, the following table illustrates the evidences that could
be produced for the nature of dispute listed therein.
Dispute on clandestine removal - Quantitative analysis of purchase and sale
goods from factory - Electricity consumption
- Bank statements to show receipts from customers and
payments to vendors.
Dispute on classification of Description of the goods
goods Chemical composition of goods
Technical literature about the goods
Dispute on classification of Explanation about the nature of activities.
services Agreement with the customer which details the scope of
services
Eligibility to cenvat credit Copy of the invoice/bill on the basis of which credit is
availed.
Explanation as to usage of the said input or input service
Short payment / Non-payment Provide copy of challans / provide copy of the extract of
of tax or duty (which is already cenvat register if paid by utilizing cenvat
paid but not considered by the
department)

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20 Background Material on Litigation Management

8. Expert Advice
Section 45 of Evidence Act provides that when the Court has to form an opinion on a point of
foreign law, or of science, or art, or has to identity hand writing or finger-impressions, the
opinions of persons specially skilled in such foreign law, science or art, or in identification of
handwriting or finger impressions are relevant.
Under tax litigation, opinions of experts may be relevant on the composition of goods
manufactured or imported for the purpose of classification of goods.
Further, such expert opinion would be relevant to defend the case where the assessee has
taken certain legal positions based on the expert opinions.

9. Admission to certain facts in the statement or during

investigations
Where facts are admitted by the assessee either during investigations or during recording of
statement by the central excise authorities, then such facts need not be proved by the
department. (Refer Sec. 58 of Indian Evidence Act)
However, where the admission was under coercion or fraud or through misrepresentation,
then in such cases, the admission itself could be disputed and for the same, the assessee
must provide evidence to the effect there was a coercion or misrepresentation.

10. Privileged Communication

It shall be noted that in terms of Section 126 of Evidence Act, no barrister, attorney, pleader or
vakil, shall at any time be permitted, unless with his client’s express consent, to disclose any
communication made to him in the course and for the purpose of his employment as such
barrister, pleader, attorney or vakil, by or on behalf of his client, or to state the contents or
condition of any document with which he has become acquainted in the course and for the
purpose of his professional employment or to disclose any advice given by him to his client in
the course and for the purpose of such employment.
Further, Section 127 provides that provisions of Section 126 above shall equally be applicable
to interpreters, and the clerks or servants of barristers, pleaders, attorneys and vakils.
Similarly Section 129 provides that no one shall be compelled to disclose to the Court any
confidential communication which has taken place between him and his legal professional
adviser, unless he offers himself as a witness; in which case he may be compelled to disclose
any such communication as may appear to the Court necessary to be known in order to
explain any evidence which he has given, but not others.
It shall be noted that the above privilege would not apply to communications leading to illegal
activity or committing a fraud, etc.
Coming to the professional communications between CA and his client, the professional ethics
issued by the Institute of Chartered Accountant provides for non- disclosure of information of

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Principles of Evidence 21

the client obtained during his professional appointment. The disclosure of information of client
obtained during professional appointment is a misconduct as held by High Court in the case of
Council of Institute of CA Vs. Mani S Abraham, AIR 2000 Ker 2012.
However, the question that arises is whether communication between a CA and his client,
whom a CA is representing in tax litigation would fall under Section 126/127/129 of Evidence
Act. It is possible that CA could well fit in the ambit of ‘pleader’ which is defined to mean as
below under CPC and CrPC.
Section 2 (15) of CPC: "pleader" means any person entitled to appear and plead for another in
Court, and includes an advocate, a vakil and an attorney of a High Court
Section 2(q) of CrPC: "pleader", when used with reference to any proceeding in any Court,
means a person authorised by or under any law for the time being in force, to practice in such
Court, and includes any other appointed with the permission of the Court to act in such
proceeding.
It may be noted that since appearance by a chartered accountant before any adjudicating or
the appellate authority or the Tribunal would not be as appearance before any “court”,
immunity under Sections 126 or 127 would not be available to the communications between
the said Chartered Accountant and his client.
Apart from the above, the communications between CA and his client in relation to rendering
legal advice could fall under Section 129

11. Affidavits
Affidavits are written statement of facts voluntarily made by an affiant under an oath or
affirmation administered by a person authorized to do so by law.
Affidavits shall be confined to such facts as the deponent is able to prove on his own account.
Affidavit shall contain facts and grounds and not inferences or submissions.
There are conflicting views on the aspect whether affidavits, in themselves, are an evidence in
the court of law. (Source: Order XIX CPC)

12. Application of CPC to Central excise / Service tax issues

Section 14 of Central Excise Act, 1944 which grants powers to the Central Excise officer to
summon a person and record his statement, provides that exemption from personal
appearance given to certain persons under Civil Procedure Code would equally apply to the
appearance under this section.
The provisions relating to non-cognizable offence(Sec.9A of Central Excise Act, 1944), power
to arrest, power to Search and seizure, enquiry of arrested persons, would refer to the
provisions of Code of Criminal procedure.
Therefore, while dealing with such provisions or issues, the respective provisions under Code
of Criminal Procedure 1908 shall also be examined.

Indirect Taxes Committee

 Chapter 4
Statutory Provisions

1. Introduction
An appeal is judicial examination of an inferior court by a higher forum. An appeal is an
application to reverse, vary or set aside the judgment or decision or award of an inferior court
on the ground that it is wrongly decided or that as a matter of justice or law it requires to be
corrected. – Halsbury’s Laws of England – quoted in Maruti Udyog Ltd vs ITAT (2001) 117
Taxman 122 (Del. HC-DB).
Right to appeal is neither a natural right nor an inherent right. It does not exist unless
expressly conferred by statute. –Vijay Prakash D Mehta v. CC (72 STC 324). Hence, it is
important to be mindful of the express nature of the right to appeal conferred by the statute.
Excise, Customs and Finance Act have made elaborate provisions for appeals against
adjudication orders passed by excise / customs / service tax authorities. There is only one
appeal in case of orders of Commissioner, which in case of other orders (i.e., orders of
Superintendent, Assistant Commissioner, Deputy Commissionerr etc.,), first appeal is with
Commissioner (Appeals) and other with Tribunal. In some matters, revision matters application
lies with Government against order of Commissioner and Commissioner (Appeals).
In this chapter the relevant provisions relating to appeal and CESTAT procedures that one
needs follow havebeen dealt.

2. Provisions of Appeal
Recovery of sums due to Government
Particulars Service tax Excise Customs
Section 87 11 142
Amount Any amount payable by a person to the credit of the Central
Government under any of the provisions of the Act or of the rules
made thereunder.
By whom Concerned Central Excise Officer or Customs Officer upon required
authorisation from Principal Commissioner or Commissioner.
Mode of recovery 1. May deduct or may require any other Central Excise Officer or
any officer of customs to deduct the amount so payable from any
money owing to such person which may be under the control of the
said Central Excise Officer or any officer of customs.
2. May, by notice in writing, require any other person from whom
money is due or may become due to such person, or who holds or
Statutory Provisions 23

may subsequently hold money for or on account of such person, to

pay to the credit of the Central Government either forthwith upon the
money becoming due or being held or at or within the time specified
in the notice, not being before the money becomes due or is held, so
much of the money as is sufficient to pay the amount due from such
person or the whole of the money when it is equal to or less than
that amount;
a. Every person to whom a notice is issued under this section shall
be bound to comply with such notice, and in particular, where any
such notice is issued to a post office, banking company or an
insurer, it shall not be necessary to produce any pass book, deposit
receipt, policy or any other document for the purpose of any entry,
endorsement or the like being made before payment is made,
notwithstanding any rule, practice or requirement to the contrary. In
a case where the person to whom a notice under this section is sent,
fails to make the payment in pursuance thereof to the Central
Government, he shall be deemed to be an assessee in default in
respect of the amount specified in the notice
3. May distrain any movable or immovable property belonging to or
under the control of such person, and detain the same until the
amount payable is paid; and in case, any part of the said amount
payable or of the cost of the distress or keeping of the property,
remains unpaid for a period of thirty days next after any such
distress, may cause the said property to be sold and with the
proceeds of such sale, may satisfy the amount payable and the
costs including cost of sale remaining unpaid and shall render the
surplus amount, if any, to such person.
4. May prepare a certificate signed by him specifying the amount
due from such person and send it to the Collector of the district in
which such person owns any property or resides or carries on his
business and the said Collector, on receipt of such certificate, shall
proceed to recover from such person the amount specified
thereunder as if it were an arrear of land revenue.
In case of transfer (or Where the person (hereinafter referred to as predecessor) from
otherwise) of business whom the tax /duty or any other sums of any kind, is recoverable or
due, transfers or otherwise disposes of his business or trade in
whole or in part, or effects any change in the ownership thereof, in
consequence of which he is succeeded in such business or trade by
any other person, all goods (like materials, preparations, plants,
machineries, vessels, utensils, implements and articles), in the
custody or possession of the person so succeeding may also be

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24 Background Material on Litigation Management

attached and sold by such officer empowered by the Central Board

of Excise and Customs, after obtaining the written approval of the
Principal Commissioner of Central Excise or Commissioner of
Central Excise, for the purposes of recovering such tax /duty or other
sums recoverable or due from such predecessor at the time of such
transfer or otherwise disposal or change.
2.1 Recovery of dues not-levied or not-paid or short-levied or short-paid or
erroneously refunded
Particulars Service tax Excise Customs
Section 73 11A 28
By whom Concerned Central Excise Officer or Customs Officer.
Notice Serve notice on the person chargeable with the tax / duty which
has not been so levied or paid or which has been so short-
levied or short-paid or to whom the refund has erroneously
been made, requiring him to show cause why he should not pay
the amount (including penalty, if any) specified in the notice
Cases not Period Thirty months Two year from the Two year from the
involving from the relevant relevant date relevant date
fraud, date
collusion, Procedure 1. The person chargeable with tax / duty may, before
wilful service of notice, pay on the basis of-
misstatements
(i) his own ascertainment of such tax / duty; or
or
suppression (ii) the tax / duty ascertained by the Concerned Officer, the
of facts to amount of tax / duty along with interest payable thereon
evade the 2. The person who has paid the tax / duty as above, shall
payment of inform the Concerned Officer of such payment in writing, who,
tax / duty on receipt of such information, shall not serve any notice in
respect of the tax / duty so paid or any penalty leviable under
the provisions of this Act or the rules made thereunder.
3. Where the Concerned Officer is of the opinion that the
amount paid falls short of the amount actually payable, then, he
shall proceed to issue the notice in respect of such amount
which falls short of the amount actually payable in the manner
specified and the period of one year shall be computed from the
date of receipt of information.
4. The Concerned Officer shall, after allowing the
concerned person an opportunity of being heard, and after
considering the representation, if any, made by such person,

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Statutory Provisions 25

determine the amount of tax / duty of excise due from such

person not being in excess of the amount specified in the
notice.
5. Where an order determining the tax / duty of excise is
passed by the Concerned Officer under this section, the person
liable to pay the said tax / duty of excise shall pay the amount
so determined along with the interest due on such amount
whether or not the amount of interest is specified separately.
Time For Within six months from the date of notice, where it is possible to
completion do so.
Cases Period Five years from Five years from the Five years from the
involving the relevant date relevant date relevant date
fraud,
Procedure 1. Any person chargeable with tax / duty may, before
collusion,
service of show cause notice on him, pay the tax / duty in full or
wilful
in part, as may be accepted by him along with the interest
misstatements
payable thereon and penalty as applicable, and inform the
or
Concerned Officer of such payment in writing.
suppression
of facts to (i) The Concerned Officer, on receipt of information shall-not
evade the serve any notice in respect of the amount so paid and all
payment of proceedings in respect of the said tax / duty shall be
tax / duty deemed to be concluded where it is found by the
Concerned Officer that the amount of tax / duty, interest
and penalty has been fully paid
(ii) proceed for recovery of such amount, if found to be short-
paid, in the manner specified and the period of one year
shall be computed from the date of receipt of such
information.
2. The Concerned Officer shall, after allowing the
concerned person an opportunity of being heard, and after
considering the representation, if any, made by such person,
determine the amount of tax / duty of excise due from such
person not being in excess of the amount specified in the
notice.
3. Where an order determining the tax / duty of excise is
passed by the Concerned Officer under this section, the person
liable to pay the said tax / duty of excise shall pay the amount
so determined along with the interest due on such amount
whether or not the amount of interest is specified separately.

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26 Background Material on Litigation Management

4. Where during the course of any audit, investigation or

verification, it is found that any tax / duty has not been levied or
paid or has been short-levied or short-paid or erroneously
refunded for the reason of fraud etc., but the details relating to
the transactions are available in the specified records, then in
such cases, the Concerned Officer shall within a period of five
years from the relevant date, serve a notice on the person
chargeable with the tax / duty requiring him to show cause why
he should not pay the amount specified in the notice along with
interest and penalty.
Time Within one year from the date of notice, where it is possible to
For do so.
completion
Further notice(s) The Concerned Officer may, serve, subsequent to any notice or
notices served, as the case may be, a statement, containing the
details of tax / duty not levied or paid or short-levied or short-
paid or erroneously refunded for the subsequent period, on the
person chargeable, then, service of such statement shall be
deemed to be service of notice on such person, subject to the
condition that the grounds relied upon for the subsequent
period are the same as are mentioned in the earlier notice or
notices.
Relevant date 1. Where no periodical return has been filed - the last date
on which such return is required to be filed.
2. Where the return has been filed on due date - the date on
which such return has been filed.
3. In any other case - the date on which tax / duty is
required to be paid under the Act or the rules made
thereunder.
4. In a case where Customs duty is not levied, or interest is
not charged - the date on which the proper officer makes
an order for the clearance of goods.
5. In a case where tax / duty of excise is provisionally
assessed - the date of adjustment of tax / duty after the
final assessment thereof.
6. In the case of erroneous refund of tax / duty - the date of
such refund.

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Statutory Provisions 27

2.2 Power of Adjudication and Adjudication procedure.

Particulars Service tax Excise Customs
Section 83A / 33A of CEA, 1944. 33 / 33A 122 / 122A
Power Where under the Act or Where anything is liable In every case in which
the rules made to confiscation or any anything is liable to
thereunder any person is person is liable to a confiscation or any
liable to a penalty, such penalty, such person is liable to a
penalty may be adjudged confiscation or penalty penalty, such
by the Central Excise may be adjudged- confiscation or penalty
Officer conferred with 1. without limit, by may be adjudged, -
such power as the Commissioner of Central 1. without limit, by
Central Board of Excise Excise; a Principal
and Customs may, by 2. up to confiscation Commissioner of
notification in the Official of goods not exceeding Customs or
Gazette, specify. five hundred rupees in Commissioner of
value and imposition of Customs or aJoint
penalty not exceeding Commissioner of
two hundred and fifty Customs;
rupees, by anAssistant 2. where the value
Commissioner of Central of the goods liable to
Excise or Deputy confiscation does not
Commissioner of Central exceed five lakh rupees,
Excise. by an Assistant
Commissioner of
Customs or Deputy
Commissioner of
Customs;
3. where the value
of the goods liable to
confiscation does not
exceedfifty
thousand rupees, by a
Gazetted Officer of
Customs lower in rank
than anAssistant
Commissioner of
Customs.
Procedure The Adjudicating authority shall, in any proceeding under the provisions of this
Act, give an opportunity of being heard to a party in a proceeding, if the party so
desires.

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28 Background Material on Litigation Management

The Adjudicating authority may, if sufficient cause is shown, at any stage of

proceeding, grant time, from time to time, to the parties or any of them and
adjourn the hearing for reasons to be recorded in writing. (No such adjournment
shall be granted more than three times to a party during the proceeding)

2.3 Power to issue summons.

Particulars Service tax Excise Customs
Section 14 of CEA, 1944. 14 108
By whom Central Excise Officer Gazetted Officer of
Customs
Power Shall have power to summon any person whose attendance he considers
necessary either to give evidence or to produce a document or any other thing
in any inquiry which such officer is making for any of the purposes of this Act. A
summons to produce documents or other things may be for the production of
certain specified documents or things or for the production of all documents or
things of a certain description in the possession or under the control of the
persons summoned.
Duty of the All persons so summoned shall be bound to attend, either in person or by an
person authorised agent, as such officer may direct; and all persons so summoned
shall be bound to state the truth upon any subject respecting which they are
examined or make statements and to produce such documents and other things
as may be required.
2.4 Provisional attachment to protect the revenue.
Particulars Service tax Excise Customs
Section 73C 11DDA 28BA
By whom Central Excise Officer Gazetted Officer of
Customs
Prior Commissioner of Central Principal Commissioner Principal Commissioner
approval Excise of Central Excise or of Customs or
Commissioner of Central Commissioner of
Excise Customs
Power For the purpose of protecting the interest of revenue, if it is necessary so to do,
the concerned officer may, with the previous approval as required, by order in
writing, attach provisionally any property belonging to the person on whom
notice is served in accordance with the rules made in this behalf.
Time limit Provisional attachment shall cease to have effect after the expiry of a period of
six months from the date of the order.
Extension Chief Commissioner of Principal Chief Principal Chief
of time limit Central Excise may, for Commissioner or Chief Commissioner or Chief

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Statutory Provisions 29

reasons to be recorded Commissioner of Central Commissioner of

in writing, extend the Excise of Central Excise Customs may, for
aforesaid period by such may, for reasons to be reasons to be recorded
further period or periods recorded in writing, in writing, extend the
as he thinks fit, so, extend the aforesaid aforesaid period by such
however, that the total period by such further further period or periods
period of extension shall period or periods as he as he thinks fit, so,
not in any case exceed thinks fit, so, however, however, that the total
two years. that the total period of period of extension shall
extension shall not in not in any case exceed
any case exceed two two years.
years.
2.5 Power to search the premises, conveyances, vehicles etc.
Particulars Service tax Excise Customs
Section 82 12F 100/101/103/105/106
By whom Joint Commissioner of Authorised officer of Customs
Central Excise or
Additional Commissioner of
Central Excise or such
other Central Excise
Officer as may be notified
by the Board
Power If the concerned officer has 1. If the proper officer has reason to believe
reasons to believe that any that any person has secreted about his person,
goods liable to confiscation any goods liable to confiscation or any documents
or any documents or books relating thereto, he may search that person. This
or things, which in his applies to the following persons, namely: (a) any
opinion shall be useful for person who has landed from or is about to board,
or relevant to any or is on board any vessel within the Indian
proceedings under the customs waters;(b) any person who has landed
CEA, 1944, are secreted in from or is about to board, or is on board a foreign-
any place, he may going aircraft;(c) any person who has got out of,
authorize in writing any or is about to get into, or is in, a vehicle, which
Central Excise Officer to has arrived from, or is to proceed to any place
search and seize or may outside India;(d) any person not included in
himself search and seize clauses (a), (b) or (c) who has entered or is about
such documents or books to leave India;(e) any person in a customs area.
or things. 2. If an officer of customs empowered in this
behalf by general or special order of the Principal
Commissioner of Customs or Commissioner of

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30 Background Material on Litigation Management

Customs, has reason to believe that any person

has secreted about his person any goods (like
gold, diamonds, manufactures of gold or
diamonds, watches) which are liable to
confiscation, or documents relating thereto, he
may search that person.
3. Where the proper officer has reason to
believe that any person has any goods liable to
confiscation secreted inside his body, he may
detain such person and produce him without
unnecessary delay before the nearest
magistrate. Where any such magistrate has
reasonable ground for believing that such person
has any such goods secreted inside his body and
the magistrate is satisfied that for the purpose of
discovering such goods it is necessary to have
the body of such person screened or X-rayed, he
may make an order to that effect. Where on
receipt of a report from a radiologist, the
magistrate is satisfied that any person has any
goods liable to confiscation secreted inside his
body, he may direct that suitable action for
bringing out such goods be taken on the advice
and under the supervision of a registered medical
practitioner and such person shall be bound to
comply with such direction (that in the case of a
female no such action shall be taken except on
the advice and under the supervision of a female
registered medical practitioner).
4. If the Assistant Commissioner of Customs
or Deputy Commissioner of Customs, or in any
area adjoining the land frontier or the coast of
India an officer of customs specially empowered
by name in this behalf by the Board, has reason
to believe that any goods liable to confiscation, or
any documents or things which in his opinion will
be useful for or relevant to any proceeding under
this Act, are secreted in any place, he may
authorise any officer of customs to search or may
himself search for such goods, documents or
things.

