Sukumar Mukhopadhyay: Freedom from Central Law Agency

Recently a book written by a former Additional Solicitor General of India has highlighted what we always knew about the disquieting features of the functioning of the Central Law Agency.  Now it is official.  The Central Law Agency is supposed to conduct litigation on behalf of the Ministries of the Government of India in the Supreme Court.  He has written devastating stories about the Central Law Agency, about brief-less dockets being given to the ASGs and files being sent at the last movement which does not give opportunity to the ASG to prepare the file.  In this book there are many instances but I do not want to deal with them specifically but in a general way.  The idea is to suggest some improvements in the set up.

            The author has described some of the chronic ailments in the Central Agency as follows: (Page 92 of  My Experience with the office of Additional Solicitor General of India by Bishwajit Bhattacharya).

(i) Distribution of brief to panel counsels and law officers is arbitrary, inequitable, uneven and non-transparent. 

(ii) Some panel lawyers are marked briefs and some other remain only on paper.  Even amongst those who are marked briefs, there is a serious distortion.  Favourites are flooded with briefs.  How one can become a favourite, is widely known and hardly needs any elaboration.  Some people exercise this option of becoming favourites, but majority in the panel, out of self-respect, don’t exercise this opinion.  Brief eludes such panel counsel.

(iii)  Sometimes revenue panel counsel returns the brief at the eleventh hour, claiming that he knows the assessee only to appear for the assessee when the matter reaches.  It is virtually impossible to verify such a claim of the revenue counsel as to when he came to know the assessee!  When such a situation occurs, no substitute is provided for the revenue.  The practice of revenue panel lawyers being permitted to appear for the assessee has given rise to such a situation.

 (iv) Sending docket without the brief is a regular feature.  Even when a brief is sent, some pages or annexures go missing.  Sometimes counter-affidavit or other crucial papers or annexures are not sent.  Sending an incomplete and truncated brief is a rampant phenomenon.

(v)  Sometimes counter-affidavits and rejoinders are not filed without reasons or filed with considerable delay jeopardising thereby the interst of the revenue.

(vi)   Office report about the case, as given by the Supreme Court Registry, are often withheld from the brief.

(v)  Considerable delay is caused in Central Law Agency in filing cases due to insensitive attitude at various stages such as drafting, typing giving opinions, movement of files by messengers, etc.

(vi)  Sometimes in very