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Statutory Provisions 31

5. Where the proper officer has reason to

believe that any aircraft, vehicle or animal in India
or any vessel in India or within the Indian customs
waters has been, is being, or is about to be, used
in the smuggling of any goods or in the carriage
of any goods which have been smuggled, he may
at any time stop any such vehicle, animal or
vessel or, in the case of an aircraft, compel it to
land, and - (a)rummage and search any part of
the aircraft, vehicle or vessel; (b)examine and
search any goods in the aircraft, vehicle or vessel
or on the animal; (c)break open the lock of any
door or package for exercising the powers
conferred by clauses (a) and (b), if the keys are
withheld, it becomes necessary to stop any
vessel or compel any aircraft to land, it shall be
lawful -
(i) for any vessel or aircraft in the service of
the Government while flying her proper flag and
any authority authorised in this behalf by the
Central Government to summon such vessel to
stop or the aircraft to land, by means of an
international signal, code or other recognized
means, and thereupon, such vessel shall
forthwith stop or such aircraft shall forthwith land;
and if it fails to do so, chase may be given thereto
by any vessel or aircraft as aforesaid and if after
a gun is fired as a signal the vessel fails to stop
or the aircraft fails to land, it may be fired upon;
(ii) it becomes necessary to stop any vehicle
or animal, the proper officer may use all lawful
means for stopping it, and where such means fail,
the vehicle or animal may be fired upon.
2.6 Power to arrest
Particulars Service tax Excise Customs
Section 91 13 104
By whom Principal Commissioner Central Excise Officer Officer of Customs
of Central Excise or empowered in this
Commissioner of Central behalf by general or
Excise special order of

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32 Background Material on Litigation Management

the Principal
Commissioner of
Customs or
Commissioner of
Customs
Power If the officer has reason The concerned officer If the officer has reason
to believe that any may arrest any person to believe that any
person has committed an whom he has reason to person in India or within
offence, he may, by believe to be liable to the Indian customs
general or special order, punishment under the waters has committed
authorise any officer of Act or the rules made an offence, he may
Central Excise, not below thereunder. Any person arrest such person and
the rank of accused or reasonably shall, as soon as may
Superintendent of suspected of committing be, inform him of the
Central Excise, to arrest an offence under the Act grounds for such arrest.
such person. or any rules made Every person arrested
Where a person is thereunder, who on shall, without
arrested for any demand of any officer unnecessary delay, be
cognizable offence, duly empowered by the taken to a magistrate.
every officer authorised Central Government in
to arrest a person shall, this behalf, refuses to Where an officer of
inform such person of the give his name and customs has arrested
grounds of arrest and residence, or who gives any person, he shall, for
produce him before a a name or residence the purpose of releasing
magistrate within twenty- which such officer has such person on bail or
four hours. reason to believe to be otherwise, have the
In the case of a non- false, may be arrested same powers and be
cognizable and bailable by such officer in order subject to the same
offence, the Assistant that his name and provisions as the officer-
Commissioner, or the residence may be in-charge of a police-
Deputy Commissioner, ascertained. station has and is
as the case may be, subject to under the
shall, for the purpose of Code of Criminal
releasing an arrested Procedure, 1898.
person on bail or (The following offences
otherwise, have the shall be cognizable (a)
same powers and be prohibited goods; or (b)
subject to the same evasion or attempted
provisions as an officer evasion of duty
in charge of a police exceeding fifty lakh
station has, and is rupees - all other

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Statutory Provisions 33

subject to, under section offences under the Act

436 of the Code of shall be Non-
Criminal Procedure, cognizable)
1973. (The following offences
shall be non-bailable (a)
evasion or attempted
evasion of duty
exceeding fifty lakh
rupees; (b) prohibited
goods notified under
section 11;(c) import or
export of any goods
which have not been
declared in accordance
with the provisions of
the Act and the market
price of which exceeds
one crore rupees; (d)
fraudulently availing of
or attempt to avail of
drawback; or any
exemption from duty
provided under this Act,
if the amount of
drawback or exemption
from duty exceeds fifty
lakh rupees)
2.7 Appeals to the Commissioner of Central Excise (Appeals)

Particulars Service tax Excise Customs

Section 85 35 / 35A 128
Appeal any decision or order passed by an adjudicating authority subordinate to the
against Principal Commissioner of Central Excise or Commissioner of Central Excise
may appeal to the Commissioner of Central Excise (Appeals).
Form ST-4 E.A - 1 CA-1
Period within two months from the within 60 days from the date of receipt of the
date of receipt of the decision decision or order
or order
Delay One month 30 days

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34 Background Material on Litigation Management

Who can Any person aggrieved by any decision or order-

prefer an Neither the Central Government or industry operating in the same field as the
appeal importer can as a matter of right prefer an appeal as `person aggrieved’
(NORTHERN PLASTICS LTD- 1997 (91) E.L.T. 502 (S.C.)
Procedure 1. The Commissioner (Appeals) may, if sufficient cause is shown at any stage
of hearing of an appeal, grant time, from time to time, to the parties or any of
them and adjourn the hearing of the appeal for reasons to be recorded in
writing;
2. No such adjournment shall be granted more than three times to a party
during hearing of the appeal
3. The Commissioner (Appeals) shall, pass such order, as he thinks just and
proper, confirming, modifying or annulling the decision or order appealed
against;
4. The order of the Commissioner] (Appeals) disposing of the appeal shall be
in writing and shall state the points for determination, the decision thereon and
the reasons for the decision.
5. The provision provides that wherever it is possible, the proceedings must
be concluded within a period of six months from the date on which it is filed. It
implies that there is no time limit to pass an order.
6. The order shall be communicated to:
(a) The appellant,
(b) the adjudicating authority,
(c) the Principal Chief Commissioner of Central Excise or Chief
Commissioner of Central Excise and
(d) The Principal Commissioner of Central Excise or Commissioner of
Central Excise.
7. The grounds of appeal and the form of verification as contained in
respective Form shall be signed, in case of-
(a) An individual
 By himself or
 where the individual is absent from India, by the individual
concerned or by any person duly authorised by him in this behalf;
and
 where the individual is a minor or is mentally incapacitated from
attending to his affairs, by his guardian or by any other person
competent to act on his behalf;
(b) Hindu undivided family –
 by the Karta and,
 where the Karta is absent from India or is mentally incapacitated
from attending to his affairs, by any other adult member of such
family;

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Statutory Provisions 35

(c) Company or local authority - by the principal officer;

(d) Firm - by any partner thereof, not being a minor;
(e) Any other association, by any member of the association or the principal
officer thereof; and
(f) Any other person, by that person or any person competent to act on his
behalf.
8. The form of appeal shall be filed in duplicate and shall be accompanied
by a copy of the decision or order appealed against.
Production  The appellant shall not be entitled to produce any evidence, whether oral
of or documentary, other than the evidence produced by him during the
Additional course of the proceedings before the adjudicating authority;
Grounds  Except in the following circumstances, :-
(a) where the adjudicating authority has refused to admit evidence which
ought to have been admitted; or
(b) where the appellant was prevented by sufficient cause from
producing the evidence which he was called upon to produce by
adjudicating authority; or
(c) where the appellant was prevented by sufficient cause from
producing, before the adjudicating authority any evidence which is
relevant to any ground of appeal; or
(d) where the adjudicating authority has made the order appealed
against without giving sufficient opportunity to the appellant to adduce
evidence relevant to any ground of appeal.
 No evidence shall be admitted unless the Commissioner (Appeals) records
in writing the reasons for its admission.
 The Commissioner (Appeals) shall not take any evidence produced unless
the adjudicating authority or an officer authorised in this behalf by the said
authority has been allowed a reasonable opportunity, -
(a) to examine the evidence or document or to cross-examine any
witness produced by the appellant; or
(b) to produce any evidence or any witness in rebuttal of the evidence
produced by the appellant under sub-Rule (1).
 The Commissioner (Appeals) can direct the production of any document, or
the examination of any witness, to enable him to dispose of the appeal.
 Further, the Commissioner (Appeals) can suo-moto direct the production of
any document, or the examination of any witness, to enable him to dispose
of the appeal.

Indirect Taxes Committee

36 Background Material on Litigation Management

3. Appeals to Appellate Tribunal

Particulars Service tax Excise Customs
Section 86 35B 129A
Order against 1. An assessee aggrieved by an order passed by:
(a) Principal Commissioner of Central Excise; or
(b) Commissioner of Central Excise as an adjudicating
authority; or
(c) an order passed by a Commissioner of Central Excise
(Appeals)
may appeal to the Appellate Tribunal
2. Under Excise law - No appeal shall lie to the Appellate
Tribunal and the Appellate Tribunal shall not have jurisdiction to
decide any appeal in respect of any order referred to in clause (b) if
such order relates to,-
(a) a case of loss of goods, where the loss occurs in transit from a
factory to a warehouse, or to another factory, or from one
warehouse to another, or during the course of processing of
the goods in a warehouse or in storage, whether in a factory
or in a warehouse;
(b) a rebate of duty of excise on goods exported to any country or
territory outside India or on excisable materials used in the
manufacture of goods which are exported to any country or
territory outside India;
(c) goods exported outside India (except to Nepal or Bhutan)
without payment of duty;
(d) credit of any duty allowed to be utilised towards payment of
excise duty on final products under the provisions of this Act
or the rules made thereunder and such order is passed by the
Commissioner (Appeals) on or after the date appointed under
section 109 of the Finance (No. 2) Act, 1998;
3. However, the Appellate Tribunal may, in its discretion, refuse
to admit an appeal in respect of an order referred to in clause (b)
where-
(a) in any disputed case, other than a case where the
determination of any question having a relation to the rate of
duty of excise or to the value of goods for purposes of
assessment is in issue or is one of the points in issue, the
difference in duty involved or the duty involved; or
(b) the amount of fine or penalty determined by such order, does

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Statutory Provisions 37

not exceed two lakh rupees.

4. Under Customs law - No appeal shall lie to the Appellate
Tribunal and the Appellate Tribunal shall not have jurisdiction to
decide any appeal in respect of any order referred to in clause (b) if
such order relates to, -
(a) any goods imported or exported as baggage;
(b) any goods loaded in a conveyance for importation into India,
but which are not unloaded at their place of destination in
India, or so much of the quantity of such goods as has not
been unloaded at any such destination if goods unloaded at
such destination are short of the quantity required to be
unloaded at that destination;
(c) payment of drawback as provided in Chapter X, and the rules
made thereunder :
5. However, the Appellate Tribunal may, in its discretion, refuse
to admit an appeal in respect of an order referred to in clause (b)
where -
(a) the value of the goods confiscated without option having been
given to the owner of the goods to pay a fine in lieu of
confiscation under section 125; or
(b) in any disputed case, other than a case where the
determination of any question having a relation to the rate of
duty of customs or to the value of goods for purposes of
assessment is in issue or is one of the points in issue, the
difference in duty involved or the duty involved; or
(c) the amount of fine or penalty determined by such order, does
not exceed two lakh rupees.
Period Within three months of the date of receipt of the order. The Appellate
Tribunal may admit an appeal after the expiry of the relevant period,
if it is satisfied that there was sufficient cause for not presenting it
within that period.
Departmental Appeal 1. The Board may, by order, constitute such Committees as may
be necessary for the purposes of this Chapter.
2. The Committee of Principal Chief Commissioners of Central
Excise or] Chief Commissioners of Central Excise may, if it objects
to any order passed by:
(a) the Principal Commissioner of Central Excise; or
(b) Commissioner of Central Excise; or
(c) Commissioner of Central Excise (Appeals)

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38 Background Material on Litigation Management

direct the Principal Commissioner of Central Excise or Commissioner

of Central Excise to appeal to the Appellate Tribunal against the
order.
3. Every appeal shall be filed within four months from the date on
which the order sought to be appealed against is received by the
Committee.
4. The other party may, notwithstanding that he may not have
appealed against such order or any part thereof, within forty-five
days of the receipt of the notice, file a memorandum of cross-
objections, verified in the prescribed manner, against any part of the
order of the Principal Commissioner of Central Excise or
Commissioner of Central Excise or the Commissioner of Central
Excise (Appeals), and such memorandum shall be disposed of by
the Appellate Tribunal as if it were an appeal presented within the
time specified in sub-section (3).
5. An appeal to the Appellate Tribunal shall be in the prescribed
form and shall be verified in the prescribed manner and shall,
irrespective of the date of demand of service tax and interest or of
levy of penalty in relation to which the appeal is made, be
accompanied by a fee of,-
(a) where the amount of tax and interest demanded and penalty
levied by any Central Excise Officer in the case to which the appeal
relates is five lakh rupees or less, one thousand rupees;
(b) where the amount of tax and interest demanded and penalty
levied by any Central Excise Officer in the case to which the appeal
relates is more than five lakh rupees but not exceeding fifty lakh
rupees, five thousand rupees;
(c) where the amount of tax and interest demanded and penalty
levied by any Central Excise Officer in the case to which the appeal
relates is more than fifty lakh rupees, ten thousand rupees :
6. No fee shall be payable in the case of an appeal preferred by
the department or a memorandum of cross-objections filed by the
other party.
7. Every application made before the Appellate Tribunal,-
(a) in an appeal for rectification of mistake or for any other
purpose; or
(b) for restoration of an appeal or an application,
shall be accompanied by a fee of five hundred rupees:

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Statutory Provisions 39

4. CESTAT (Procedure) Rules, 1982.

CESTAT (Procedure) Rules, 1982 came into effective 25th October 1982 by virtue of CEGAT
Notification No. 1/CEGAT/82, dated 25-10-1982. It may be noted that CEGAT is not a tribunal
constituted under Article 323B of the Constitution. Therefore, writ jurisdiction of the High
Courts is not ousted.
Particulars Provision / Commentary
Sittings of Rule 3 confers the power on the president of the Tribunal to order sitting
Bench (Rule 3) of the Bench either at the Headquarters or any other place coming within
the jurisdiction of the Tribunal.
Powers of  A Bench shall hear and determine such appeals and applications
Bench (Rule 4 made under the Acts as the President may by general or special
order direct.
 Where two or more Benches are functioning at any place, the
President, or in his absence the senior amongst the Vice-Presidents
present, or in their absence the senior-most Member present, may
transfer an appeal or application from one Bench to another.
Procedure for (1) A memorandum of appeal shall be presented by:
filing appeals. (a) the appellant in person or
(Rule 6) (b) by an agent to the concerned officer, or
(c) sent by registered post addressed to the concerned officer.
(2) In case of urgency or for other sufficient reason, present or send
the appeal to the concerned officer of the Bench nearest to him, even
though the matter relates to a different Bench; and in such a case the
officer receiving the appeal shall, as soon as may be, forward it to the
concerned officer of the appropriate Bench.
(3) A memorandum of appeal sent by post shall be deemed to have
been presented to the concerned officer on the date on which it is
received in the office of the concerned officer.
The number of (1) Irrespective of the number of show cause notices, price lists,
appeals to be classification lists, bills of entry, shipping bills, refund claims / demands,
filed: (Rule 6A) letters or declarations dealt with in the decision or order appealed against,
it shall suffice for purposes of these rules that the appellant files one
Memorandum of Appeal against the order or decision of the authority
below, along with such number of copies thereof as provided in rule 9.
(2) In a case where the impugned order-in appeal has been passed
with reference to more than one order-in-original, the Memoranda of
Appeal filed as per Rule 6 shall be as many as the number of the orders-
in-original to which the case related in so far as the appellant is
concerned.

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40 Background Material on Litigation Management

(3) In case an impugned order is in respect of more than one person,

each aggrieved person will be required to file a separate appeal (and
common appeals or joint appeals shall not be entertained).
Number of orders and Number of appeals
No of SCN(s) NO. of OIO Number of OIA Number of
CESTAT
appeals
One One One One
Two One One One
Two Two One Two
Two Two Two Two
Where in the same impugned order, the authority passes order on more
than one person (Company, Director / customer/ job worker), each person
has to prefer separate appeal
Date of The Registrar or, as the case maybe, the officer authorised by him, shall
presentation of endorse on every memorandum of appeal the date on which it is
appeals – Rule 7 presented or deemed to have been presented under that rule and shall
sign the endorsement.
Delay in filing of appeal.- There shall be nodelay in filling of appeal if the
due date was Saturday and appeal was filed on the next working day i.e.
Monday.
Contents of a (1) Every Memorandum of Appeal shall set forth concisely and under
memorandum of distinct heads, the grounds of appeals and such grounds shall be
appeal - RULE 8 numbered consecutively and shall be typed in double space of the paper.
(2) Every memorandum of appeal, cross-objection, reference
applications, stay application or any other miscellaneous application shall
be typed neatly in double spacing on the foolscape paper and the same
shall be duly paged, indexed and tagged firmly with each paper book put
in a separate folder.
(3) Every memorandum of appeal / application / Cross-objection shall
be signed and verified.
(4) The appellant /applicant /respondent or the Consultant or Advocate
shall certify as true, the documents produced before the Tribunal.
What to (1) Every Memorandum of appeal shall be filed in quadruplicate and
accompany shall be accompanied by four copies, one of which shall be a certified
memorandum of copy of the order appealed against in the case of an appeal against the
appeal? – Rule 9 original order passed by the additional Commissioner or Commissioner of
Excise or Customs and where such an order has been passed its appeal
or revision, four copies (one of which shall be a certified copy) of the order

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Statutory Provisions 41

passed in appeal or in revision and four copies of the order of the original
authority.
Explanation: "Copy for the purpose of this Rule shall mean a true copy
certified by the appellant or appellant's representative to be a true copy.
(2) In the case of an appeal which can be heard by a single Member,
Memorandum of appeal shall be filed in triplicate and number of copies of
the order shall be three instead of four.
(3) Where an appeal which can be heard by a single Member is
referred to or placed before a two-Member Bench or an appeal which can
be heard by a two-Member Bench is referred to a Larger Bench, the
appellant shall immediately furnish an additional copy of the memorandum
of appeal and of the order or orders of the lower authorities.
Rejection or 1. The Tribunal may, in its discretion, on sufficient cause being
amendment of shown, accept a memorandum of appeal which is not accompanied by the
memorandum of documents referred to in Rule 9 or is in any other way defective, and in
appeal: - Rule such cases may require the appellant to file such documents or, as the
11 case may be, make the necessary amendments within such time as it may
allow.
2. The Tribunal may reject the memorandum of appeal, if the
documents sought by the Tribunal are not produced, or the amendments
are not made, within the time-limit allowed.
Document 1. Where the parties to an appeal or application are being represented
authorising in such appeal or application by authorised representatives, the
representative to documents authorising such representatives to appear on their behalf
be attached to shall be appended to the memorandum of appeal, application or
the memorandum memorandum of cross-objection if they are signed by the authorised
of appeal – Rule representatives.
13 2. The said documents shall indicate clearly the status of the
authorised representatives as to whether they are relatives or regular
employees of the parties and the details of the relationship of
employment;
3. In cases where they are not relatives or regular employees, their
qualifications to act as authorised representatives under the Acts or, in
the case of a person referred to in rule 2(c)(ii), particulars of the
notification by which they have been appointed:
4. Where the authorised representative is a legal practitioner, such
document of authorisation shall be a duly executed vakalatnama.
Filling of 1. Subject to satisfaction of the Bench, in cases, where an authorised
authorisation at representative known to the Court has been engaged but is unable to file
a later stage: - immediately the document authorising him to appear and plead along with

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42 Background Material on Litigation Management

Rule 14 the appeal or application for any reason, he may file memo of appearance
along with an undertaking to file duly executed vakalatnama or document
of authorisation during such time as the Bench may in its discretion allow.
2. In case the direction of the Bench (including extended time, if any)
is not followed, the Bench may in its discretion withhold the issue of the
order or stay its operation till the compliance is duly made and/or refrain
from extending the facility in future.
3. Any misrepresentation for the purpose of this Rule will be
considered as a misconduct and may invite the same action in the same
way as indicated in Section 35Q(5) of the Central Excise Act, 1944.
Reply to appeal After a copy of the appeal has been served, the respondents may file a
– Rule 15A reply within one month and on receipt thereof, the appellant may file a
rejoinder within one month or within such time as may be specified /
extended.
Preparation of 1. The appellant shall, along with the appeal or within one month of
paper book: - filing of the appeal, submit in such number of copies as of the
Rule 16 memorandum of appeal, a paper book containing copies of the
documents, statements of witnesses and other papers on the file of, or
referred to in the orders of, the departmental authorities, which he
proposes to rely upon at the hearing of the appeal.
2. The respondent may also file a paper book containing such
documents as are referred to in sub-rule (1), which he proposes to rely
upon at the time of hearing of the appeal, in such number of copies as of
the memorandum of appeal, within one month of the service of the notice
of the filing of the appeal on him, or within two weeks of the service of the
paper book, whichever is later.
3. The Tribunal may, in its discretion, allow the filing of any paper
book referred to in sub-rule (1) or sub-rule (2) after the expiry of the
period referred to therein.
4. The Tribunal may on its own motion direct the preparation of as
many copies as may be required of a paper book by and at the cost of the
appellant or the respondent, containing copies of such statements, papers
or documents as it may consider necessary for the proper disposal of the
appeal.
5. All paper books shall contain clearly legible documents duly paged,
indexed and be tagged firmly.
Date and place of The Tribunal shall notify to the parties the date and place of hearing of the
hearing to be appeal or application.
notified: - Rule The issue of the notice referred to in sub-rule (1) shall not by itself be
18 deemed to mean that the appeal or application has been admitted.

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Statutory Provisions 43

Action on The appellant does not appear when the appeal is called on for hearing,
appeal for the Tribunal may, in its discretion, either dismiss the appeal for default or
appellant's hear and decide it on merits:
default: - Rule In case an appeal has been dismissed for default and the appellant
20 appears afterwards and satisfies the Tribunal that there was sufficient
cause for his non-appearance when the appeal was called on for hearing,
the Tribunal shall make an order setting aside the dismissal and restore
the appeal.
Though the rule provides for dismissal for non- appearance, the appeal
shall have to be decided on merits – refer Balaji Steel Rolling Mills v
Commissioner of C.Ex. & Customs, 2014 (310) E.L.T. 209 (S.C.)
Hearing of In case the appellant appears and the respondent does not appear when
appeals ex the appeal is called on for hearing, the Tribunal may hear and decide the
parte: - RULE 21 appeal ex parte.
Continuance of Where in any proceedings the appellant or applicant or a respondent dies
proceedings or is adjudicated as an insolvent or in the case of a company, is being
after death or wound up, the appeal or application shall abate, unless an application is
adjudication as made for continuance of such proceedings by or against the successor-in-
an insolvent of interest, the executor, administrator, receiver, liquidator or other legal
a party to the representative of the appellant or applicant or respondent, as the case
appeal or may be:
application – Every such application shall be made within a period of sixty days of the
Rule 22 occurrence of the event. The Tribunal may condone the delay if it is
satisfied that the applicant was prevented by sufficient cause from
presenting the application within the period so specified, allow it to be
presented within such further period as it may deem fit.
Order to be Every order of the Tribunal shall be in writing and shall be signed and
signed and to dated by the Members constituting the Bench concerned.
dated – Rule 26 Last date of hearing of the matter shall be typed on the first page of the
order.
If the order is dictated on the Bench, the date of dictation will be the date
of the final order. If the order is reserved, the date of final order will be the
date on which the order is pronounced.
In cases, where gist of the decision is pronounced without the detailed
order, the last para of the detailed order shall specify the date on which
the gist of the decision was pronounced. In such cases, the date of the
final order shall be the date on which all the Members of the Bench sign
the order. If they sign on different dates, the last of the dates will be the
date of the order.

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44 Background Material on Litigation Management

Procedure for 1. Every application preferred under the provisions of the Acts for stay
filing and of the requirement of making deposit of any duty demanded or penalty
disposal of stay levied shall be presented in triplicate
petitions: - Rule (a) by the appellant in person; or
28A (b) by his duly authorised agent; or
(c) sent by registered post to the Registrar or any other office
authorised to receive memoranda of appeals, as the case may be,
at the Headquarters of the Bench having jurisdiction to hear the appeal in
respect of which the application for stay arises.
2. One copy each of such application shall be served on the
authorised representative of the Commissioner or, as the case may be,
the Administrator simultaneously by the applicant.
3. Every application for stay shall be neatly typed on one side of the
paper and shall be in English and the provisions of rule 5 shall apply to
such applications.
4. An application for stay shall set forth concisely the following:
 the facts regarding the demand of duty or penalty, the deposit
whereof is sought to be stayed;
 the exact amount of duty or penalty and the amount undisputed
therefrom and the amount outstanding;
 the date of filing of the appeal before the Tribunal and its number, if
known;
 whether the application for stay was made before any authority
under the relevant Act or any civil court and, if so, the result thereof
(copies of the correspondence, if any, with such authorities to be
attached);
 reasons in brief for seeking stay;
 whether the applicant is prepared to offer security and, if so, in
what form; and
 prayers to be mentioned clearly and concisely (state the exact
amount sought to be stayed).
5. The contents of the appeal / application / cross-objection shall be
supported by a verification regarding their correctness by the appellant or
respondent or the principal officer authorised to sign appeal / cross-
objection.
6. The Bench may, however, in a particular case direct filing of an
affidavit by the appellant / respondent or any other person, if so
considered necessary or desirable in the circumstances of a given case.

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Statutory Provisions 45

7. Every application for stay shall be accompanied by three copies of

the relevant orders of the authorities of the department concerned,
including the appellate orders, if any, against which the appeal is filed to
the Tribunal by the appellant and other documents, if any:
8. Any application which does not conform to the above requirements
is liable to be summarily rejected.
9. Subject to any general or special orders of the President in this
behalf, an application for stay shall be decided by the Bench having
jurisdiction to hear the appeal to which the application relates.
Change of In case an appellant / respondent changes the person authorised to
authorised represent him after the filing of the appeal or application then:
representative –  the fact of such a change may be indicated by way of a
Rule 28B memorandum addressed to the tribunal or an endorsement or
Vakalatanama or document of authorization;
 Upon such communication or endorsement the bench may not insist
on filing of a no-objection certificate from the previous authorised
representative except where in the opinion of the bench it was called
for in a given case.
Procedure for The provisions of the rules regarding the filing of stay applications shall, in
filing of and so far as may be, apply to the filing of applications under this rule (mutatis
disposal of mutandis).
Miscellaneous
Application –
Rule 28C
Same Bench to An application for rectification of a mistake apparent from the record, shall
hear be heard by a Bench consisting of the Members who heard the appeal
applications for giving rise to the application, unless the President directs otherwise.
rectification of
mistakes: - Rule
31A
Orders and The Tribunal may make such orders or give such directions as may be
directions in necessary or expedient to give effect or in relation to its orders or to
certain cases - prevent abuse of its process or to secure the ends of justice
Rule 41
Working hours Except on Saturdays, Sundays and other public holidays, the offices of
of offices of the the Tribunal shall, subject to any order made by the President, be open
Tribunal: - Rule daily from 9.30 A.M. to 6.00 P.M.; but no work, unless of urgent nature,
42 shall be admitted after 5.30 P.M.

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46 Background Material on Litigation Management

Sittings of the (1) The Tribunal shall not ordinarily hold sittings on Saturdays, nor on any
Tribunal: - Rule Sundays and other public holidays.
43 (2) The sitting hours of the Tribunal shall ordinarily be as under:
In New Delhi, Mumbai, Bangalore, Chennai and other location
From 10.30A.M. to 1.30 P.M. and from 2.15 P.M. to 4.45 P.M.
In Kolkata From 10.30A.M. to 1.15 P.M. and from 2.00 P.M. to 4.30 P.M.
Dress for the Every authorised representative other than a relative or regular employee
parties – Rule of a party shall appear before the Tribunal in his professional dress, if
48 any, and, if there is no such dress,-
 Male - in a close-collared black coat, or in an open-collared black
coat, with white shirt and black tie; or
 Female - in a black coat over a white sari or any other white dress:
Note: During the summer season from 15th April to 31st August, the
authorised representatives may, when appearing before a Bench of the
Tribunal, dispense with the wearing of a black coat.

5. Authority for Advance Rulings

The relevant statutory provisions Authority for Advance Ruling (Central Excise, Customs and
Service Tax) Procedure Regulations, 2005 are as below:
Particulars Provision / Commentary
Advance Ruling "advance ruling" means an advance ruling as defined in:
– Regulation 2  Section 28E(b) of the Customs Act, 1962 (52 of 1962); - “advance
ruling” means the determination, by the authority of a question of law
or fact specified in the application regarding the liability to pay duty
in relation to an activity proposed to be undertaken, by the applicant;
 Section 23A(b) of the Central Excise Act, 1944 (1 of 1944); - same
as defined under customs law.
 Section 96A(a) in Chapter VA of the Finance Act, 1994 (32 of 1994)
(Chapters V and VA of the said Act referred to herein as the Service
Tax Provisions). - "advance ruling" means the determination, by the
Authority, of a question of law or fact specified in the application
regarding the liability to pay service tax in relation to a service
proposed to be provided, by the applicant
Definition of "applicant" means,—
Applicant (i) (a) a non-resident setting up a joint venture in India in
collaboration with a non-resident or a resident; or
(b) a resident setting up a joint venture in India in
collaboration with a non-resident; or

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Statutory Provisions 47

(c) a wholly owned subsidiary Indian company, of which the

holding company is a foreign company,
who or which, as the case may be, proposes to undertake any
business activity in India;
(ii) a joint venture in India; or
(iii) a resident falling within any such class or category of persons, as
the Central Government may, by notification in the Official
Gazette, specify in this behalf,
and which, or who, as the case may be, makes application for
advance ruling.
Powers of Regulation 4 gives the Authority powers deemed necessary for
Authority – determination of issues and passing of rulings. The Authority has the
Regulation 4 powers vested upon civil courts for the following:
 Discovery and inspection of records
 Enforcing attendance of any person and examining that person on
oath
 Issuing commissions
 It is also within the powers of the Authority to direct the following:
 Examination of any records and submission of report
 Conduct of any technical, scientific or market enquiry of any goods
or services and submission of report and may also call for reports
from experts and order such further investigations as may be
necessary for effectual disposal of the application.
Cause 2 of this regulation provides power to issue orders necessary for
removal of difficulties. It may be noted that such orders may be issued
by the authority suomotu or on the basis of a petition made by an
applicant or the Principal Commissioner or Commissioner. A period of
three months has been prescribed for issuing the order.
Mode of service The service of notice or document shall be made by hand delivery or by
of notices, etc.- registered post with acknowledgement due or by speed post or by courier
Regulation 7. service or by any other means of transmission of documents including e-
mail/fax.
Notices or documents required to be served on the parties to the
application/petition shall be deemed to have been served, if delivered at
the address indicated in the application/petition and in the case of a
Commissioner at the Office of the Commissioner.
Procedure for Procedure for filing application.- The procedural requirements pertaining
filing to filing of applications are summarised below:
applications.-  The application must be in the prescribed form that is it to say, Form

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48 Background Material on Litigation Management

Regulation 8. - AAR (CUS) of the Customs (Advance Rulings) Rules, 2002 or

Form - AAR (CE) of the Central Excise (Advance Rulings) Rules,
2002 or Form - AAR (ST) of the Service Tax (Advance Rulings)
Rules, 2003, as the case may be.
 The Form and all accompanying documents must be legibly printed
on A-4 paper leaving a margin of 5 cm. withdouble-line spacing.
 The application form must be filed in quadruplicate.
 The application must be filed in person (by the applicants
themselves or their authorized signatory) before the Secretary. The
application may also be filed by sending it to the Secretary by
registered/speed post or courier. The application would be deemed
to have been made on the date on which it is received in the office
of the authority.
 A fee of INR 2,500 is to be paid along with the application by
demand draft. The demand draft must be in favour of ‘Authority for
Advance Rulings (Central Excise, Customs and Service Tax)’
payable at New Delhi.
 Applications are to be filed between 10 am to 1 pm or 2 pm to 5 pm
on any working day
 Every page of the application along with all annexures and
supporting documents must be signed by the authorized signatory.
The application is required to be filed along with evidence that the
person signing the application is competent to do so. For instance,
in the case of a company, a board resolution authorizing a person to
sing on behalf of the company must be submitted along with the
application
 In case the applicant is located outside India, the application should
be accompanied with the postal address abroad and the email
address along with the postal address of the authorized
representative of the applicant in India (who is authorized to act on
behalf of the applicant and receive notices and other documents).
Regulation 9. Regulation 9 provides for the procedure to be followed after receipt of the
Procedure on application. The procedure is summarized below,
receipt of an  The officer receiving the application puts his initials and stamp on
application the application along with the date and time of receipt. The receipt
is to be entered in the register maintained for this purpose.
 The application is scrutinized by an officer authorized by the
Secretary for this purpose. Any deficiency/defect found (such as
evidence of authorized signatory not submitted or form of application
not as prescribed) is communicated to the applicant (preferably
within 10 working days of receipt of the application).

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Statutory Provisions 49

 The application can be rectified within the time granted by the

Secretary for this purpose. The application shall be deemed to have
been received on the date on which it is resubmitted after removal of
the deficiency or defect. If the application is not rectified by the
applicant within the time granted, it is put forth before authority by
the Secretary for appropriate orders.
 The application free from any defect or deficiency is marked as
‘examined and registered’ and a serial number is allotted to the
application.
 The application is forwarded to the concerned revenue authorities
for furnishing of relevant records and comments, if required. A time
of two weeks is granted to the revenue authorities. This time limit
may be extended by the Authority.
 On receipt of the records and/or comments from the revenue
authorities or on expiry of the time granted to the revenue
authorities, the application is put up before the Authority for a ruling.
 If there is a prima facie case for rejection ofthe application, the
Authority sends a notice to the applicant recording the reasons for
rejection along with comments of the revenue authorities. This
notice gives the applicant an opportunity of being heard. A copy of
this notice is send to the revenue authorities as well.
 An order is passed by the Authority on the date of the hearing (or
any other date to which the matter is adjourned). A copy of the
order is sent to both the applicant and the revenue authorities. The
applicant’s attention should be drawn to the statutory provisions that
he/she has the right to be heard before pronouncement of the ruling.
The response of the applicant must reach the Authority within 2
weeks of the receipt of copy of the order.
 The hearing of the application shall normally take place between 11
am and 5 pm on any working day.
 If the applicant does not request for a personal hearing, the ruling is
pronounced after hearing the revenue authorities and on the basis of
evidence available on record with the Authority.
 If the Authority reserves an application for consideration, the ruling
is pronounced in open court with intimation to the applicant and the
revenue authorities. A copy of the ruling is served to both parties.
Additional facts The Authority may, at its discretion, either suomotu or on a petition,
by way of a permit or require the applicant to submit such additional facts as may be
petition - necessary to enable it to pronounce its advance ruling.
Regulation 11 The additional facts sought to be brought on record, by the petitioner
shall be supported by necessary documents, if any, duly verified.

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50 Background Material on Litigation Management

Questions not The applicant shall not, except with the leave of the Authority, urge or be
specified in the heard in respect of any question other than the question specified in the
application - application but in pronouncing an advance ruling on the question set forth
Regulation 12 in the application, the Authority may at its discretion consider such other
aspects as may be necessary to pronounce the advance ruling on the
question specified in the application.
On a petition made by an applicant, the Authority may permit amendment
of a question, in appropriate cases.
Authorization to An authorized representative appearing for the applicant shall before the
be filed - commencement of the hearing, file before the Secretary, a document
Regulation 13 authorizing him to appear for the applicant.
Every authorized representative shall notify to the Secretary the address
of his office, before the commencement of the hearing.
Any change of an authorized representative shall be intimated by the
concerned party to the Secretary as well as to the other party to the
application.
Continuation of Even on the death or dissolution of the applicant, the application shall be
proceedings continued by the legal representatives, executors, administrators,
after the death, liquidators, assignees, etc. of the applicant. However, this continuation is
etc., of the only on approval by the Authority of a petition made in this regard.
applicant. -
Regulation 14.
Hearing of  On the day fixed for hearing or any other day to which the case is
application - adjourned, the Authority shall hear the applicant or his authorized
Regulation 15 representative in cases where it is proposed to reject the application
or where the applicant seeks an opportunity of being heard;
 the Authority may also hear the Commissioner or his authorized
representative, if it considers it necessary, before pronouncing its
advance ruling.
 The Authority may, on such conditions as the circumstances of the
case require, adjourn the hearing of the application.
Hearing of In case an order is passed ex parte on merits because of non –
application ex appearance of either party or their authorized representatives, an
parte – application aside the ex parte order may be made within 7 days of receipt
Regulation 16 of that order.
If the authority is satisfied that there was sufficient cause for non-
appearance at the time of the original hearing, and after giving the other
party to the application a reasonable opportunity of being heard the ex
parte order may be set aside and the application restored

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Statutory Provisions 51

Withdrawal of The applicant may withdraw his application within thirty days from the
application - date of such application and thereafter only with the leave of the
Regulation 17 Authority.
Modification of The Authority may suomotu or on a petition by the applicant or the
the Commissioner,
order/advance Before pronouncement of an advance ruling or before an advance ruling
ruling. - pronounced has been given effect to,
Regulation 18. On being satisfied that an order/advance ruling was pronounced under
mistake of law or fact,
Modify such order/advance ruling in such respects as it considers
appropriate, after allowing the applicant and the Commissioner a
reasonable opportunity of being heard.
Rectification of The Authority may, with a view to rectifying any mistake apparent from
mistakes - the record, amend any advance ruling pronounced by it before such
Regulation 19 ruling has been given effect to.
Declaration of The regulation states that a ruling obtained on the basis of fraud or
advance ruling misrepresentation is void ab initio. The procedural aspects in this regard
to be void in are summarised below:
certain  The revenue authorities may make a representation to the authority
circumstances - claiming fraud or misrepresentation. The representation is to be
Regulation 23 accompanied by an attested affidavit and attested copies of all
documents relied upon for making the representation.
 If the authority is of a prima facie view that the application is
obtained by fraud or misrepresentation,a notice is sent to the
application informing of the grounds on which the ruling is void along
with copies of documents relied upon. A reasonable opportunity of
being heard is given (in writing and in person).
 A copy of the notice is also sent to the revenue authorities and they
are given an opportunity of being heard as well.,
Proceedings of (1) When one or both of the Members of the Authority other than the
Authority - Chairperson is unable to discharge his functions owing to absence or
Regulation 27 vacancies etc., the Chairperson alone or the Chairperson and the
remaining Member may function as the Authority.
(2) In case there is difference of opinion among the Members hearing
an application, the opinion of the majority of Members shall prevail;
(3) Where the Chairperson and one other Member hear a case and are
divided in their opinion, the opinion of the Chairperson shall prevail.
Dress (1) An authorized representative shall appear before the Authority in
Regulation - dress prescribed for the members of his profession by the competent
Regulation 29 professional body, if any.

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52 Background Material on Litigation Management

(2) All other persons appearing before the Authority shall be properly
dressed.
Prohibition of No person shall be allowed to bring mobile phones, sticks, arms or other
arms, mobile weapons in the room where the Authority conducts the proceedings.
phones etc.-
Regulation 30.

6. Settlement Commission
Particulars Service Tax Excise Customs
Application for 1. An assessee may, in respect of a case relating to him, make an
Settlement application, before adjudication, to the Settlement Commission to have
Commission – the case settled,
Section 32E 2. The application must contain a full and true disclosure of:
(Under Customs
law – Section (a) His duty liability which has not been disclosed before the Central
127B) Excise Officer having jurisdiction or proper officer, the manner in
which such liability has been derived,
(b) The additional amount of excise duty / customs duty accepted to
be payable by him; and
(c) Such other particulars as may be prescribed including the
particulars of such excisable goods in respect of which he admits
short levy on account of misclassification, under-valuation,
inapplicability of exemption notification or CENVAT credit or
otherwise;
(d) Under customs law - the particulars of such dutiable goods in
respect of which he admits short levy on account of
misclassification, under-valuation or inapplicability of exemption
notification or otherwise;
3. No application shall be made unless,—
(a) the applicant has filed returns showing production,
clearance and central excise duty paid in the prescribed
manner;
(b) a show-cause notice for recovery of duty issued by the
Central Excise Officer has been received by the applicant;
(c) the applicant has filed a bill of entry, or a shipping bill, or a
bill of export, or made a baggage declaration, or a label or
declaration accompanying the goods imported or exported
through post or courier, as the case may be, and in relation

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Statutory Provisions 53

to such document or documents, a show cause notice has

been issued to him by the proper officer;
(d) the additional amount of duty accepted by the applicant in
his application exceeds three lakh rupees; and
(e) the applicant has paid the additional amount of excise duty
accepted by him along with interest due under section 11AA
of Central Excise and 28AA of the Customs law.
4. No application shall be entertained by the Settlement Commission:
(a) In cases which are pending with the Appellate Tribunal or any
court:
(b) For the interpretation of the classification of excisable goods
under the Central Excise Tariff Act, 1985 (5 of 1986).
Power of 1. The Settlement Commission may, if it is satisfied that any person who
Settlement made the application for settlement:
Commission to (a) has co-operated with the Settlement Commission in the
grant immunity proceedings before it, and
from (b) has made a full and true disclosure of his duty liability,
prosecution and
grant to such person, subject to such conditions as it may think fit to
penalty. –
impose, immunity from prosecution for any offence under this Act and
Section 32K
also either wholly or in part from the imposition of any penalty and fine
under this Act, with respect to the case covered by the settlement:
2. No such immunity shall be granted in cases where the proceedings
for the prosecution for any such offence have been instituted before the
date of receipt of the application under section.
3. An immunity granted to a person shall stand withdrawn if
(a) such person fails to pay any sum specified in the order of the
settlement passed within the time specified in such order; or
(b) fails to comply with any other condition subject to which the
immunity was granted.
Procedure (1) A settlement application shall be presented by the applicant in person
covered under - to the Secretary at the headquarters of the Commission at New Delhi or
Customs and of the Bench within whose jurisdiction his case falls or to any officer
Central Excise authorized in this behalf by the Secretary, or shall be sent by registered
Settlement post addressed to the Secretary.
Commission (2) A settlement application sent by post under sub-rule (1) shall be
Procedure, 2007 deemed to have been presented to the Secretary on the day on which it is
Rule 5 received in the office of the Commission

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54 Background Material on Litigation Management

Form and (1) An application under shall be made in the Form SC(ST)-1; SC(E)-1.
Manner of (2) The application referred to in sub-rule (1), the verification contained
Application – therein and all relevant documents accompanying such application shall
Rule 4 of Central be signed by the authorised person;
Excise (3) Every application shall be filed in quintuplicate and shall be
(Settlement accompanied by a fee of one thousand rupees.
cases) Rules (4) The additional amount of excise duty accepted by the applicant, along
2007. with interest due thereon, shall be deposited by him in any of the
authorized bank under TR-6 challan in quintuplicate.
Fee for Copies Section 32J of the Central Excise Act provides for inspection of reports
of reports – Rule made by Central Excise officers to the Settlement Commission on the
6 of Central basis of an application along with payment of fees. This rule provides
Excise that the fee for this purpose shall be INR5/page of the report.
(Settlement
cases) Rules
2007.
Preparation of (1) If the applicant or the Commissioner, as the case may be, proposes to
paper books etc. refer or rely upon any documents or statements or other papers, he may
– Rule 6 submit six copies of a paper book containing such papers duly indexed
and paged within seven days from the date of issuance of notice;
Provided that if the Commission is satisfied that there is sufficient reason
for delay, it may condone the delay and admit the paperbook.
(2) If the applicant proposes to refer to or rely upon any documents or
statements or other papers during the course of hearing, the applicant
may submit six copies of a paper book containing such papers duly
indexed and paged, within thirty days or within such extended period as
may be allowed by the Commission.
(3) The Commission may, suomotu, direct the preparation of six copies of
a paperbook by and at the cost of the applicant or the Commissioner,
containing copies of such statements, documents and papers, as it may
consider necessary for the proper disposal of the settlement application
on or matters arising therefrom.
(4) The paperbook must be legibly written or type-written in double space
or printed. If xerox copy of the document is filed, then the same should be
legible. Each paper should be certified as a true copy by the party filing
the same and indexed in such a manner as to give a brief description of
the documents, with page numbers and the authority before whom it was
filed.

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Statutory Provisions 55

Filing of Where a fact which is not borne out by or is contrary to the record relating
Affidavit – Rule to the case, is alleged in the settlement application, it shall be stated
7 clearly and concisely and supported by a duly sworn affidavit.

Filing of An authorised representative appearing for the applicant at the hearing of

authorization an application shall file before the commencement of the hearing a
document authorising him to appear for the applicant and if he or she is a
relative of the applicant, the document shall state the nature of his or her
relationship with the applicant, or if he or she is a person regularly
employed by the applicant, the capacity in which he or she is at the time
employed.
Verification of Where in the course of any proceedings before the Commission any facts
additional fact not contained in the settlement application (including the annexure and
the statements and other documents accompanying such annexure) are
sought to be relied upon, they shall be submitted to the Commission in
writing and shall be verified in the manner as provided for in the
settlement application.
Proceedings not The proceedings before the Commission shall not be open to the public
open to the and no person (other than the applicant, his employee, the concerned
public officers of the Commission or the Customs and Central Excise
Department or the authorized representatives) shall, without the
permission of the Commission remain present during such proceedings.

7. State Provisions - Karnataka Value Added Tax Act, 2003

7.1 Adjudication Process - Assessment:
The provision of the Karnataka VAT Act provides following assessments
Type of Section Provisions
Assessment
Self – Assessment or 38 1) Every dealer shall be deemed to have been
Deemed Assessment assessed to tax based on the return filed by him
and Best Judgement However, in cases where the Commissioner may notify
Assessment the dealer of any requirement of production of
accounts before the prescribed authority in support of
a return filed for any period and such authority shall
proceed to assess such dealer. -
(a) where the return filed is correct and complete, or
(b) to the best of its judgment, where the return filed
appears to be incorrect

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56 Background Material on Litigation Management

2) In case, registered dealer fails to furnish his monthly

or final return on or before the date provided in this Act
or the rules made thereunder, or the return furnished is
incorrect or incomplete, the prescribed authority shall
issue an assessment to the registered dealer to the
best of its judgment and the tax assessed shall be paid
within ten days from the date of service of such
assessment on the dealer.
However, in case the dealer subsequently furnishes a
return for the period to which the assessment relates,
the prescribed authority may withdraw the assessment
but the dealer shall be liable to penalties and interest
as applicable. However, the return shall be furnished
within one month of service of such assessment on the
dealer.
Protective 38(5) 1)The prescribed authority on any evidence showing a
Assessment liability to tax coming to its notice may with the
previous permission of his Joint Commissioner or
Additional Commissioner issue a protective
assessment in the case of a dealer registered under
this Act or a dealer liable to be registered under this
Act, if the prescribed authority has reason to believe
that such dealer will fail to pay any tax, penalty or
interest so assessed or imposed or payable and such
tax, penalty or interest shall become payable forthwith.
2) On any application made within thirty days from the
date of receipt of such protective assessment by the
dealer or on his own motion within thirty days from the
date of issue of such protective assessment, if the
Joint Commissioner or Additional Commissioner
considers that any protective assessment issued is
erroneous, he may after giving the dealer concerned
an opportunity of being heard and after making such
enquiry as he deems necessary, pass such order
thereon as the circumstances of the case may justify.
Re – Assessment 39 1) Where the Commissioner has grounds to believe
that any return furnished which is deemed as
assessed or any assessment issued under self-
assessment/ deemed assessment/ protective
assessment understates the correct tax liability of the
dealer, it-

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Statutory Provisions 57

(a) may, based on any information available, reassess,

to the best of its judgment, the additional tax payable
and also impose any penalty and demand payment of
any interest; and,
(b) shall issue a notice of re- assessment to the dealer
demanding that the tax shall be paid within thirty days
of the date of service of the notice after giving the
dealer the opportunity of showing cause against such
re-assessment in writing.
2) Where after making a re-assessment-
(a) any further evidence comes to the notice of the
prescribed authority; or
(b) if the prescribed authority has reason to believe
that the whole or any part of the turnover of a dealer in
respect of any tax period has escaped re-assessment
to tax; or
(c) tax has been under re-assessed; or
(d) has been re-assessed at a rate lower than the rate
at which it is assessable under this Act; or
(e) any deductions or exemptions have been wrongly
allowed in respect thereof,
the prescribed authority may, proceed to make any
further re-assessments in addition to such earlier re-
assessment.

7.2 Clarification and Advance Rulings:

Particulars Section Provisions
Constitution 60 (1) The Commissioner may constitute an 'Authority for
Clarification and Advance Rulings', consisting of
atleast three Additional Commissioners, to clarify the
rate of tax in respect of any goods or the exigibility to
tax of any transaction or eligibility of deduction of input
tax or liability of deduction of tax at source under the
Act, in respect of any case or class of cases as the
Commissioner may specify.
Application by 60 (2) Any registered dealer seeking clarification or advance
ruling, shall make an application to the Authority in
such form, accompanied by proof of payment of such
fee, paid in such manner as may be prescribed.

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58 Background Material on Litigation Management

Procedure 60 (2A) to 1. On receipt of an application, the Authority shall

60 (6) cause a copy thereof to be forwarded to the assessing
or registering authority concerned and call for its
finding on the clarification sought or question raised
and also any information or records.
2. The Authority may, after examining the
application and any records called for, by order, either,
admit or reject the application.
3. However, the Authority shall not allow the
application where the question raised in the
application-
(i) is already pending before any officer or authority
of the Department or Appellate Tribunal or any Court;
(ii) relates to a transaction or issue which is
designed apparently for the avoidance of tax.
4. (No application shall be rejected unless an
opportunity has been given to the applicant of being
heard and where the application is rejected, reasons
for such rejections shall be recorded in the order.)
5. A copy of every order madeshall be sent to the
applicant and the officer concerned.
6. Where an application is admitted, the Authority
shall after examining such further material as may be
placed before it by the applicant or obtained by the
Authority, pass such order as deemed fit on the
questions specified in the application, after giving an
opportunity to the applicant of being heard, if he so
desires and also to the assessing authority or
registering authority concerned. The authority shall
pass an order within ninety days of the receipt of any
application and a copy of such order shall be sent to
the applicant and to the officer concerned.
7. No officer or any other authority of the
Department or the Appellate Tribunal shall proceed to
decide any issue in respect of which an application
has been made by an applicant.
8. The order of the authority shall be binding, only
on the applicant who seeks clarification and only in
respect of the goods or transaction in relation to which
a clarification is sought and also only in the

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Statutory Provisions 59

proceedings before the officers of the department

(other than the Commissioner) and the Appellate
Tribunal, relating to such applicant.
9. The order of Authority shall be binding as
aforesaid unless there is a change in law or facts on
the basis of which the order was passed.
10. Where the authority finds, on a representation
made to it by any officer or otherwise, that an order
passed by it was obtained by the applicant by fraud or
misrepresentation of facts, it may, by order, declare
such order to be void ab initio and thereupon all the
provisions of this Act shall apply to the applicant as if
such order had never been made.

7.3 Appeals to the Joint Commissioner (Appeals).

Particulars Provisions
Section 62
Appeal against Any decision or order passed by an adjudicating authority subordinate to
the Joint Commissioner may appeal to the Joint Commissioner (Appeals).
Form Form VAT 430
Period Order of assessment - within 30 Order of any other proceedings -
days from the date of on which the within 30 days from the date of on
notice of assessment was served which the order was communicated
Delay Up to 180 days, if it is satisfied that there was sufficient cause for not
preferring an appeal
Procedure 1. No appeal against an order of assessment shall be entertained by
the appellate authority unless it is accompanied by satisfactory proof of the
payment of tax and other amount not disputed in the appeal.
2. The tax or other amount shall be paid in accordance with the order
or proceedings against which an appeal has been preferred.
3. The appellate authority may, in its discretion, stay payment of
Seventy percent of tax and other amount, if the appellant makes payment
of the balance thirty percent of the tax and other amount along with
prescribed form of appeal.
4. Where any application made by an applicant for staying proceedings
of recovery of any tax or other amount has not been disposed of by the
Appellate Authority within a period of thirty days from the date of such
application, it shall be deemed that the Appellate Authority has made an
order staying proceeding of recovery of such tax or other amount subject to
payment of thirty percent of the tax and other amount disputed and

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60 Background Material on Litigation Management

furnishing of sufficient security to the satisfaction of the Assessing

Authority in regard to the balance Seventy percent of such tax or amount
within a further period of fifteen days.
5. Where an order staying proceedings of recovery of any tax or other
amount is passed in any proceedings relating to an appeal, the appellate
authority shall dispose of the appeal within a period of Two hundred forty
days from the date of such order.
6. In disposing of an appeal, the appellate authority may, after giving
the appellant a reasonable opportunity of being heard,
(a) in the case of an order of assessment or penalty:
(i) confirm, reduce or enhance the assessment including any part
thereof whether or not such part is objected to in the appeal;
(ii) pass such other orders as it may think fit; and
(b) in the case of any other order or proceedings, confirm, cancel or vary
such order.
7. In disposing of an appeal before it, the appellate authority, shall not
remand the case to make fresh assessment or fresh order, but shall
proceed to dispose of the appeal on its merit, as it deems fit, if necessary
by taking additional evidence.
8. The Appellate Authority shall pass an order by disposing of an
appeal, within a period of ninety days from the date on which the hearing of
the case was concluded.
7.4 Appeals to the Appellate Tribunal.
Particulars Provisions
Section 63
Appeal against Any decision or order passed by the Joint Commissioner.
Form Form VAT 440
Period Within 60 days from the date of on which the order was communicated
Delay Up to 180 days, if it is satisfied that there was sufficient cause for not
preferring an appeal
Procedure 1. On receipt of notice that an appeal against the order of the appellate
authority has been preferredby the other party, may, notwithstanding that
he has not appealed against such order or any part thereof, file, at any time
before the appeal is finally heard, a memorandum of cross-objections,
verified in the prescribed manner, against any part of the order of the
appellate authority, and such memorandum shall be disposed of by the
Appellate Tribunal as if it were an appeal presented.

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Statutory Provisions 61

2. The appeal, or the memorandum of cross-objections, shall be in the

prescribed form, shall be verified in the prescribed manner, and, in the
case of an appeal preferred by any person other than an officer
empowered by the State Government or the Commissioner shall be
accompanied by proof of payment of thirty percent of tax or other amount
disputed and also a fee equal to two percent of the amount of assessment
objected to, provided that the sum payable in no case be less than two
hundred rupees or more than one thousand rupees.
3. The Appellate Tribunal shall, after giving both parties to the appeal a
reasonable opportunity of being heard, pass such orders thereon as it
thinks fit.
4. If the appeal involves a question of law on which the Appellate
Tribunal has previously given its decision in another appeal and either a
revision petition in the High Court against such decision or an appeal in the
Supreme Court against the order of the High Court thereon is pending, the
Appellate Tribunal may defer the hearing of the appeal before it till such
revision petition in the High Court or the appeal in the Supreme Court is
disposed of.
5. If as a result of the appeal any change becomes necessary in the
assessment, which is the subject matter of the appeal, the Appellate
Tribunal may authorize the Prescribed authority to amend the assessment,
and the prescribed authority shall amend the assessment accordingly and
thereupon, any amount over paid by the dealer shall be refunded to him
without interest, or any additional amount of tax due from him shall be
collected in accordance with the provisions of the Act, as the case may be.
6. The Appellate Tribunal may, in its discretion, stay payment of
Seventy percent of the tax or other amount disputed, if the appellant makes
payment of the thirty percent of the tax or other amount disputed along with
the prescribed form of appeal.
7. The Appellate Tribunal shall dispose of such appeal within a period
of three hundred and sixty-five days from the date of the order staying
proceedings of recovery of Seventy percent of tax or other amount and, if
such appeal is not so disposed of within the period specified, the order of
stay shall stand vacated after the said period and the Appellate Tribunal
shall not make any further order staying proceedings of recovery of the
said tax or other amount.
8. The Appellate Tribunal may, on the application either of the
appellant or of the respondent, review any order passed by iton the basis
of facts which were not before it when it passed the order.

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62 Background Material on Litigation Management

9. The application for review shall be preferred in the prescribed

manner within six months from the date on which the order to which the
application relates was communicated to the applicant;it shall be
accompanied by a fee equal to that which has been paid in respect of the
appeal.
10. If the application for review is preferred within ninety days from the
date on which the order to which the application relates is communicated to
the applicant, the application shall be accompanied by half the fee which
had been paid in respect of the appeal.
11. With a view to rectifying any mistake apparent from the record, the
appellate Tribunal may, at any time, within five years from the date of any
order, amend such order after giving a reasonable opportunity of being
heard to both the parties.
12. Every order passed by the Appellate Tribunalshall be communicated
to the appellant, the respondent, the appellate authority on whose order the
appeal was preferred and the Commissioner.
7.5 Revision Powers
Particulars Joint Commissioner Additional Commissioner /
Commissioner
Section 63A 64
Revision w.r.t. The JC may on his own motion call The Ad. C. may on, his own motion,
for and examine the record of any call for and examine the record of
order passed or proceeding any order passed or proceeding
recorded under this Act and if he recorded under this Act and if he
considers that any order passed considers that any order passed
therein by any officer, who is not therein by any officer, who is not
above the rank of a Deputy above the rank of a Joint
Commissioner, is erroneous in so Commissioner, is erroneous in so
far as it is prejudicial to the interest far as it is prejudicial to the interest
of the revenue of the revenue,
the Commissioner may on his own
motion call for and examine the
record of any proceeding under this
Act, and if he considers that any
order passed therein by any officer
subordinate to him or the Authority
for Clarification and Advance
Rulings is erroneous in so far as it
is prejudicial to the interest of the
revenue

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Statutory Provisions 63

No revision if (a) the time for appeal against the order has not expired; or the matter has
been subject to an appeal to the Appellate Tribunal or a revision in the
High Court.
(b) more than four years have expired after the passing of the order sought
to be revised.
Period The JC shall pass order within a The Additional Commissioner or the
period of one year from the date of Commissioner may pass an order,
initiation of proceeding or calling for as the case may be, on any point
the records which has not been raised and
decided in an appeal or revision,
before the expiry of a period of one
year from the date of the order in
such appeal or revision or before
the expiry of a period of four years,
whichever is later.
Procedure The JC / Ad.C/ Commissioner may, if necessary, stay the operation of the
order for such period as he deems fit and after giving the person concerned
an opportunity of being heard and after making or causing to be made
such inquiry as he deems necessary, pass such order thereon as the
circumstances of the case justify, including an order enhancing or
modifying the assessment, or cancelling the assessment and directing the
fresh assessment.

8. Delhi Value Added Tax Act, 2004

8.1 Adjudication Process - Assessment:
The provision of the Delhi VAT Act provides as follows
Type of Section Provisions
Assessment
Self – Assessment 31 1. Where a return is furnished by a person, which
contains the prescribed information and complies with
the requirements of the Act and the rules -
(a) the Commissioner is taken to have made, on the
day on which the return is furnished, an assessment of
the tax payable of the amount specified in the return;
(b) the return is deemed to be a notice of the
assessment and to be under the hand of the
Commissioner; and
(c) the notice referred to in (b) is deemed to have
been served on the person on the day on which the

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64 Background Material on Litigation Management

Commissioner is deemed to have made the

assessment.
2. However, no assessment shall arise, if the
Commissioner has already made an assessment of tax
in respect of the same tax period under any another
section of the Act.
Default Assessment 32 1. If any person –
orBest Judgement (a) has not furnished returns required under this Act
Assessment by the prescribed date; or
(b) has furnished incomplete or incorrect returns; or
(c) has furnished a return which does not comply
with the requirements of this Act; or
(d) for any other reason the Commissioner is not
satisfied with the return furnished by a person;
the Commissioner may for reasons to be recorded in
writing assess or reassess to the best of his judgment
the amount of net tax due for a tax period or more than
one tax period by a single order so long as all such tax
periods are comprised in one year.
2. If, upon the information which has come into his
possession, the Commissioner is satisfied that any
person who has been liable to pay tax under this Act in
respect of any period or periods, has failed to get
himself registered, the Commissioner may for reasons
to be recorded in writing, assess to the best of his
judgment the amount of net tax due for such tax period
or tax periods and all subsequent tax periods.
3. Where the Commissioner has made an
assessment, the Commissioner shall forthwith serve
on that person a notice of assessment of the amount
of any additional tax due for that tax period.
4. Where the Commissioner has made an
assessment and further tax is assessed as owed, the
amount of further tax assessed is due and payable on
the same date as the date on which the net tax for the
tax period was due
Assessment of 33 1. Where the Commissioner has reason to
Penalty believe that a liability to pay a penalty under the Act
has arisen, the Commissioner, after recording the
reason in writing, shall make and serve on the person

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Statutory Provisions 65

a notice of assessment of the penalty that is due under

the Act.
2. The amount of any penalty assessed is due and
payable on the date on which the notice of assessment
is served by the Commissioner.
3. Any assessment made shall be without
prejudice to prosecution for any offence under this Act.
Limitation on 34 1. No assessment or re-assessment shall be made
assessment or re- by the Commissioner after the expiry of four years
assessment from
(a) the end of the year comprising of one or more
tax periods for which the person furnished a return; or
(b) the date on which the Commissioner made an
assessment of tax for the tax period, whichever is the
earlier.
2. However, where the Commissioner has reason
to believe that tax was not paid by reason of
concealment, omission or failure to disclose
fullymaterial particulars on the part of the person, the
said period shall stand extended to six years.
8.2 Objections to the Commissioner
Particulars Provisions
Section 74
Objection (a) An assessment made under the Act (including an assessment of
against penalty); or
(b) Any other order or decision made under the Act
Form 38 to 41
Period Within 2 monthsof the date of service of assessment or order or decision.
Where the Commissioner is satisfied that the person was prevented for
sufficient cause from lodging the objection within the time specified, he
may accept an objection within a further period of two months.
No objections if No objection may be made against a non-appealable order as defined in
section 79 of the Act.
Also, no objection against an assessment shall be entertained unless the
amount of tax, interest or penalty assessed that is not in dispute has been
paid failing which the objection shall be deemed to have not been filed.
Procedure 1. An objection shall be in writing in the prescribed form and shall state
fully and in detail the grounds upon which the objection is made.
2. The Commissioner shall conduct its proceedings by an examination

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66 Background Material on Litigation Management

of the assessment, or order or decision, as the case may be, the objection
and any other document or information as may be relevant.And where the
person aggrieved, requests a hearing in person, the person shall be
afforded an opportunity to be heard in person.
3. Where a person has requested a hearing and the person fails to
attend the hearing at the time and place stipulated, the Commissioner shall
proceed and determine the objection in the absence of the person.
4. Within three months after the receipt of the objection, the
Commissioner shall either – (a) accept the objection in whole or in part and
take appropriate action to give effect to the acceptance (including the
remission of any penalty assessed either in whole or in part); or (b) refuse
the objection or the remainder of the objection, as the case may be; and in
either case, serve on the person objecting, a notice in writing of the
decision and the reasons for it, including a statement of the evidence on
which it is based.
5. Where the Commissioner within three months of the making of the
objection notifies the person in writing, he may continue to consider the
objection for a further period of two months. Also the person may, in
writing, request the Commissioner to delay considering the objection for a
period of up to three months for the proper preparation of its position, in
which case the period of the adjournment shall not be counted towards the
period by which the Commissioner shall reach his decision.
6. Where the Commissioner has not notified the person of his decision
within the time, the person may serve a written notice requiring him to
make a decision within fifteen days.
7. If the decision has not been made by the end of the period of fifteen
days after being given the notice, then, at the end of that period, the
Commissioner shall be deemed to have allowed the objection.
Section 79- Bar No objection or appeal shall lie against –
on appeal or (a) a decision of the Commissioner to make an assessment of tax or
objection penalty;
against certain (b) a notice requiring a person to furnish a return;
orders (c) a notice issued for audit, special audit and inspection of records;
(d) a decision of the Commissioner to notify any matter;
(e) a notice asking a dealer to show cause why he should not be
prosecuted for an offence under this Act;
(f) a decision relating to the seizure or retention of books of account,
registers and other documents;
(g) a decision sanctioning a prosecution under the Act;
(h) an interim decision made in the course of any proceedings;

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Statutory Provisions 67

(i) a decision of the Commissioner touching on the internal administration

of the Value Added Tax authorities;
(j) an assessment issued by the Commissioner to give effect to an order of
theAppellate Tribunal or a court; or
(k) a notice served on the person for determination of specific questions.

8.3 Appeals to the Appellate Tribunal

Particulars Provisions
Section 76
Appeal against Any decision or order passed by the Commissioner.
Form 38A
Period Within 2 monthsfrom the date of on which the order was communicated
No appeals Against a non-appealable order as defined in section 79 of the Act. Further,
against that no appeal shall be entertained by the Appellate Tribunal unless it is
satisfied that such amount as the appellant admits to be due from him has
been paid.
Procedure 1. Every appeal made shall be in the prescribed form, verified in the
prescribed manner and shall be accompanied by such fee as may be
prescribed.
2. No appeal against an assessment shall be entertained by the
Appellate Tribunal unless the appeal is accompanied by satisfactory proof
of the payment of the amount in dispute and any other amount assessed as
due from the person:
3. However, the Appellate Tribunal may, if it thinks fit, for reasons to be
recorded in writing, entertain an appeal against such order without payment
of some or all of the amount in dispute, on the appellant furnishing in the
prescribed manner security for such amount as it may direct:
4. In proceedings before the Appellate Tribunal -
(a) The person aggrieved shall be limited to disputing only those matters
stated in the objection;
(b) The person aggrieved shall be limited to arguing only those grounds
stated in the objection; and
(c) The person aggrieved may be permitted to adduce evidence not
presented to the Commissioner for good and sufficient reasons.
5. The Appellate Tribunal shall -
(a) In the case of an assessment, confirm, reduce, or annul the
assessment (including any penalty and interest imposed);
(b) In the case of any other decision of the Commissioner, affirm or
reject the decision; or

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68 Background Material on Litigation Management

(c) Pass such other order for the determination of the issue as it thinks
fit:
6. The Appellate Tribunal shall give reasons in writing for its decision
which shall include its findings on material questions of fact and the
evidence or other material on which those findings were based.
7. The Appellate Tribunal shall use its best endeavours to make a final
resolution of the matter before it and for this purpose may make a decision
in substitution for the order in dispute, including the exercise or re-exercise
of any discretion or power vested in the Commissioner.
8. The Appellate Tribunal shall not set aside an assessment and remit
the matter to the Commissioner for a further assessment, unless it has
first-
(a) Advised the aggrieved person of the proposed order;
(b) Offered the person the opportunity to adduce such further evidence
before it as might assist the Appellate Tribunal to reach a final
determination.
9. Where the Appellate Tribunal sets aside an assessment and remits
the matter to the Commissioner for a further assessment, the Appellate
Tribunal shall at the same time order the Commissioner to refund to the
person some or all of the amount in dispute:
10. Where no order is made, it shall be presumed that the Appellate
Tribunal has ordered the refund of the amount in dispute.
11. Where a person has failed to attend the hearing at the time and
place stipulated, the Appellate Tribunal may adjourn the proceedings,
strike out the appeal or proceed to make an order determining the objection
in the absence of the person.
12. The Appellate Tribunal may rectify any mistake or error apparent
from the record of its proceedings.
13. Any order passed by the Appellate Tribunal may be reviewed suo-
motu or upon an application made in that behalf Provided that before any
order which is likely to affect any person adversely is passed, such person
shall be given a reasonable opportunity of being heard.
8.4 Revision Powers
Particulars Provisions
Section 74A
Revision w.r.t After any order (including an order under this section) or any decision in
objection is passed under the Act, rules or notifications made thereunder,
by any officer or person subordinate to him, the Commissioner may, of his
own motion or upon information received by him, call for the recordof such

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Statutory Provisions 69

order and examine whether –

(a) any turnover of sales has not been brought to tax or has been brought
to tax at lower rate, or has been incorrectly classified, or any claim is
incorrectly granted or that the liability to tax is understated, or
(b) in any case, the order is erroneous, in so far as it is prejudicial to the
interest of revenue, and after examination, the Commissioner may pass an
order to the best of his judgment, where necessary.
Form 24B
No revision if No proceedings shall be entertained on any application made by a dealer
or a person.
Period (a) No order shall be passed after the expiry of four years from the end of
the year in which the order passed by the subordinate officer has been
served on the dealer.
(b) Where in respect of any order or part of the said order passed by the
subordinate officer, an order has been passed by any authority hearing the
objection or any appellateauthority including the Tribunal or such order is
pending for decision in objection or in appeal, or an objection or an appeal
is filed, then, whether or not the issues involved in the examination have
been decided or raised in the objection or the appeal, the Commissioner
may, within five years of the end of the year in which the said order passed
by the subordinate officer has been served on the dealer, make a report to
the said objection hearing authority or the appellate authority including the
Tribunal regarding his examination or the report or the information received
by him and the said appellate authority including the Tribunal shall
thereupon, after giving the dealer a reasonable opportunity of being heard,
pass an order to the best of its judgment, where necessary.
Procedure 1. For the purpose of the examination and passing of the order, the
Commissioner may require, by service of notice, the dealer to produce or
cause to be produced before him such books of accounts and other
documents or evidence as he thinks necessary for the purposes aforesaid.
2. If the Commissioner has initiated any proceeding before an
appropriate forum against an issue which is decided against the revenue
by an order of the Tribunal, then the Commissioner may, in respect of any
order, other than the order which is the subject matter of the order of the
Tribunal, call for the record, conduct an examination as aforesaid, record
his findings, call for the said books of account and other evidence and pass
an order as provided for as if the issue was not so decided against the
revenue, but shall stay the recovery of the dues including the interest or
penalty, insofar as they relate to such issue until the decision by the
appropriate forum and after such decision, may modify the order of
revision, if necessary.

Indirect Taxes Committee

 Chapter 5
Drafting and Pleadings

1. Introduction
Conveying information that is adequate to state a fact or observation or question about an
action taken or anticipated without deficiency or overuse of words is a skill that will come by
practice. However, this chapter lays down the variants that may be at play in communicating
with various authorities in indirect tax laws.
Drafting refers to the manner of presenting / communicating that best fulfills the twin
objectives of ‘audience’ and ‘message’. That is, the communication must be commensurate
with the office of its recipient in language, detail and precision while passing on the desired
understanding in its essence and form for verification.
Pleading means a plaint or a written statement. Understanding these requires a detailed study
of this subject but broadly refers to the precise and purposive writing of the communication
where only relevant facts are brought into consideration seeking a particular action by the
addressee. Any relief sought in a departmental communication is with a purpose for seeking
exercise of authority vested with the addressee based on facts or data supplied. Hence, clarity
in communication is imperative.
Communication in general must convey:
(a) Clear and unambiguous statement of facts about the assessee or transaction;
(b) Polite yet firm statement of assessee’s position about any, direct or indirect, assertion;
(c) Awareness of the limits to the power to seek information and the extent of duty to
supply the same;
(d) Transparency about availability of documents and the contemporaneous nature; and
(e) Promptness in being available or accessible to attend to requirements.

2. Investigation
By its very nature, investigation is secretive as to the ‘object and reason for ‘suspicion’.
Confidential, yes, but conveys a certain degree of mutual lack of confidence between the
investor and the investigated. That one cannot be made a witness against himself is not a
one-way street because the investigation cannot be compromised by allowing the person
investigated to supply evasive response.
Correspondence received from investigating authorities is generally brief and seeks large
number of documents and records. Refusing to supply information attracts punitive provisions
and it is not offensive to express inability to prepare new information not ordinarily available
Drafting and Pleadings 71

and / or maintained except in order to supply contemporaneously available documents and

records. In other words, data available in the ordinary course of operations or those prescribed
in law can be provided and details required in a new form / format of reports may not be able
to be provided instantaneously.
It is important to verify the following:
(a) Provisions of the law that authorize the said investigation;
(b) Authority (officer) empowered to conduct the said investigation;
(c) Jurisdiction of the said authority over the assessee; and
(d) Nature of information called for and duration of time permitted to supply the same
Illustration 35:
“To,
……..
This has reference to the telephonic request seeking the following information:
a) …..
b) …..
In order to correctly understand the nature of information required and to obtain necessary
approval to provide the same, we respectfully urge your good self to provide a written request
in this regard. This would greatly help us in promptly providing you with reliable information
without any misunderstanding or error on our part.
…….”
Illustration 36:
“To,
……..
With reference to your above referred letter, we are pleased to submit the following
information for your kind perusal:
a) …..
b) …..
However, in view of the ongoing statutory audit / upcoming annual general meeting of
shareholders / ANY OTHER EVENT schedule to be held on _________, we are unable to
devout the time required to prepare information in the form requested by your goodself.
Hence, we request you to kindly grant us __ weeks from the date of completion of the said
event to provide the information as requested above.
…….”

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72 Background Material on Litigation Management

Illustration 37:
“To,
……..
With reference to your above referred letter, we have been directed to prepare and provide the
following information:
a) Sales register in respect of sales contracts concluded in each office of the Company
within the State of …..
b) Details of Cenvat credit availed segregated based on payment made from each bank
account of the Company for the period …..
c) …..
In view of the fact that the said information is not required to be maintained by us in
accordance with the extant Rules under Service Tax or other applicable law(s), we do not
have the processes to capture this information and regrettably we do not have the said
information prepared contemporaneously. Hence, we are unable to reliably prepare and
provide the same for verification.
…….”

3. Audit
Audit is undertaken based on certain criteria such as revenue or risk in a unit and
departmental officers perform the audit. Sometimes audit is conducted by the CAG or special
audit is conducted at the behest of the department by CAs. Audit as envisaged under the
Chartered Accountant’s Regulations is distinct and cannot be used as an appropriate
comparison to appreciate the nature of this exercise undertaken by departmental audit
officers.
It is usual to receive request for information in standardized forms / formats. Hence, it is
important to bear in mind that the response must be in line with the information available in
returns filed and annual financial statements. For example, where AS-7 is followed for
reporting revenues in financial statements, it is not acceptable that reconciliation is not
available with the value of taxable services disclosed in ST3 returns.
The scope of an audit correspondence may be bifurcated into two parts:
(a) Categorization of transaction for purposes of levy of service tax – here contractual
arrangements are inquired into and copies of agreements / contracts are called for to verify
the tax positions followed. As regards, general business overview or any equivalent non-
specific language used to seek information that categorizes the business operations, it is
important to ensure that in the enthusiasm to provide such information the note / submission
does not travel beyond the scope of the words used in actual agreements / contracts. Use of
sweeping description can lead to misunderstanding or misinterpretation. It is advisable to

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Drafting and Pleadings 73

restrict the information to words from contracts or tax positions determined after internal
consultations.
Illustration 38:
“General Business Overview
The Company is engaged in the business:
Not Advisable Suggested Alternative
..…of software development and …..of information technology software
customization, sale of software licenses of its services and trading of goods (packaged
own products namely, ………. and annual software, namely, …..)
maintenance contracts
…..of real estate development …..of works contracts for construction of
residential apartment under a scheme
involving transfer of undivided share of land
(owned and otherwise) along with amenities
and facilities
…..of operating restaurant …..of operating air-conditioned restaurant
serving food and non-alcoholic drinks and
outdoor catering services
…..of operating dealership of XYZ (brand) …..of trading of goods (motor cars and parts)
cars including service station as authorized dealer and providing
maintenance and repair services

……REPRODUCE WORDS FROM FINANCIAL STATEMENTS (NOTES TO

ACCOUNTS)…….”
(b) Compliance with discharge of the levy – here the date and time of payment of taxes and
their disclosure to the tax department is inquired. Explanations in textual form allow room for
misunderstanding. Hence, workings may be confined to computations and reconciliations. In
these workings, clear references to source of each of the values would be beneficial.
Illustration 39:
“Revenue Reconciliation – ST3 and Audited Financial Statements
Revenue as per ST3 (column __ of ST3 Apr-Sept) ………
(column __ of ST3 Oct-Mar) ……… ……….
Add: ………
Less: ………
Balance ……….
Revenue as per audited financial statement ……….

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4. Adjudication
While it is in one sense correspondence, more precise expressions are employed to describe
correspondence with adjudicating authorities. Interaction with an adjudicating authority has the
show cause notice as the starting point. Not only that, the SCN provides the framework or
boundaries for correspondence.
Show cause notice must be met with a reply that may be filed by the Noticee or a duly
authorized representative. The authority to appoint a representative is a statutory right and the
law lays down a list of qualifications that such a representative needs to possess in order to
be eligible to provide such representation.
Reply to a show cause notice must contain the following parts:
(a) Background facts relating to the Noticee;
(b) Identification of facts and facts-in-issue to point to the purpose of the SCN;
(c) Preliminary objections concerning the SCN – authority and jurisdiction, timing and valid
service and request for adjournment;
(d) Clear statement of acceptance or rejection, wholly or in part, of each para(s) forming the
issues raised in the SCN. Arguments, corroborative or rebuttal evidence and supporting
decisions need to be provided;
(e) Alternative plea may also be contained in order to rebut the issues raised in the SCN;
and
(f) Prayer containing the nature of relief sought including whether opportunity for personal
hearing is required or waived.
Illustration 40:
“OPENING WORDS (IN REPLY TO SCN) AGAINST EACH REBUTTAL PARA –
Without prejudice and in addition to the foregoing………..”
Illustration 41:
“CONCLUDING (IN REPLY TO SCN) AGAINST EACH REBUTTAL PARA –
………..for these reasons the demand in para no. ……… of the impugned notice is liable to be
set aside as being unlawful and contrary to facts which the Noticee vehemently objects and
rejects in totality.”
Illustration 42:
“MAKING REFERENCE TO PARAS IN ORDER APPEALED AGAINST –
…….the learned Assistant Commissioner has extracted para no…….. in internal page no…….
of the Intelligence Report and reproduced it in para no…….. at page no…… of the impugned
order that……”

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Illustration 43:
“CONCLUDING PARA IN REPLY IN THE FORM OF PRAYER –
In view of the foregoing, the Noticee prays that:
a) Su ppression alleged in the impugned notice may be dropped as
unsubstantiated
b) Demand for service tax in para no……. of impugned notice may be dropped as barred
by limitation / not sustainable in law
c) Demand for consequent interest may also be dropped
d) Demand for penalty is liable to be set aside
Noticee further craves leave to furnish additional grounds or amend any or all of the grounds
setout herein as may be necessary to support contentions raised herein and seeks opportunity
to be heard in person through authorized signatory.”

5. Revisionary Authority
Power of revision is a supervisory power conferred by statute to inquire into the propriety of
orders passed by any specified authority. Correspondence with revisionary authority occurs
when opportunity is being given to the Noticee before passing adverse orders.
The fact that such a revisionary proceeding is initiated itself indicates that the underlying order
is considered to be warranting re-examination on some ground. Hence, it is important for such
Noticee to ensure accuracy of facts being referred or relied upon. And correspondence may be
directed towards:
(a) Firstly, ensure correctness and completeness of information being considered in the
proceedings and
(b) Secondly, ensure all judicial precedents holding field on a given date are supplied to the
authority carrying out these proceedings

6. Authority for Advance Ruling

The binding nature of the rulings of AAR requires very precise line of communication by the
Applicant. The applicant must ask a specific question based on the intended facts or proposed
action. It, therefore, goes without saying that the ruling will have its binding force only if the
transaction is carried out exactly the same way in which it was stated in the application.
“If the facts are as follows” is a presumption in the application. For exactly this reason, “if the
facts were altered as follows” is impermissible in the application. AAR is not a forum to seek
legal opinion for various hypothetical scenario in which a certain transaction could possibly be
implemented.

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7. Settlement Commission
Commission is a forum where the tax department does not have any representation. It is the
Applicant who is to make a truthful and voluntary disclosure of the admitted amount of dues
with an unconditional undertaking to pay these admitted dues in exchange for immunity from
prosecution. Hence, the nature of the underlying cause for non-payment of dues is one which
imminently attracts prosecution.
Given the nature of remedy sought, the application must be simple and clear in stating the
facts. Further, securing decision by misleading the Commission has very severe
consequences. In such a case, the decision will be revoked, erstwhile proceedings that were
halted will be resumed and the time lost in approaching the Commission until discovery of
such deception will be excluded in calculating the applicable limitation.

8. Appeal
While provisions of CPC do not apply to appeal proceedings before statutory authorities such
as Joint Commissioner or Commissioner (Appeals) and Tribunal, it is important to fully grasp
the Appellate Procedure Rules that are prescribed by the statute. Diligence in the adherence
to the form and presentation is essential.
Format prescribed may be referred from the statute. It is important to note that the appellate
authority’s familiarity with the form of appeal guides them to look for relevant information in
specific columns or pages in this form. Hence, strict adherence to the prescribed form is
essential.
Completeness is also of equal importance where the different parts of the form of appeal such
as facts, grounds, prayer and verification arenot deviated from. Deviation can be fatal to the
appeal itself.
Well- drafted appeal does not mean a very lengthy appeal. In fact, it is encouraging to note
that under Income-tax law, e-filing of appeals has just commenced where there are limits to
the number of words for each of these parts. Hence, the area of skill in filing appeal is not in
elaborate language but in precision without leaving out any potential ground for substantiating
the relief prayed for.
Illustration 44:
“……..the learned Commissioner has permitted himself to be misled by relying upon unverified
information that is nothing more than hearsay and as such reached an erroneous finding at
para no….. of the impugned order which is unlawful and for this reason the demand for tax
deserves to be set aside.”
Illustration 45:
“……..the impugned order is not legal and proper in as much as it seeks to regard the services
rendered by the Appellant tax contrary to the express language of rule ….. by introducing
extra-legislative tests and criteria not contained in the extant Rules and thereby performing
great injustice against the Appellant which does not enjoy legislative sanction or pleasure of

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Drafting and Pleadings 77

support from authority of judicial pronouncements holding field and for this reason the demand
for tax deserves to be set aside.”
Illustration 46:
“…having cited a circular issued by the Board as to the interpretation that the words in rule …..
are to be supplied and to this end, the impugned order demonstrates eagerness to fasten
unsubstantiated liability and a pre-determined mind which is violative of principles of natural
justice and for this reason the demand for tax deserves to be set aside.”

9. Additional Evidence
Evidence is that which advances the cause asserted by the Appellant. Appellant is free to
mount a barrage of evidence that may prevail upon the Appellate Authority. Use of additional
evidence must not appear to exhaust the Authority. Instead, it must be such that each one of
them throws new light or advances the case asserted by the Appellant.
Appeal is a process of visualizing the ‘reasons’ for the ‘actions’ charged to have or ought not
to have taken place. Availability of evidence only supports the imagination of the Authority to
reach a substantial conclusion about the events that have occurred in the past.

10. Additional Grounds

Generally, the Appellate Authority does not encourage use of additional grounds after the
appeal has been filed,the reason being that the respondents who would have been served
with a copy of the appeal and put at notice about the grounds urged by the Appellant. Hence,
if after filing the appeal additional grounds are permitted, then the respondents will be in the
dark without any occasion to prepare a suitable rebuttal. This could also be misused by
withholding an important ground only to be introduced later as an additional ground to leave
the respondents unaware. Although this is the principle, Courts have not allowed this to deny
the Appellant to urge a bona fide ground that was omitted at the time of filing the appeal.
10.2 Additional or new grounds must show purpose to advance the cause of the Appellant
and prima facie be thosewhich could not have been urged in the appeal itself. Suitable
opportunity will be granted to the respondents to consider this additional or new ground and
prepare rebuttal.

11. Number of Copies

All correspondence must be submitted in requisite number of copies. Copies of appeals and
miscellaneous applications must be such that each member of the Tribunal is provided one
copy each as well as one copy is filed / separately served to each respondent .

12. Formats
All documents are to be in clear and legible font with adequate margin and line spacing. One-
inch margin and double-line spacing on legal-size paper is a safe format to follow. Relevant
Procedure Rules of the Appellate forum may be referred.

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All submissions are to be bound with index and page numbering legibly marked uniformly in all
copies. Where documents are voluminous, the same may be separated into multiple volumes
marked distinctly but with continuity in the page numbers.

13. Do’s
(a) Always ask for written requests before submitting any information and collect
acknowledgement for written replies submitted.
(b) While filing enclosures, identify the same with description in the title of the document. If
there are too many enclosures, then pagination and indexing it is advisable to facilitate
quick reference.
(c) Record the ‘date of service’ of every communication including notice or order(s)
received from the tax department. If it is not available, it can be sourced under right to
information law.
(d) Address all communication to the specific authority and provide relevant references of
documents, letters, visits, etc., that ‘this communication is in relation to or is in
furtherance of…….’.
(e) Provide written communication in case of change of address for serving notice during
the course of any proceeding by letter or a specific application.
(f) Ensure politeness in all communications with tax authorities. Politeness does not mean
reverence to the authority because as an authorized representative, loyalty is towards
the law and not to the officer enforcing or administering the law.
(g) When extracts of statutory provision arebeing submitted, ensure that photocopy from an
official publication is provided and not a print-out of a reproduced version from a
computer. Photocopy from an official publication displays authenticity.
(h) Subscribe to more than one law journal for reference including electronic versions.
(i) Develop and maintain a good library in the office.
(j) Before citing any authority ensure that it is current and has not been overruled by a
superior authority / Court.

14. Don’ts
(a) Do not deviate from prescribed forms and formats. Use additional enclosures to submit
charts and pictorial presentation of relevant information / data
(b) Do not forget to do page numbering after printing and binding the final version of
documents and submissions to tax authorities
(c) If any information is not available, make a clear statement to this effect and do not offer
any alternatives because it dilutes the clarity about the earlier statement – that the said
information is not available

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(d) Do not make spelling mistakes in the title / designation of authorities before whom
submissions are being made
(e) Avoid using short forms / acronyms for the title of any authority such as ‘Supdt.’ for
Superintendent, ‘AC’ for Assistant Commissioner, etc. Instead, refer to their full and
complete title.
(f) As an authorized representative, do not encourage telephonic communication with the
office of any adjudicating or appellate authority. Client is free to maintain telephonic
contact with jurisdictional / range authorities
(g) Do not allow typographical errors in statements or replies
(h) Do not submit incomplete or erroneous enclosures to be including in the submissions
(i) As a practitioner, do not discard books / publications of Act and Rules when the next
year’s publications are notified. In representation matters, reference is to be made to
the law ‘as it then was’ and not as on the date of current proceedings

15. Errors (common or otherwise)

(a) Excess or unsolicited information – Often in the eagerness to supply information or to
lay emphasis on the diligence exercised, assessees may volunteer to provide unwarranted
information without any purpose being served.
Illustration 47:
“UNSOLICITED INFORMATION –
………..as such the applicable taxes have been deposited regularly. In fact, there have been
occasions where the Company has voluntarily deposited taxes identified as due and payable
from internal audit verifications of tax compliance even though the same is beyond the period
of limitation specified in section ….. of …. Act.”
(b) Non-specific description of business overview – In order to be cautious, it is not
uncommon to find the company supplying information that is non-specific and vague and
instead of supplying clarity, this itself triggers further queries. All communication, as stated
earlier, must be clear, precise and presented in simple language.
Illustration 48:
“NON-SPECIFIC INFORMATION –
………..as the Company hasestablished to undertake real estate development in accordance
with applicable foreign investment guidelines of Government of India, the Company has
undertaken contracts for conducting site survey and preparation of feasibility studies for
evaluating and prospecting opportunities. Based on these studies, the Company then
determines which projects to implement and which ones not to. The actual activity of
construction is outsourced with full accountability with the vendors/contractors and the
Company markets the project to customers. Revenue from operations refers to sale of
apartments and developed plots. Cost of operations relates to actual construction work

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undertaken on behalf of the Company by various third parties. Cost of feasibility studies is
shared with ……. who is an associate concern.”
(c) Caustic remarks – However much the order passed may cause grief to the assessee,
there is no justification formaking caustic remarks against the said authority in appellate
submissions.
Illustration 49:
“PERSONAL AND UNCHARITABLE REMARKS –
………..in so doing the learned Commissioner has taken leave of his senses and made a
mockery of the discretion vested in him under ….. rule of ….. Act ……………”

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 Chapter 6
Appearance

1. Appearance
Appearance before Government / departmental authorities, is an art and one of the most
important functions in any litigation proceedings. It requires skills that showcase the grasp of
knowledge about the law on a particular matter and the understanding of the facts of the case.
With practice, one can express this art skillfully. While a well prepared ground can ease the
task of the person representing; the representation skills are often brought to test when either
the grounds are weak or lack precedence or can be decided eitherway.
Appearance, either as appellant, or as a respondent, is a formal representation on behalf of
the client in the proceeding before the adjudicating authority/appellate authority so as to lend
assistance in discovering the facts and the interpretation of law and the application of law to
the facts of the case. The outcome is a by-product of this exercise.
Depending on the matter, an appearance, may be before:
(a) Departmental authority, that is, pursuant to a notice issued by the lower authority which
considers that the assessee has either not paid or short paid any tax, interest or penalty
due to the Government and who has either issued a show cause notice or desires to
issue a show cause notice
(b) Appellate Authority such as Commissioner (Appeals), where an adjudicating order has
been passed and the assessee is aggrieved.
(c) Tribunal, where the order is passed by any lower authority in adjudicatory or appellate
proceedings, or in case of a departmental appeal, as respondent.
(d) Appropriate High Court or the Supreme Court of India.

2. Authority of Persons to Represent

In terms of Section 35Q of the Central Excise Act, 1944, Section 83 of the Finance Act, 1994
read with Section 35Q of the Central Excise Act, 1944 and Section 146A of the Customs Act,
1962 any person unless required to appear personally, may appear through an authorized
representative. A CA is one of the persons who is authorized to represent on behalf of the
client.
Legal recognition of professional qualification does not prohibit the authority from examining
whether the person appearing is mindful of the force that his averments obtain to bind his
client in the proceedings. It is not unimaginable that in his obedience to conduct a fair
proceeding, the authority may express dissatisfaction with the attitudeof the person appearing
to be excused from representing the assessee / appellant. Hence, CAs must pay attention to
preparation and appearance while providing representation services.
82 Background Material on Litigation Management

3. Dress code
The dress code for appearance by an authorized representative is prescribed only for
appearances before Tribunal. The recommended dress code for representation is given in the
table below:
Represented Prescribed dress code Recommended dress code
before
Departmental Not specified Recommended to be formal
Authority
Commissioner Not specified Recommended to be formal
(Appeals)
Tribunal In terms of Rule 48 of Customs, When representing in person:
Excise and Service Tax Appellate Formal dress.
Tribunal (Procedure) Rules, 1982:
If prescribed by Professional body When representing by authorized
to which the representative is representative: as prescribed.
attached, the said prescribed dress
code, else:
(i) For a male: A close-collared
black coat, or in an open-collared
black coat, with white shirt and
black tie;
(ii) For a female: A black coat over
a white sari or any other white
dress

4. Preparations before the hearing

Personal hearings are an opportunity afforded in ensuring that while adjudicating matters, the
authorities are given full perspective from both parties, on their version of the matter. It is a
well-known fact that spoken words are more expressive and have more value than written
literature, due to the greater impact of non-verbal elements like body language, stress etc. in
speech.
Accordingly, personal appearances before adjudicating authorities should not be regarded as
a mere formality and the best use of the said opportunity should be madeto ensure more
favorable rulings. Certain precautions that may be taken before appearing in front of the
authorities are listedbelow:
(a) Block your calendars for the scheduled date of personal hearing;
(b) In case the hearing is scheduled before Tribunal, it is customary for the court to issue a
cause list. As and when issued, the same may be checked to ensure the listing and the
serial number / time at which the case would be called;

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(c) Know the adjudicating / appellate authorities – this may be done by reading about his /
her previous judgments, if any. This would give the person appearing a better
perspective of the authorities and would aid in representing in a manner the authorities
would understand or get convinced;
(d) Visit the location of the hearing before the actual date of hearing, to familiarize yourself
with the place;
(e) Review the file, to acquaint yourself with the facts and legal grounds taken;
(f) Check for judicial decisions not considered earlier and having relevance to the matter.
It is advisable to have printed copies of the judicial decisions relied upon and in case
the same are to be presented, sufficient copies be made available to the adjudicating
authorities and the other party;
(g) Prepare a summary / synopsis to be presented before the adjudicating authority/
appellate authority which will help them know about the entire case in about 3-4 pages.
This also saves time and gives all the parties involved a better understanding ofthe
facts of the case.
(h) Prepare short notes that would help you while appearing before the adjudicating
authority/ appellate authority

5. Precautions during appearance

Right to be heard, being an opportunity, limited, however, by time. It is important that
adequate preparations are made to ensure proper representations are made before
adjudicating authority/ appellate authority. Rules, wherever prescribed, should be followed
while appearing.
In case the matter is listed before departmental authorities / first appellate authority:
(a) Meeting the Superintendent assisting the adjudicating authority/ appellate authority may
be advisable. While meeting, it may be ensured that the department file is available
and that the personal hearing record is printed and kept in the file.
(b) In case, letter to represent the matter was not filed earlier, the same may be provided to
the Superintendent to be placed in the file
(c) While addressing the departmental authority, it is important to be courteous. It is
advisable to address the adjudicating authority/ appellate authority as ‘Sir’ and any
respectful salutation / title that is customary.
In case the matter is listed before Tribunal:
(a) Meeting the court master before the court commences may be advisable. It will make
him know about your presence. Further, it is important that you are polite in your
interaction with them. Meeting the departmental representatives will also help.
Common courtesies go a long way inbuilding professional rapport.

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(b) In case the letter of authorization to represent the matter is not filed earlier, the same
may be provided to the court master to be placed in the file
(c) The members on the bench should be addressed as ‘My Lord’ or ‘Your Honour’.
(d) Parties must remain quiet so as not to disturb the hearing. Disrupting court hearings is a
contempt of court and can result in punishment.
(e) Stand whenever the members on the bench enter or leave the courtroom and bow your
head to acknowledge them.
General etiquettes:
(a) Smoking, eating, drinking or chewing gum is strictly not permitted;
(b) Audio or video recording or photography is not allowed;
(c) Usage of mobile phones is prohibited;
(d) Children under the age of 14 are not allowed in the courtroom unless they are present
to give evidence or have the court’s prior approval;
(e) While sitting in the court hall or before the adjudicating authority/ appellate authority, the
posture should be courteous. For instance, sitting with crossed legs may be taken as
being disrespectful to the authorities.

6. Representing before adjudicating authority/ first appellate

authority
When the matter is called upon, the following may be considered for effective representation:
(a) Nature of hearing
There may be various scenarios for which the hearing is called upon. The methodology to
represent varies with the type of hearing.
(i) Stay Matter:
In a stay matter, the question before the adjudicating authority/ appellate authority is to prima
facie understand the merits of the case and thereon upon decide the quantum of stay. In such
cases, the representation to be made should be brief and precise. Elaborate submissions on
merits are not welcome.
In case of financial hardship, adequate financial evidence would need to be supported to
support the plea. In case the assessee is financially strong but the plea is taken, the bench
may not appreciate the same and consider the plea as frivolous. Further the details of tax and
other levies demanded, period of dispute and amounts already paid and appropriated by the
department should be highlighted.
Illustration 50: Appellant praying for financial hardship had filed an affidavit claiming financial
hardship without submitting corroborative evidence to show financial hardship. Stay was
rejected without expressly holding the affidavit to be false.

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Illustration 51: Appellant submitted financial statements where loss was reported for two years
in a row in support of his claim for financial hardship. Appellate authority verified the balance
sheet and found that loans to related parties had been extended for a sufficient amount and
recognizing the financial hardship allowed stay application partially by directing the appellant
to deposit to the extent monies were advanced as loans to related parties.
Illustration 52: Appellant claimed financial hardship but the financial statements showed
profitability of the business. The CA representing the appellant stated that by being asked to
deposit the disputed amount, would cause financial distress to the operations. He supported
this submission with an elegant cash flow statement projecting the working capital implication
of making such a deposit. The Appellate Authority agreed with the submission and granted
absolute stay after making a statement that in view of the extent of ongoing Government
contracts, there was no apparent risk to recovery of dues, if eventually determined in favour of
revenue.
Illustration 53: Appellant praying for stay of recovery of demand had claimed financial hardship
along with corroborative evidence. During arguments, the CA showed that the case was
covered by a superior Court’s decision which had been followed by this forum in a number of
recent decisions. Appellate Authority allowed the stay application and as there was no
objection by the departmental Counsel, took up the appeal itself and disposed of it in the
interest of time and justice.
(ii) Early Hearing:
It would be important that the reasons for early hearing are clearly illustrated. The right to
grant early hearing would be that of the adjudicating authority/ appellate authority. Principally,
matters with high financial implications are not the only reasons for early hearing.
Illustration 54: Appellant filed application for early hearing stating that the stay application has
also not come up for hearing but the tax department has issued a letter to the bank asking for
‘blocking’ of funds in view of the adjudicating order that is currently in operation. Appellate
authority took exception to this revenue recovery tactic and allowed the early hearing
application and directed the Registry to bring the stay application. Appellate authority heard
the stay application in the afternoon session and passed stay orders noting that such
aggressive measures were unwarranted and showeddisrespect tothe Appellate Authority who
is yet to hear the stay application. Factors like stakes involved, other similar matters,
availability of precedents, and recurring nature of the issue are considered while granting early
hearing.
Illustration 55: Appellant filed application for early hearing of application stating that appeal
along with stay application has been filed; however the time limit stated in the adjudicating
order for payment of disputed tax is about to expire and that the Appellant is apprehensive
that the tax authorities may take aggressive recovery action. Appellate authority assured the
Appellant that when the stay application is pending, the tax authorities will not take any
recovery action. They will wait for disposal of the stay application and directed the
departmental Counsel to taken note of this confidence that the Appellate Authority is reposing

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in the tax authorities. After making these observations, the early hearing application was
dismissed as unsubstantiated apprehension without any real evidence and as such
unwarranted.
(iii) Clubbing:
Similar matters may be prayed to the adjudicating authority/appellate authority to be clubbed
for hearing. In case the matters in different appeal have common cause, the adjudicating
authority/appellate authority may list the same together for speedy disposal. This would also
reduce the litigation costs.
Illustration 56: Appellant filed application for clubbing of multiple appeals involving
substantially similar questions. Appellate authority heard the application but found that only
some of the questions were similar and recognized that there were other significant dissimilar
issues and by clubbing the various appeals, there would be occasion to attend to the
dissimilar issues out of turn. As such, the application was dismissed as rejected.
Illustration 57: Appellant filed application for clubbing of multiple appeals involving
substantially similar questions. Appellate authority heard the application and though other
dissimilar issues were present, they were not substantial and as such allowed the application
as the substantial questions involved in all appeals being identical merited consideration
together.
Illustration 58: Appellant filed application for clubbing of multiple appeals where some were
cross-appeals and some were appeals by Appellant. Appellate authority heard and allowed the
application so that appeals by Appellant and Department could receive consideration together.
(iv) Condonation of delay:
Filing an appeal within time is a limitation provided in the law for seeking redressal and the
condonable period is ordinarily stated. In case of delay, the applicant will have to provide for
reasons that account for the delay and in the event the adjudicating authority/ appellate
authority considers the same to be fit for condonation and is within the extendable period, the
matter subject to the satisfaction of the adjudicating authority/appellate authority, is
condonable. The applicant will have to bring a strong case for condonation. The application
should also be supported by an affidavit and other documentary evidence.
There may also be delay in filing departmental appeals, which are viewed little more leniently
due to government procedures/processes involved in seeking approval for filing and other
administrative reasons. Condonation is not a matter of right. Sometimes costs are imposed by
the Tribunal and Court for entertaining a condonation application.
Illustration 59: Appellant filed application for condonation of delay of more than 1000 days and
explained that being a PSU, they required clearance to file the appeal from their Committee of
Disputes. When the Appellate Authority found that the case each day of delay was explained
and if the time taken by the Committee were excluded, the Appellant had filed the appeal in
time, and the application was allowed. The CA for the Appellant made successful submissions

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Appearance 87

on the strong prima facie merits of the case and the Appellate Authority noted that need to do
justice on the merits of the case further supported condonation of delay.
Illustration 60: Appellant filed application for condonation of 200 days’ delay before First
Appellate Authority where the condonable delay was 180 days and due to bona fide reasons
the Appellant was prevented from filing appeal within this extended time limit. The First
Appellate Authority dismissed the application and also the appeal also stating the there is no
statutory power to condone delay beyond the time limit of 180 days. Delay of 200 days being
beyond the statutory time limit for condonation, even though the cause for delay is genuine
and verifiable, the law does not vest the First Appellate Authority with the power to condone.
Illustration 61: An appeal was filed in respect of dismissal of the condonation application and
the appeal itself (as in the above illustration) before the Second Appellate Authority. In law,
the Second Appellate Authority has power to condone delay and there is no upper limit for the
extent of delay that can be condoned. The Second Appellate Authority found that this appeal
was filed in time and held that the scope of the second appeal is to inquire into the propriety of
the order of the First Appellate Authority and not to entertain appeal against the adjudication
order passed originally. As such this appeal was dismissed by the Second Appellate Authority
stating that there was nothing improper in the order passed by the First Appellate Authority.
Appellant was left to consider whether writ petition can be filed against the order of the
Second Appellate Authority in view of the merits of the case having never come up for
consideration and that justice eluded the Appellant on account of technicalities of procedure.
Appellant was relying upon decisions in Orient Syntex Ltd. v. AC-CE 1990 (47) ELT 321
(Bom.) and Zafarullah v. CC 1992 (60) ELT 263 (Trib.)
(v) Regular hearing:
Ordinarily, there are no limitations on time for presenting the arguments at regular hearings.
This is for the reason that the adjudicating authority/ appellate authority provides full
opportunity to the parties to present their version in a manner, which enables justice to prevail.
However, we need to value the time of the adjudicating authority/appellate authority and the
matter presented would need to be precise and adequate as the context requires.
(b) Start with your hearing by addressing the bench ‘Your Honour’ and state in brief the
matter before the adjudicating authority/ appellate authority
Illustration 62: The CA for an Appellant opened his submissions by stating “Your Honour, the
facts of the case are covered by decision in the case of …….”. The Bench replied “So, do you
mean to say that you will not bother to explain the facts to us and want us to take your word
for it and allow your appeal?” and the Bench added “Kindly, submit the facts and also show us
how your facts are covered by the decision in the case of ….. which you are seeking to rely
upon. We will then be able to apply our minds to that question and if it is in fact true and
acceptable in our view, we will pass an equitable order”. The CA quickly retraced his steps
and made his submissions and the Bench eventually ruledin favour of the Appellant.

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88 Background Material on Litigation Management

(c) Speak slowly, softly and clearly

A calm and deliberate voice will exude more confidence and command more attention in the
room than a frenetic one.
Illustration 63: Representatives are advised not to put on an accent when speaking in English.
It is a known fact that English is not our natural language even if we have studied in English
as the medium of instruction. Use of artificial accent in English can cause difficulty for the
Appellate Authority to register the points being submitted. Therefore, speaking in a clear voice
and softly pre-emptsnervous interruptions that appear to arise from the use of accent.
Illustration 64: Representatives are advised not to overcompensate for any influence of their
native accent. Understand that if there is any real influence of native accent, the Appellate
Authority may find it difficult to comprehend certain pronunciations. Therefore, speaking slowly
and clearly will covey the submissions without the interference of native accent.
Illustration 65: Representatives should not imitate any influence of native accent of the
authority as it may be taken as mocking and disrespectful.
Illustration 66: The CA stood up to make submissions when the Bench was distracted by the
sound of mobile phone from another person present in the Court Hall. Speakingto that person
sternly, the Bench got him to immediately stop the distraction. The Bench seemed to carry
some residue of the annoyance of the distraction while returning to hear the submissions of
the CA. And being aware of the possible effects of that distraction and that no such
disadvantage was affordable in the case, the CA very skillfully made a statement commending
the patience and tolerance that the Bench displayed in the instance. At this, the Bench quickly
took a moment’s pause and attentively listened to the submissions that the CA went on to
make on the merits of the case.
(d) Question raised by the adjudicating authority/ appellate authority
Very often adjudicating authorities ask questions. It is important to satisfactorily address the
question raised and not to launch a counter question or debate over it.
(e) In case written submissions are to be made or the summary needs to be presented,
itscopies may be provided to the adjudicating authority/appellate authority. Each member on
the bench and the other party should be provided with a copy of the same
(f) Each ground should be submitted and supported with facts and/or law.
(g) While proceeding from one submission to another, you may address the bench as “Your
honour, if there are no more questions, I will now then move to my second submission…”
(h) In case the matter requires, it may be appropriate to provide photographs, video
recordings, proto-types as part of the submissions, which can strengthen the arguments
(i) In case you have made a mistake and you realize the same, do not defend the same or
make excuses. You should own the mistake by stating “Pardon me” and while apologizing for
the same, state to the adjudicating authority/ appellate authority that it was inadvertent and
reassure that it would not occur again.

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Appearance 89

(j) Never interrupt an adjudicating authority/ appellate authority. This may annoy the
adjudicating authority/ appellate authority and adversely impact his / her perception
(k) In case where the respondent is presenting his version of the matter, allow him to
complete his / her submission and in case you desire to intervene, the permission of the bench
is to be sought before countering the respondent’s arguments
(l) In case the matter is posted for another date, the record of the next hearing be made as
the bench may not serve a notice considering that the date has been communicated in person
during the proceedings
(m) Whenever matters are heard partly, it would be important to summarize the submissions
made in the previous hearing before proceeding with the fresh submissions
(n) In case of pass-over of the matter for specified reason, it is important to adhere to the
same before the appointed time
(o) In case the bench or adjudicating authority/ appellate authority has sought compliance
to any stipulation such as pre-deposit or providing of evidence, the same be made before the
appointed date and in case otherwise, permission of the adjudicating authority/ appellate
authority besought.
(p) While concluding the submissions, you may state as “Your Honour if there are no
further questions, I would like now to close submission and thank the bench for the attention”
(q) The CA should keep all relevant documents, statutory provisions, circulars and case
laws, which he intends to rely upon during arguments. A compilation of such documents with
proper indexation is preferable and adequate number of copies should be available
(r) It is important to use appropriate language, which is polite, humble and draws the
needed attention. Depending on the situation, one may consider using the following terms:
 I would like to emphasize that...
 If I may draw your attention to the fact that...
 I submit that....
 As already pointed out...
 As a consequence...
 Let me quote the words of...
 It is a rule that...
 With your permission, I doubt that the revenue would accept...
 I would like to explain why...
 With your permission, I quote...
 The principles we invoke, etc.
 I respectfully disagree with the learned respondent…

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7. After the hearing

7.1 In case the matter is before an authority lower than Tribunal, the adjudicating
authority/appellate authority would record the proceedings of the matter. It may be
appropriate to read the summary of the record of personal appearance and sign the same as
token of acknowledgment. It would be important to carry a copy of the same and retain as
record of adjudicating proceedings. The same may be relevant in future proceedings of the
matter. In case there is a need to file further submissions/evidence in the light of the
discussions during the hearing, then leave of the authority should be sought to file it within the
agreed time.
7.2 In case the matter is before Tribunal, it would be important to ensure that the registry
has sent an official copy to the address mentioned in the memorandum of appeal/ cross-
objections or a copy of the same is provided to the authorized representative or party in
person, which is duly acknowledged. In case it is picked up in person, it is important that the
date of receipt is written on the order and duly initialed. It is advisable to file synopsis of facts
and submissions during final hearing. This is moreso when the issues are complex and no
direct precedents are available.

The Institute of Chartered Accountants of India

 Chapter 7
Ethics and Etiquette

1. Introduction
The purpose of enriching one’s knowledge is to bring justice to a client who is neither obliged
to pay excessive or higher taxes nor unlawfully lower than what is imposed under the law.
While ethics and integrity serve as guiding principles of the role one adores, etiquette is the
tool at one’s disposal in effectively discharging that role.
This chapter in sum is a recollection of visible signs that a learned member of this Institute has
come to personify. A few areas where this recollection may be required are briefly discussed.

2. Code of Conduct
All members are required to refer to an updated publication of ICAI Code of Ethics to be
mindful of the continuous recommendations brought about by the Ethical Standards Board
(www.esb.icai.org). Code of conduct not only refers to the written code but also the underlying
essence that serves as a guide post for conducting oneself as a member of this august
Institution.
Conduct as it is said is contagious and articled assistants and new members learn by watching
other members. It helps the process of training if the considerations weighing on the various
decisions being taken are shared transparently. Code of conduct is both the written and
practiced approach in the course of work that is chosen as a path to follow. It comprises
various aspects from knowledge to methodology.

3. Knowledge
Knowledge is gained continuously - some from books and some from observing those
exercising its teachings. Those who produce work of great skill and expertise have long been
contemplating every interpretation that a provision may expose itself to. A client’s engagement
only provides an opportunity and create an occasion to display and put into action the
expertise and experience gathered by a practitioner over a long period of time involving study,
observations and assimilation of knowledge.
Reading and updating is a sign of being ‘teachable’ or ‘coachable’ and those who have worked
closely with some of our members who are acclaimed in their field of expertise would agree
that such members are found to spend greater number of hours on this aspect than a fresher.
Embracing technology to access most recent information advances the cause of Clients by
allowing you to placehands on most current decisions or changes in law.
Knowledge is valuable when shared. Hence, develop an environment of learning and
imparting the learning to all associates even if it is expected that someof them may leave the
92 Background Material on Litigation Management

firm. Plagiarizing is self-humiliation. Those who leave the firm with the knowledge gained go
on to become ambassadors in the world. Hence, it is advisable to be magnanimous in
imparting knowledge to all who can embrace it.

4. Style and Approach

Representation is an art and an amalgam of various styles and approaches observed, applied
and customized. No two persons are alike in their manner of delivering their representational
prowess. Polite but not timid, firm but not abrasive and perceptive but not presumptuous – this
sums up the goal that all aims towards striving for excellence in representational skills. Years
of practice is required to develop expertise and this begins with setting our sights on the right
goal.
Visible manifestation in the form of spoken words, their composition, tone of voice, posture
and native influences all represent the individual’s thoughts and perceptions. Understanding
these thoughts and perceptions by observing these visible manifestations is an important
aspect of skill developed withyears of practice. These thoughts and perceptions of a person
are really a response to visible communication that we put out by our own words, their
composition, tone of voice, posture, etc. Dress and presentation are discussed in detail in
another chapter, but style and approach can be brought into these areas, too.
It is easy to see if a representative is imitating another person in the style and approach during
arguments. This is a put-off and it is advisable to avoid imitation or copycat approach. One
may be inspired but he should develop his own style and approach. Follow natural manner of
speaking including choice of words and diction. Unnatural approach leads to loss of content
due to concentration on unfamiliar words and pronunciation. Develop a good vocabulary, and
there is no substitute for reading or more reading. While reading decisions, attention is paid to
the ratio laid down by the Court, but attend to the manner in which a complex set of facts are
unraveled by identifying relevant considerations only and discarding irrelevant ones. And then
see how the law is applied to those relevant considerations. Also, see how any view taken or
deviated from is substantiated without allowing the weight of the Court to prevail but its
wisdom relied upon to discover and declare the meaning and interpretation. Do not ignore
poor decisions as it provides scope for learning as to how a judgment should not be.

5. Integrity
This is an overused expression but is visible and apparent in day- to- day practice. Clients
seeking representational assistance always believe they are right and come with an
expectation of a favourable outcome immediately. A member well-entrenched in litigation
services knows the value of setting right expectations and where deserving, advise Clients to
accept the tax demanded. In his /her zeal to serve more clients, a CA should not give any
false assurance or fail to indicate the serious impediments in a case. Service of a member in
litigation is not just to support the cause of the Client but maintain unbiased loyalty to the law
and not to the litigating parties.

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Ethics and Etiquette 93

Allowing one’s actions to be guided by fear of adverse consequence or favour of unmerited

benefits does not augur well forthe office of a member and particularly one who is providing
representational services. Corruption is the cloak that hides incompetence and it deserve no
further mention that appears to lend respect. Maintain firm demeanour during interaction with
tax authorities. Often polite and submissive demeanour may be interpreted as lacking
integrity. Be cautious and avoid the perils of being misread.
Exercise knowledge and experience to develop pleadings suited for different kinds of matters.
Pleadings cannot be copied and recycled because it may have been developed for a certain
approach in the notice issued and not suitable in another case. Refer pleadings prepared as a
guide to draft fresh pleadings. As explained in another chapter, develop check-lists to ensure
completeness of all submissions going out of the office. Follow relevant Appellate Procedure
Rules regarding form, format and content of each submission before appellate authority.
Diligence in this area goes a long way in conveying the attention expected of the authority in
hearing the matter.

6. Methodology
This refers to an organized, systematic and predictable manner of undertaking work and
carrying it out until completion. One possible methodology could include the following:
(a) Documented approach
(b) Objective assessment of facts (or case)
(c) Transparency in process-of-law
(d) Disclosure of all submissions
(e) Regular communication of progress
(f) Prompt attendance to case
(g) Handing over documents and orders
Setting unrealistic expectations or supporting unsubstantiated tax positions is one of the key
areas where members need to be firm and objective. If surgery is necessary, medicines will
not suffice.
Meticulousness is not an act but a habit. It cannot be found in certain areas,andmissing in
others. Ensure consistency in being meticulous in all areas of Client handling. Convene
meeting with Clients with both a ‘start’ and an ‘end’ time. Have an agenda for discussion or
interviewing for preparation in a case. Regularly update Client about the progress including
where there may be long intervals of time when no update is available.
Clients come with their experience with other experts and hence this requires to be reset /
realigned and it may be necessary to educate them about the approach that they should
expect. In all new relationships, this must be started immediately so that there is no confusion
or gap due to no fault of either party.

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7. Do’s
(a) Obtain written mandate for all representational engagements with specific reference to
the period of dispute or notice. Hence, develop standard mandate forms / templates
(b) In case of bona fide tax default, advise admission of default availing concessional
penalty instead of pursing litigation. The possibility of approaching the Settlement
Commissioner could also be explored
(c) Follow all amendments/changes in law closely
(d) Develop and preserve good library of reference material and commentaries
(e) Maintain continuity of subscription to journals
(f) Verify print out with authenticated version of law or decision before using in
submissions
(g) Encourage associates to be present during hearings, if permitted, to witness
proceedings ‘live’
(h) Maintain case-file and supply copies of all notices and submissions to Client
(i) Maintain acknowledgement of filing of copies of all appeals and submissions to
appellate authority and departmental representation
(j) Maintain respectful arm’s length distance fromdepartment representatives and staff in
Registry
(k) Verify cause-list hosted in website of CESTAT or VAT Tribunal regularly to avoid ex
parte disposal of matters
(l) Ensure prompt and reliable process of receiving notices and intimation at office that
reaches the member representing the Client. Large establishment are likely to have
mis-delivery within the office
(m) Adjournment applications to be filed as early as the intimation of hearing is served
(n) Carry books / journals to hearing and not just photo-copies. Photo-copies are for
submission
(o) Strive to make continuous improvements inthe representation style and approach

8. Don’ts
(a) Do not assume unwritten authorization to represent. Have standard form of ‘power of
attorney’
(b) Do not entertain requests to support unlawful tax positions
(c) Do not advise pursuit of litigation when deviation from law by Client is evident
(d) Do not skip reading and updating yourknowledge with latest decisions

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Ethics and Etiquette 95

(e) Do not use unauthenticated version of law or decisions

(f) Do not rely on head-notes of decisions without cross-checking with the relevant paras in
the decision from which those head-notes may be prepared by the publisher of journal
(g) Do not entertain personal communication with adjudication / appellate authorities
(h) Do not ‘cut and paste’ pleadings, draft afresh
(i) Do not plagiarize pleadings out of the work of other members/counsels
(j) Do not imitate the style of representation of others, instead you can watch, learn and
develop one of your own
(k) Do not follow a standard style in representation; align it to suit the authority and nature
of matter because representation is also a form of verbal communication
(l) Do not allow legal writing to spill into Client communication which is to be simple and
suited to this kind of reader-group who are not adjudicating / appellate authorities

Indirect Taxes Committee

 Chapter 8
Litigation Strategy

1. Introduction
One of the key concerns of a tax management team in an organization is to avoid tax
disputes. A tax management team of an organization takes many steps to ensure that the
company does not get into tax disputes. However, even after adequate precautions and care
being taken, disputes may crop up, which may be mainly because of lack of clarity and
simplicity in the laws. Hence handling litigation assumes importance and the tax management
team in consultation with their Counsel would think of strategies to handle litigation, where the
pros and cons of litigating are analysed and the impact of outcome of litigation isalso weighed,
keeping in mind various factors like unique facts, availability of binding precedents, risk
involved, litigation costs, precedent value, time span etc.
Litigation strategy enables analysis of various factors, which enable arriving at a decision as to
whether to litigate a particular issue or not and to what extent. This exercise would give an
insight into the issue as well as information about the risks involved. It would serve as a tool
for the assessee to decide as to whether the matter shall be litigated or not. Some of the
factors considered are analysed in the ensuing paragraphs.
Also, as the quantum of tax payments increases over the years, it should be considered
common for tax authorities to review the returns filed and examine the tax positions taken,
particularly exemptions, concessions, deductions and tax credits. Hence, ongoing compliances
must be aligned to defend all possible questions that may be posed in any audit inquiry.

2. Gathering and Understanding facts:

Gathering and understanding of facts relating to the issue is a very crucial step in litigation. It
is important for a legal representative to have complete control over the facts and analyse
them. Wrong facts / wrong understanding of facts would be a major reason for setback in
litigation.
Further, as a representative, there is a risk of losing credibility in Court or other legal
proceedings, in case the facts are not properly presented.

3. Legal provisions invoked and involved:

The legal provisions based on which the audit party / investigation team has asked the
assessee to pay additional tax or a show cause notice has been issued should be understood.
It must be noted that the tax provisions are dynamic and not static and are prone to frequent
changes and amendments. To illustrate, a Notification granting or withdrawing exemption or
changing the rules and procedures would be issued at the end of the day making these
Litigation Strategy 97

applicable from the next day itself. There could be instances where the department might be
referring to provisions or notifications, which may not be applicable to the period in dispute.
Hence the legal provisions on the basis of which the show cause notice has been issued shall
also be analyzed and understood as the department may invoke the wrong provisions.

4. Advising the client on litigation

Risk involved – The CA would be required to analyse the risk involved in litigating. Some of
the important aspects to be considered are:
(a) How strong is the case and whether the provisions of the statute support the client’s
case.
(b) Existence of supporting evidence.
(c) Whether the interpretation adopted is backed by precedent decisions.
(d) What would be the monetary impact of losing the case (in terms of outflow of duty/tax+
interest+ penalty).
(e) Possibility of issues on cenvat availment/availability, where the client accepts the
liability and pays it along with interest and penalty (Rule 9 of Cenvat credit Rules,2004).
(f) Impact on other existing litigations.
(g) Impact on stand taken under other taxing statutes/statutory compliance. For example,
where the client wishes to contest in VAT proceedings wherein that particular activity is
service and not sale under State laws, Tax implication and impact of such a stand on
service tax liability and probable demand by the service tax authorities should also be
borne in mind.
(h) Cost of litigation and the level up to which the matter may go up in litigation i.e. up to
Tribunal or High Court or Supreme Court.
Assurance about possible outcome – While a CA is expected to give his best efforts in
effectively handling litigation for his client, he is not required to give any assurance or
commitment about a favourable outcome of the case. However, the client ought to be informed
about the legal position and the possible outcome (adverse or otherwise).
Illustration 67: Where a client enquires about the probability of winning the case, rather than
assuring him of certainty of winning you could say that based on present law and the case
laws, the client has a good chance.
CA may also make the client aware that the issue is pending at a higher stage (SC or HC) and
any view is possible

5. Alternative Remedy, Settlement Commission, Writ

In adjudication proceedings, while replying to the notice on merits it is also advisable to
explore alternative options as below:

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98 Background Material on Litigation Management

(a) Payment of duty along with interest and availment of credit by the buyer of the
goods or recipient of service: Where the buyer is willing to accept the supplementary
bill for the services/goods and if the demand is not on account of invoking of extended
period of limitation (refer Rule 9(1)(bb) of Cenvat Credit Rules, 2004), the possibility of
using the credit by the buyer/service recipient could be explored..
(b) Settlement Commission: Where the issue cannot be contested on merits or the case
is weak on merits and limitation, then the option of going for settlement should be
considered instead of opting for the adjudication route.
(c) Writ: Where the demand appears to be patently wrong or beyond the scope or powers
of the issuing authority or if there is a requirement to challenge the legal provisions or
rule or notifications or circulars, then the client should be advised to file a Writ
challenging the show cause notice itself on lack of jurisdiction/competence or validity of
provisions invoked in the notice. This is because the adjudicating or appellate
authorities can only implement the law and cannot express their views on validity of
provisions/rules etc.
Illustration 68: Where the transaction is in the nature of sale of goods(fact is accepted by
department) and the department issues a notice proposing demand of service tax on such
transaction, challenge could be made before writ court

6. Revenue Neutrality
Revenue neutral situation arises when the tax (if paid) would be eligible for availment as credit
either by the person paying the tax or person who purchases/receives the goods or services.
The Revenue neutrality is also considered in the matter of invoking extended period of
limitation and imposing penalties.

7. Payment under protest

Payment under protest could possibly reduce the burden of interest in case of unfavorable
outcome in future, where the issues are debatable. Thus the interest amount gets limited till
the date of payment of duty/ tax under protest. Considering the high rates of interest prevalent
in the indirect tax system and as the litigation may take many years to conclude, this option
can be looked at.
Illustration 69: where claim of exemption is doubtful /department has contested the issue of
such claim of exemption to goods in case of other parties in the same industry, in order to
save the burden on payment of interest, assessee could opt to pay duty under protest.

8. Refund Matters
In cases involving refund, whether refund of duties or taxes excess paid or refund/rebate
arising out of export of goods or services (like cenvat refund/rebate of duty paid on inputs)
etc., the following aspects are to be considered:
(a) Compilation of the relevant documents and submission of such documents.

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Litigation Strategy 99

(b) Principle of unjust enrichment.

(c) Time limit within which the refund claim should be filed. If duties or taxes are paid under
protest no limitation would apply.
(d) Interest on delayed receipt of refund.

9. Checklist – SCN Stage

It is advisable to prepare and follow a check list for the activity of drafting and filing reply to
show cause notice / filing appeal before Commissioner (Appeals)/ CESTAT. This would
ensure effective drafting and all vital aspects would be considered.

Obtain copy of SCN and check whether complete set of SCN along with documents relied
upon has been served by the Department. If the relied upon documents are not provided along
with SCN, write to the department asking them to make available the relied upon documents.
Obtain proof of the date of service of SCN. This would be useful for contesting the matter on
limitation, as the SCN should be issued in a time- bound manner.
Obtain complete set of correspondence between the client and department in connection with
the said issue or in connection with other issues but having impact on the current issue.
Understand the facts from the client, obtain (if necessary) documents such as agreements,
work orders, purchase orders, invoices etc.
Analyse and understand the facts, issues raised and quantifications in the show cause notice.
(a) Allegations in the SCN should be specific and not vague.
(b) It should be based on evidence and documents not on the basis of assumptions.

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100 Background Material on Litigation Management

(c) It should quantify the proposed demand.

(d) The SCN shall not pre-judge or conclude the issue but it should contain only the
allegations.
Check whether officer issuing show cause notice has power to issue such SCN.
Check whether the reply to show cause notice is to be addressed to an officer other than the
officer who has issued it. [To illustrate, DGCEI may issue SCN but the reply has to be
submitted to the jurisdictional Commissioner.]
In case you cannot submit the reply within the time granted in show cause notice, write a letter
to the concerned officer seeking time.
Drafting reply to the show cause notice:
A. Background
(a) Give a brief background ofthe assessee.
(b) State the background (audit or investigation etc.) leading to the issue of present show
cause notice.
(c) Briefly mention the issue in dispute.
(d) Amounts proposed to be demanded in the SCN along with period and relevant
provisions.
B. Reply
(a) Address each of the allegations and provide evidence to support the contention.
(b) In case where the facts are in dispute- narrate the facts, provide documentary evidence
to support the actual facts as against the facts assumed by the Department.
(c) In case where the issue relates to interpretation of provisions, state the client’s
interpretation supported by circulars, decisions and other relevant material.
(d) Address the limitation (if extended period is invoked) issue and provide sufficient
supporting evidence to dispel the allegation and cite the relevant decisions.
(e) Reply to the proposals to impose penalty and support the reply with decisions.
(f) Prayer: The reply should be concluded with a prayer, which should be carefully drafted
inter-alia to drop the proceedings and also to provide opportunity to explain the case
during the course of hearing.

10. Check list – Appeal stage

Obtain the copy of the order along with supporting evidence as regards date of service of
order. The time limit to file an appeal starts from the date of receipt and the evidence of date

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Litigation Strategy 101

of receipt may have to be produced before the CESTAT or Commissioner (Appeals) while
filing the appeal.

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102 Background Material on Litigation Management

Note that the Commissioner (Appeals) has limited powers to condone delay.
Summarize the order giving break up of demands confirmed (or refund rejected) and the
demand dropped.
Advise the client as to the options available where the demands are confirmed (or refunds are
rejected). Also inform the client on the time limitwithin which the appeal needs to be filed.
Based on the confirmation received from the client for filing of appeal, prepare the appeal by
considering the following aspects:
(a) Read through and understand provisions relating to appeal and the rules issued there
under.
(b) Appeal shall be filed in specific forms and format as notified. Select the proper form.

(c) If the appeal is being filed before the CESTAT, ensure that the appeal filing fee is
computed properly and demand draft for the same is submitted.
(d) Provide correct information as required under the form of appeal.
(e) Don’t leave any of the questions in the form unanswered.
(f) Prayer for grant of relief shall be specific.
(g) Verification shall be completed properly and signed by the authorised person
Drafting of appeal memorandum
(a) Give a brief background of the assessee and the issues involved.
(b) Chronological events prior to issue of SCN (if relevant) may be stated and the relevant
documents be enclosed.
(c) Summarize the allegations in the SCN, your reply and the findings in the impugned
order. Enclose copy of each of the document.
(d) Grounds of appeal:
(i) State the grounds of appeal in a precise and concise manner. Link such grounds
to the reply to show cause notice and the evidence relied upon, which apparently
was not considered in the impugned order.
(ii) Counter the findings of the respondent if he has dealt with the ground taken
before him. If the respondent has not dealt with such ground, state that the
respondent has not considered the said ground.
(iii) The findings in the order cannot traverse beyond the proposals in the SCN. In
case the order has made out a new case then it should be mentioned in the
grounds (Example: Allegation in the SCN that the services provided fall under
marketing services but the tax demand is confirmed under support services in the
order).

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Litigation Strategy 103

Preparation and presentation of appeal memorandum

(a) Refer Appeal rules and CESTAT procedure Rules for manner of printing, presentation,
attestation of document etc.
(b) Number of copies of Appeal memorandum: 2 sets before Commissioner (Appeals), 4
sets in case the appeal is to be filed before CESTAT.
(c) The Appeal memorandum shall be signed and verified and shall be indexed
(d) One copy of the order impugned shall be signed as TRUE COPY.
(e) The appeal memorandum along with the annexure shall be stitched like a booklet.
Therefore, it is imperative that CAs attend to enhancement of their representational skills by
considering the need to read matters stated in this material relating to administrative law,
jurisprudence and allied laws. With this understanding we trust the need to practice and
develop this art of representation before various tax authorities will bewell appreciated.
Lastly, litigation is understood asnot a reply to the notice issued but a strategy that CAs must
evaluate and thoughtfully consider the approach in responding to the process of law initiated
by tax authorities.

Indirect Taxes Committee

 Chapter 9
Mock Tribunal and Logistics of the Course

1. Introduction
This module on Mock Tribunal and Mock Appellate/Adjudication Proceedings is included in the
course to give the participants a feel of what happens, while representing a case before the
authority or Tribunal. Hence, it should be ensured that the logistics and format are as close to
that we come across in the Tribunal or before the authority.

2. Structure and suggested format of Mock Tribunal

All the participants should prepare for the case and get one chance to appear in the Mock
Tribunal or hearing.
SCNs (for mock hearing) or Orders (for Mock Tribunal ) shall be provided to the participants in
advance so that they shall spend sufficient time in understanding preparation
Paper books should be prepared with statement of facts, grounds and annexures and made
available to the presiding members and opposite side.
In a case, four participants can be there – two for Appellant and two for Respondent.
Case laws/circulars relied upon should be made available at the time of arguments to the
presiding members and opposite side.
Two or three experienced faculties should be chosen as presiding members of the Tribunal or
as departmental authority hearing the case.
Dress code as prescribed by the CESTAT Rules, should be followed by the participants
including faculties acting as Tribunal members or departmental authorities.
One day should be dedicated for Mock Tribunal/Mock Departmental hearing.
Court room atmosphere should be created and even the seating arrangement should be in the
same manner to the extent possible.
Microphone facilities should be available to all participants and faculties, preferably collar
mics.
The names of faculties and their contact numbers should be given to the participants for
clarifying any doubts about the mock tribunal. A local coordinator should ensure preparation
for mock tribunal/hearing.
ICAI should have atleast 25 SCNs and orders kept ready for use in mock tribunal.
Mock Tribunal and Logistics of the Course 105

3. Adjudication or appellate authority

A faculty should be the presiding authority.
The participants should have a SCN, reply to SCN and case laws ready for the hearing.
ICAI should have atleast 25 SCNs and the participants shall prepare reply to SCNs ready for
use in such mock hearing.
Two participants can be allowed to represent in a particular case.
Adequate number of microphones should be made available.

4. Logistics for drafting/pleadings

Participants should be encouraged to bring their laptops, which can be used for drafting.
Two faculties should be present while conducting this session.
One day should be spent on drafting/pleading skills including drafting of letters, appeals, reply
to notices, miscellaneous applications.
One day can be dedicated for drafting/pleadings.

5. Schedule of the course

Day 1  About the course and importance of representation - Duration 1 hour
 Relevant statutory provisions under Central Excise, Customs, Service Tax
and VAT laws – Duration 3 hours
 Principles of Administrative law – Duration 2 hours
 Principles of Evidence law – Duration 2 hours
Day 2  Advisory role during litigation including search, seizure, audit, investigation
etc. – 2 hours
 Handling litigation before the adjudicating authority with practical tips and
illustrations – Duration 2 hours
 Handling litigation before the appellate authority with practical tips and
illustrations – Duration 2 hours
 Dress code, logistics and litigation strategies – 2 hours
Day 3  Drafting and pleadings and its importance – Duration one hour
 Drafting audit reply and other correspondence during audit and investigation
– Duration 30 minutes
 Drafting of reply to SCN (analysis of SCN, evidence and grounds) –
Duration 3 hours
 Drafting of appeal to Tribunal including form, statement of facts, grounds,
prayer and verification– Duration 3 hours

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106 Background Material on Litigation Management

Day 4  Mock Hearing (adjudication/first appellate authority) – 3 hours

 Mock Tribunal – 4 hours.
 Ethical practices and integrity – one hour

The Institute of Chartered Accountants of India

 Annexure A
Selection of Statutory Provisions

1. Basis for Legal Remedies

1.1 Parliament has further powers to make any law for any part of India not comprised in a
state, notwithstanding that such matter is included in the state list. Part XII of the Constitution
of India, contains matters related to “Finance, Property, Contracts and Suits” in the Articles
264 to Article 300A. Article 265 states that “no tax shall be levied or collected except by
authority of law”.
1.2 It has been held by the Supreme Court in Kunnathat v. State of Kerala AIR 1961 SC
552, that the term “authority of law” means that tax proposed to be levied must be within the
legislative competence of the Legislature imposing the tax.
1.3 The law must not be a colorable use of or a fraud upon the legislative power to tax. It
must not also violate the fundamental rights such as Article 14,19 etc.
1.4 The Supreme Court in the case of Vijaylakshmi Rice Mills 2006 (201) ELT 329 has
distinguished the works ‘tax’ and ‘fee’ and has held that tax is compulsory exaction of money
for public purposes by state whereas the fee is charge for service rendered by governmental
agency.
1.5 A few Articles of the Constitution relevant to the taxation have been referred to below:
(a) Article 13: Laws Inconsistent with or in Derogation of Fundamental Right
(b) Article 14: Equality before Law
(c) Article 15: Prohibition of Discrimination on the Grounds of Religion, Race, Caste, Sex or
Place of Birth
(d) Article 20 : Protection in respect of conviction for offences

2. Writ Jurisdiction
2.1 Writ has been defined as a written command or formal order issued by Court directing
person(s) to do or refrain from doing some act specified therein. The Constitution of India
provides writ jurisdiction under Article 32 and Article 226 for the enforcement of Fundamental
Rights and other legal remedies. A petitioner can approach Supreme Court under Article 32
and High Court under Article 226 of the Constitution.
2.2 The right to move the Supreme Court by appropriate proceedings for the enforcement of
the rightsconferred by this Part is guaranteed. The Supreme Court shall have power to issue
directions or orders or writs, including writs in the nature of the following:
(a) Habeas Corpus: Habeas Corpus is a Latin term which means “you may have the body”.
108 Background Material on Litigation Management

The writ is issued to produce a person who has been detained, whether in prison or in
private custody, before a court and to release him if such detention is illegal. The writ
provides a prompt and effective remedy against illegal detention. The principal aim of
the writ is to ensure swift judicial review of alleged unlawful detention on liberty or
freedom of the prisoner or detenu.
(b) Mandamus: Mandamus is a Latin word, which means “We Command”. Mandamus is an
order from the Supreme Court or High Court to a Lower Court or Tribunal or public
authority to perform a public or statutory duty. The writ of mandamus would be to issue
an order to cancel an order of an administrative or statutory public authority or the
Government itself where it violates a fundamental right.
(c) Prohibition: The writ of prohibition means to forbid or to stop and it is popularly known
as ‘Stay order’. The writ of prohibition would be issue of order to prevent or prohibit a
quasi-judicial authority from proceeding to act in contravention of a fundamental right
such as ex-jurisdiction, violation of natural justice, unconstitutional etc. After the issue
of this writ, proceedings in the lower court etc. come to a stop.
(d) Certiorari: Certiorari means “to be certified”. The writ of certiorari can be issued by the
Supreme Court or any High court for quashing the order already passed by an inferior
court, tribunal or quasi- judicial authority.
(e) Quo Warranto: The word Quo Warranto means “what is your authority”. It is a writ
issued with a view to restrain a person from holding a public office to which he is not
entitled. The writ requires the concerned person to explain to the court by what authority
he holds the office.
2.3 In addition to the specific writs for the enforcement of fundamental rights and other
constitutional rights, a petition can also be filed in cases where the vires of the law has been
challenged or where the principal of natural justice has not been followed or against the
validity/enforceability of circular/rule/notification or against any order/notice issued without
jurisdiction or where the alternate remedy is inadequate. The writs are subjected to rejection
when any efficacious alternate remedy is available or if it involves a disputed question of fact.
2.4 There is no prescribed time limit for filing writ petition in the Supreme Court or High
Court. However, writ can be dismissed on grounds of unreasonable delay.
2.5 Only the person aggrieved can file a writ in the Supreme Court or Jurisdictional High
Court. However public interest litigation or enforcement of habeas corpus or quo warrantoare
some exceptions where writ can be filed other than the aggrieved person.

3. General Clauses
3.1 Any exercise on interpretation of law is incomplete without due consideration being
given to the provisions of General Clauses Act, 1897. States too have their own laws on
General Clauses. This Act provides the ‘rules’ for interpretation and the provisions of this Act
burns into every legislation to which it applies. The Constitution of India also does not fall

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Selection of Statutory Provisions 109

outside the scope of the rules laid down in this Act. Some key provisions of the Central law on
General Clauses are discussed here.
3.2 Section 5 Coming into force – when a Central Act is to ‘come into force’ from the date it
receives assent of the President of India, it shall come into force from ‘end of day preceding’
its commencement.
3.3 Section 6 Effect of repeal – when any Act is ‘repealed’, it shall not:
(a) Revive anything not in force;
(b) Affect anything already done;
(c) Affect any – right, privilege obligation or liability – arrived previously;
(d) Affect any – penalty, forfeiture, punishment – incurred previously;
(e) Affect any – investigation, legal proceeding or remedy – in respect of above.
3.4 Section 8 References to repealed enactments – when any law refers to provisions from
other laws which undergo amendment, then reference to those provisions will have to be
applied along with those amendments while enforcing the law.
3.5 Section 9 Commencement and termination of time – when referring to a series of days
with ‘from’ it excludes the first of those days and ‘to’ includes the last of those days.
3.6 Section 17 Functionaries – for indicating a person executing certain functions, it is
sufficient to mention the official title of the person and every successive incumbent in that
office will continue those functions.
3.7 Section 20 Construction of notification – words and expressions used in a notification
issued under an enactment must be interpreted according to the meaning available ofthose
words and expressions in the enactment itself.
3.8 Section 21 Scope of power – when power is given to issue notifications or orders, then
it includes the power to add, amend, vary or rescind those notifications or orders but the
procedure prescribed must be followed without any deviation.
3.9 Section 23 Laying down – when power is delegated with a condition that exercise of
such delegated power must be ‘laid’ before Parliament or ‘published’ in gazette or after any
other similar procedure of supervision (with or without affirmative action) then, unless the said
procedure is followed, the exercise of delegation is void.
3.10 Section 24 Continuation after repeal – when any notification or order is issued under a
law which is repealed and re-enacted, then those notifications or orders (unless inconsistent
with the re-enacted law) will continue to apply as if issued under the re-enacted law until
superseded.
3.11 Section 27 Meaning of service by post – when service is required in respect of any due
process, it is sufficient if the said process, properly addressed and stamped with all necessary
contents included, is put into dispatch which would reach the addressee in the normal course
of delivery by post.

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110 Background Material on Litigation Management

4. Limitation
4.1 Assistance from the State is available to everyone whose rights are violated. If not,
those rights will be illusory. However, such assistance only avails to those who are vigilant
about enforcing their rights. Vigilantibus Et Non Dormientibus Jura Subveniunt - the law
assists those that are vigilant with their rights, and not those that sleep thereupon.
4.2 Limitation is provided in every enactment and where it is missing, recourse may be had
to the Indian Limitation Act, 1963. Certain matters, in the wisdom of law maker, do not have
any limitation or have a very large period of limitation.
4.3 Limitation is not that the underlying right abates but it merely states that the assistance
of the State is not available if the step to avail such assistance is not taken withinthe said
period of limitation. For example, section 25 of Indian Contract Act recognizes the payment of
a time barred debt
4.4 Prescription, on the other hand, is the state of affairs where after the expiration of the
period specified, the underlying right itself evaporates.
4.5 Identifying whether it is a case of limitation or prescription would greatly advance the
litigation strategy to be adopted. Reference may be had to illustration 61 above where it is
claimed by the revenue that the right to appeal abates after lapse of the time permitted for its
filing, whereas assessee holds that it is unjust and the time limit must not be treated as a
prescription but as a limitation which can be cured by intervention of higher judiciary.
4.6 Timelines of limitation can be interrupted by supervening events that can suspend the
clock. Such events could be way, lunacy, etc. Examination of expiration of limitation must also
take into account whether any supervening events may have occurred.

The Institute of Chartered Accountants of India

 Annexure B
Landmark Decisions

1. General Principles
1.1 Natural Justice
(a) Oryx Fisheries Private Limited v UOI 2011 (266) ELT 422 (SC)
Issue before the Hon’ble Supreme Court was whether the authority who issued show cause
notice proposing cancellation of the registration certificate of the appellant acted fairly and in
compliance with principles of natural justice and also whether such authority acted with an
open mind.
Quasi-judicial authority, while acting in exercise of its statutory power must act fairly and must
act with an open mind while initiating a show cause proceeding. A show cause proceeding is
meant to give the person proceeded against a reasonable opportunity of making his objection
against the proposed charges indicated in the notice.
(b) Kothari Filaments Vs. CC (Port), Kolkata, 2009 (233) E.L.T. 289 (S.C.)
The customs department, based on the enquires conducted and information collected, passed
the order of confiscation of goods and imposed penalties. The said information was not
supplied to the assessee.
Supreme Court held that when a document is relied upon by the department in passing an
order or coming to certain conclusions, the same cannot be done without supplying the relied
upon documents or information to the assessee
1.2 Contents of Notice
(a) CCE v Brindavan Beverages (P) Ltd. 2007 (213) ELT 487 (SC)
The allegations in the show cause notice was that the assessee wrongly availed the benefit of
SSI exemption.
Though the department’s case was that the assessee hadarranged their transactions to
erroneously avail the benefit of exemption, the allegations in show cause notice were not clear
and specific.
The Supreme Court observed that the show cause notice is the foundation on which the
department has to build up its case. If the allegations in the show cause notice are not specific
and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that
the noticee was not given proper opportunity to meet the allegations indicated in the show
cause notice.
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(b) Oudh Sugar Mills Ltd. v UOI 1978 (2) ELT J172 (SC)
The show cause notice alleged clandestine removal of dutiable goods based on sample
testing of raw materials and machinery usage.
The Supreme Court held that the show cause notice issued on the basis of assumption and
presumption and the findings based on such show cause notice are without any material
evidence and are based only on inferences involving unwarranted assumptions and are
vitiated by an error of law. In the absence of tangible evidence of clandestine activity the
notice was held as invalid.
1.3 Jurisdiction of the officer
(a) CC Vs Sayed Ali, 2011 (265) E.L.T. 17 (S.C.)
Whether Commissioner /Collector of Customs (Preventive), Mumbai has jurisdiction to issue
show cause notice when imports have taken place at Bombay Custom House
Supreme Court held that Customs officer assigned with specific functions of assessment and
re-assessment in jurisdictional area where goods imported, are competent to issue show
cause notice under Section 28 of Customs Act, 1962 as ‘proper officer’. such officer alone can
adjudicate the matters. Since Collector of Customs (Preventive) is not shown as officer
assigned with such functions under Section 28 as ‘proper officer’, such officer is not
competent to adjudicate the matters
1.4 Extended period of limitation
(a) Cosmic Dye Chemicals Vs. CCE, 1995 (75) E.L.T. 721 (S.C.)
The assessee did not include value of certain clearances, in the information supplied to the
department, on the basis of bona fide belief that these were exempted and need not include.
The issue before the Court was whether non-supply of information without intent to evade
would also be reasons to invoke extended period.
Each of the words (fraud, willful misstatement, collusion, Contravention of any provisions)
used in the statute allowing invocation of extended period of limitation, requires to prove
existence of intent to evade payment of duties. Without providing existence of intention to
evade, no extended period could be invoked.
(b) Tamil Nadu Housing Board Vs. CCE, Madras 1994 (74) E.L.T. 9 (SC)
Assessee, a statutory body engaged in manufacture of concrete and wood in two different
units, did not pay duty on wood on the basis of the belief that the wood products are not sold
but are used in construction activity.
When the law requires an intention to evade payment of duty then it is not mere failure to pay
duty. It must be something more. That is, the assessee must be aware that the duty was
leviable and it must deliberately avoid paying it. The word `evade’ in the context means
defeating the provision of law of paying duty. It is made more stringent by use of the word

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Landmark Decisions 113

`intent’. In other words, the assessee must deliberately avoid payment of duty which is
payable in accordance with law.
(c) Maruti Suzuki India Ltd., Vs. CCEx., Delhi, 2009(240) ELT 641(S.C)
Issue relates to interpretation of the definition of phrase ‘inputs’ and eligibility to avail credit on
inputs used in power generation.
Huge litigation in the country stands generated on account of repeated amendments in Cenvat
Credit Rules hence penalty is not leviable, particularly on account of conflict of views
expressed by various Tribunals/High Courts, in large number of other cases where assessees
also succeeded.
1.5 Presence of counsel during deposition
(a) Poolpandi v Superintendent 1992 (60) ELT 24 (SC),
The Supreme Court held that a person being interrogated did not have the right to insist on the
presence of his lawyer.
The Court observed that there is no force in the arguments of appellant’s advocates that if a
person is called away from his own house and questioned in the atmosphere of the customs
office without the assistance of his lawyer or his friends, his constitutional right under Article
21 is violated
(b) Senior Intelligence Officer v Jugal Kishore Samra 2011 (270) ELT 147 (SC)
In this case, the applicability of above decision (Poolpandi case) to Narcotic Drugs and
Psychotropic Substances Act, 1985 was examined and it was held that the decision referred to
above would be applicable and the advocate could not be part of the investigation. However,
considering poor medicalconditions of the party, interrogation was allowed to be done in the
presence of a lawyer.
1.6 Act v. Rule
(a) Bimal Chandra Banerjee v. State of M.P. and Ors., (1971) 81 ITR 105,
No tax can be imposed by any bye-law or rule or regulation unless the statute under which the
subordinate legislation is made specially authorises the imposition even if it is assumed that
the power to tax can be delegated to the executive. The basis of the statutory power conferred
by the statute cannot be transgressed by the rule making authority. A rule making authority
has no plenary power. It has to act within the limits of the power granted to it.
(b) L. CHANDRA KUMAR Vs. UoI, 1997 (92) E.L.T. 318 (S.C)
Tribunal competent to test the vires of subordinate legislations and rules but not the vires of
their parent statutes because being a creature of an Act it cannot declare the very Act as
unconstitutional

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1.7 Alternative remedy

(a) Union of India Vs. Vicco Laboratories, 2007 (218) E.L.T. 647 (S.C.)
Where a show cause notice is issued either without jurisdiction or in an abuse of process of
law, the writ Court would not hesitate to interfere even at stage of issuance of show cause
notice
(b) Baburam Prakash Chandra Maheswari vs Antarim Zilla Parishad, AIR 1969 SC 556
Rule of alternate remedy as a bar to exercise writ jurisdiction is not a rule of law but is a self
imposed restraint by the Courts. The Apex Court further observed that in proper cases, it is
open to the High Courts to exercise writ jurisdiction even in cases where alternative remedy
may be available
1.8 Retrospective operation of laws
(a) Ujagar Prints v UOI 1988 (38) ELT 535 (SC)
A competent legislature can always validate a law which has been declared to be invalid by
courts, provided the infirmities and vitiating factors noticed in the declaratory-judgment are
removed or cured. Such a validating law can also be made retrospective. No individual can
acquire a vested right from a defect in a statute and seek a windfall from the legislature’s
mistakes. Validity of legislations retroactively curing defects in taxing statutes is well
recognised and courts, except under extraordinary circumstances, would be reluctant to
override the legislative judgment as to the need for and wisdom of the retrospective
legislation. In testing whether a retrospective imposition of a tax operates so harshly as to
violate fundamental rights under Article 19(1)(g), the factors considered relevant include the
context in which retroactivity was contemplated such as whether the law is one of validation of
taxing statute struck-down by courts for certain defects; the period of such retroactivity, and
the degree and extent of any unforeseen or unforeseeable financial burden imposed for the
past period, etc.
(b) Chhotabhai Jethabhai Patel & Co. v UOI 1999 (110) ELT 118 (SC),
The Supreme Court held that it is within the legislative competence of the Parliament to
impose excise duty retrospectively, and it cannot be challenged on the ground that the same is
incapable of being passed on to the buyer or under Article 19 or 31.

2. Evidence
2.1 Burden of Proof
(a) State of Maharashtra v. Wasudeo Ram Chandra Kaidalwar AIR 1981 SC 1186
Burden of proof has two aspects (i) legal burden – to bring forth an assertion about something
and (ii) evidential burden – to lead evidence to establish that assertion. The former is burden
and later is onus. Burden does not shift but onus shifts. An issue poorly defended does not

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Landmark Decisions 115

prove the allegation unless the allegation itself is proved satisfactorily. No benefit of an
assertion accrues unless burden of proof is discharged. Burden to prove lies on the person
who asserts (onus probandi).
A substantive point not contested during adjudication but contested only in appeal causes
misleading of adjudication process. Party entitled to contest estopped from questioning
admitted or uncontested assertion.
Onus permits adducing counter-evidence to displace the proof adduced to establish the
assertion. Once proof of assertion is displaced, the assertion, while still true, is rendered
without force during remainder of proceedings.
Burden of proof and onus of proof are not synonymous. Refer res ipsa loquitur.
2.2 Degree of proof
(a) Mah. State Board of Secondary & Higher Education v. KS Gandhi (1991) 2 SCC 716
Strict rules of Evidence Act do not apply to domestic Tribunals. It is open to receive all
necessary, relevant, cogent and acceptable material facts though not strictly proved. Inference
from evidence and circumstances must be carefully distinguished from conjectures or
speculation. The mind is prone to take pleasure to adapt circumstances to one another and
even in straining them a little to force them to form parts of one connected whole. The
standard of proof is not proof beyond reasonable doubt but the preponderance of probabilities
tending to draw an inference that the facts must be probable. Probative value of evidence
must be gauged from facts and circumstances of the case. Incriminating facts incompatible
with innocence – is the degree to which an assertion is to reach to be disproved.
Seriousness of offence and evidence in support must be proportionate. As a matter of ordinary
human experience, a person is less easily satisfied that a serious allegation is made out than
that a trivial one is made out.
Severity of consequences inherently discourages deviation. Fraud is less likely than
negligence. Courts are to try the case, not the moral rectitude of assessee. Doubt about
innocence not adequate to establish guilt.
2.3 Presumption
(a) Sodhi Transport Co. v. UO AIR 1985 SC 1099
A presumption is not in itself evidence but only makes a prima facie case for party in whose
favour it exists. It indicates the person on whom the burden of proof lies. When presumption is
conclusive it obviates the production of any other evidence. But when it is rebuttable it only
points out the party on whom lies the duty of going forward with evidence on the fact
presumed, and when that party has provided evidence fairly and reasonably tending to show
that the real fact is not as presumed, the purpose of presumption is over.
Proved means the evidence adduced establishes the assertion. Disproved means that based
on evidence.

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116 Background Material on Litigation Management

2.4 Expert Opinion

(a) Ramesh Chandra Agarwal v. Regency Hospital Ltd. AIR 2010 SC 806
An ‘expert’ is one who has devoted time and study to a special branch of learning and thus
specially skilled on those points on which he is asked to state his opinion.
Occurrence of an accident is information that a witness can provide. Negligence of driver
being cause of accident is opinion which only an expert can provide.
2.5 Mens rea
(a) RS Joshi v. Ajit Mills AIR 1977 SC 2279
Prohibition from collecting tax in excess of that leviable was made punishable without having
to establish mens rea. The principle of ‘no mens rea no crime’ had no application in economic
offences – actus non facitreium nisi mens sit rea – the act itself creates no guilt in the absence
of a guilty mind.
Question in tax statutes is whether proof of mens rea is dispensed with or presence of mens
rea is irrelevant. This can be known from the words of the statute.
Being aware of the existence of a risk of tax demand,if party proceeds to follow a course
involving lower tax payment, it is a case of ‘willfulness’ in the non-payment.
2.6 Bona fide
(a) Miniyatan Zachaarias AIR 2008 SC 1456 (following Gibson v. Jeyes 1801)
In relationships of trust, where some benefit or advantage flows to the one holding the trust,
the risk of mala fides must be disproved if questioned – “He who bargains in a matter of
advantage with a person placing confidence in him is bound to show that a reasonable use
has been made of that confidence; a rule applying to trustees, attorneys or anyone else”
The law reverses the usual rule of evidence of burden of proof in dealings involving trust or
other fiduciary relationships.
Bona fide interpretation of non-liability to tax as long as it is tenable even if such interpretation
set aside by Courts does not impute mala fide to that interpretation.

3. Interpretation
3.1 Per incuriam
(a) Central Board of Dawoodi Bohra Community Vs State of Maharashtra, 2010 (254) ELT
196 (SC)
Review of earlier judgment. Doctrine of precedents.
“Per incuriam” means a decision rendered in ignorance of a previous binding decision such as
decision of its own or of a Court of coordinate or higher jurisdiction. It may also mean decision
rendered in ignorance of terms of a statute or of a rule having force of law.

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Landmark Decisions 117

(b) State of UP Vs Synthetics and Chemicals Limited, 1991 (4) SCC 139
‘Incuria’ literally means ‘carelessness’. In practice per incuriam appears to mean per
ignoratium. The ‘quotable in law’ is avoided and ignored if it is rendered, ‘in ignoratium of a
state, or other binding authority’.
3.2 Sub Silentio
(a) Municipal Corporation of Delhi v. Gurnam Kaur [(1989) 1 SCC 101],
Under Delhi Municipal Corporation Act, 1957, there was a bar on Illegal encroachment on
public land. A question arose whether the Commissioner can exercise authority to remove
encroachment.
A decision is sub silentio when the particular point of law involved in the decision is not
perceived by the court or present to its mind. The court may consciously decide in favour of
one party because of point A, which it considers and pronounces upon. It may be shown,
however, that logically the court should not have decided in favour of the particular party
unless it also decided point B in his favour; but point B was not argued or considered by the
court. In such circumstances, although point B was logically involved in the facts and although
the case had a specific outcome, the decision is not an authority on point B. Point B is said to
pass sub silentio.
(b) Security Printing & Minting Corpn of India Ltd Vs Gandhi Industrial Corporation, 2007
(217) ELT 489 (SC)
Job work was done for gumming and super-calendering of stamp paper for appellant-security
press. Impugned papers brought by appellant after paying excise duty and gate passes issued
evidencing thereof. Issue was whether Appellant was entitled to Modvat benefit.
Principle of sub silentio not applicable when terms and conditions well known and clearly
understood between parties.
3.3 Res Judicata
(a) M.J. Exporters P. Limited Vs UOI, 2015 (325) ELT 216 (SC)
The appellant had challenged the demand of interest claimed by the Department on the
amount of duty paid belatedly. The High Court rejected the prayer of the appellant and gave
partial relief for recalculating interest.
Settled law that principles of constructive res judicata are applicable in writ proceedings
also.Accordingly, while undoubtedly question of law can be raised at any time of lis, appellant
not permitted to raise fresh argument on law point on a foreclosed issue.
(b) CC Vs Texcomash Export, 2015 (322) ELT 601 (SC)
The respondent had exported children’s garments to Russia under the claim of drawback.
Value for drawback purpose was fixed by the ACC, which was challenged in earlier
proceedings and concluded by higher authority. Fresh show cause notice was issued by
alleging fraud against the respondent and on that basis, the entire issue was sought to be
reopened.

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118 Background Material on Litigation Management

Show cause notice for drawback recovery was not issuable by Commissioner, when issue had
already been settled by higher authority viz., Joint Secretary (Review). Even if certain
additional material had cometo notice, proper course was to challenge order of Joint Secretary
(Review) at appropriate forum. No infirmity in Tribunal’s order setting aside demand arising out
of impugned show cause notice.
3.4 Promissory Estoppel
(a) Shrijee Sales Corpn Vs UOI, 1997 (89) ELT 452 (SC)
Appellant had imported PVC Resin, which was sought to be taxed. Whether time bound
customs exemption can be removed prior to its expiry.
The principle of promissory Estoppel is applicable against the Government but in case there is
a supervening public equity, the Government would be allowed to change its stand. It would
then be able to withdraw from representation made by it which induced persons to take certain
steps which may have gone adverse to the interest of such persons on account of such
withdrawal. However, the Court must satisfy itself that such a public interest exists.
(b) Kasinka Trading Vs UOI, 1994 (74) ELT 782 (SC)
Courts would not interfere with fiscal policy unless there is fraud or lack of bona fides on the
part of Government.
(c) UOI Vs Dharampal Satyapal Ltd, 2015 (319) ELT 6 (SC)
Industries set up in North-Eastern Region were exempted from Excise Duty. The exemption on
tobacco product was sought to be withdrawn. Whether it was hit by promissory estoppel.
Withdrawal of exemption did not violate the principle of promissory estoppel.
3.5 Lex Non CogitImpossiblia
(a) Indian Seamless Steel & Alloys Ltd Vs UOI, 2003 (156) ELT 945 (Bom.)
Prescribed period for making payment of tax expired on a holiday. Whether there was a
default in tax payment.
Law cannot compel a person to do the impossible. Unforeseen circumstance beyond control of
assessee resulting in non-payment of duty would not mean that there was failure to pay the
duty by due date.
(b) Hico Enterprises Vs CC, 2005 (189) ELT 135 (T-LB). Affirmed by SC in 2008 (228) ELT
161 (SC)
Export obligation under Notification No. 203/92-Cus. was fulfilled by original licence holder.
Department alleged that endorsement of transferability made on licence obtained by fraud or
misrepresentation. Satisfaction arrived at by DGFT that exporter had discharged export
obligation without availing input credit is binding on the Customs Department at all times.
Maxim Lex Non Cogit Ad Impossiblia to be read from the point of view of performance of an
act by transferee of licence to fulfil condition, which is allegedly not discharged by transferor
but not from the point of view of applicability of Notification No. 203/92-Cus.

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3.6 Ratio decidendi

(a) Bharti Airtel Ltd Vs State of Karnataka, 2012 (25) STR 514 (Kar.)
Competence of the State to levy Sales Tax/VAT on telecommunication service.Interpretation
of constitutional and statutory provisions and upholding the rule of law.
Ratio decidendi is the reason assigned in support of conclusion. It must be ascertained and
determined by analyzing all material facts and issues involved in the case.
(b) Ahmedabad Mfg.& Calico Ptng. Ltd & Ors Vs UOI, 1982 (10) ELT 821 (Guj.)
Includability of post-manufacturing expenses in assessable value of goods in case of factory
gate sale.
It is not everything said by the Supreme Court in its judgment which is binding as law declared
by the Supreme Court. What is considered binding onall the courts is the actual ratio
decidendi of the decision culled out in the context of the facts of the case in question.
3.7 Obiter Dicta
(a) Municipal Corporation of Delhi v. Gurnam Kaur [(1989) 1 SCC 101]
Under Delhi Municipal Corporation Act, 1957 there was a bar on illegal encroachment on
public land. A question arose whether the Commissioner can exercise authority to remove
encroachment.
Quotability as to law applies to the case, its ratio the only thing binding on an authority is the
principle upon which the case was decided. Statements which are not part of the
ratiodecidendi are distinguished as obiter dicta and are not authoritative.
(b) MohandaasIssardas Vs CC, 2000 (125) ELT 206 (Bom.)
Powers of the authority to impose penalty when there is a prohibition or restrictions on
importation.
An obiter dictum is an expression of opinion on a point which is not necessary for the decision
of a case. Two questions may arise before a Court for its determination. The Court may
determine both although only one of them may be necessary for the ultimate decision of the
case. The question which was necessary for the determination of the case would be ratio
decidendi. The opinion of the Tribunal on the question which was not necessary to decide the
case would be only an obiter dictum.
3.8 Binding Precedent
(a) A One Granites Vs State of UP &Ors, AIR 2001 SC 1203
Issue arose in the context of re-grant of mining leases for following the procedure for giving
notice.
A decision which was not express and was not founded on reasons nor it proceeded on
consideration of issue cannot be deemed to be a law declared to have a binding effect as is
contemplated by Article 141.

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120 Background Material on Litigation Management

(b) ACCE Vs Dunlop India Ltd &Ors, 1985 (19) ELT 22 (SC)
Impact of ex parte interim orders
It is inevitable in a Hierarchical system of courts that there are decisions of the Supreme Court
which do not attract the unanimous approval of all members of the judiciary, but the judicial
system only works if someone is allowed to have the last word and that last word once spoken
is loyally accepted. The better wisdom of the Courts below must yield to the Higher wisdom of
the Court above that is the strength of the hierarchical judicial system. In India, needless to
say, under Article 141 of the Constitution, the law declared by the Supreme Court shall be
binding on all courts within the territory of India, and under Article 144 all authorities civil and
judicial in the territory of India shall act in aid of the Supreme Court.
3.9 Judicial discipline
(a) Pradip Chandra Parija Vs Pramod Chandra Patnaik, 2002 (144) ELT 7 (SC)
Judicial discipline to be followed by Judges as regards Court decisions.
Judicial discipline requires that two Judge Bench should follow the decision of a Bench of
three learned Judges. If the two Judge Bench concludes that the earlier judgment of three
learned Judges is very incorrect and under no circumstances to be followed, proper course is
to set out the reasons why it could not agree with the earlier judgment and refer the matter to
a Bench of three Judges and if then the Bench of three Judges also comes to the conclusion
that the earlier judgment of a Bench of three learned Judges is incorrect, it should refer the
matter to a Bench of five learned Judges.
(b) UOI Vs Kamalakshi Finance Corpn. Ltd, 1991 (55) ELT 433 (SC)
It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of
the quasi-judicial issues before them, revenue officers are bound by the decisions of the
appellate authorities. The order of the Appellate Collector is binding on the Assistant
Collectors working within his jurisdiction and the order of the Tribunal is binding upon the
Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the
Tribunal. The principles of judicial discipline require that the orders of the higher appellate
authorities should be followed unreservedly by the subordinate authorities. The mere fact that
the order of the appellate authority is not “acceptable” to the department, in itself an
objectionable phrase and the subject-matter of an appeal, can furnish no ground for not
following it unless its operation has been suspended by a competent Court. If this healthy rule
is not followed, the result will only be undue harassment to assessees and chaos in
administration of tax laws.
3.10 Doctrine of merger
(a) Kunhyammed Vs State of Kerala, 2001 (129) ELT 11 (SC)
Doctrine of merger is neither a doctrine of constitutional law nor one statutorily recognized. It
is a common law doctrine founded on principles of propriety in the hierarchy of justice delivery
system. Its underlying logic is that there cannot be more than one operative order governing

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the same subject matter at a given point of time. The doctrine is not of universal or unlimited
application. To attract it, the superior jurisdiction should be capable of reversing, modifying or
affirming the order put in issue before it and it should do so by passing a speaking and
reasoned order.
(b) Fuljit Kaur vs. State of Punjab, 2010 (262) ELT 40 (SC)
Unique case of an influential person having allotment of residential plot in discretionary quota
within 48 hours of submission of application and to assert right to have land at throwaway
price and not deposit sale price for quarter of a century.
Dismissal of Special Leave Petition in limine does not mean reasoning of judgment of High
Court stood affirmed or such judgment merges with Supreme Court order. Such dismissal of
SLP means case not considered as worthy of examination. Such order does not operate as
res judicata and is not a binding precedent.

Indirect Taxes Committee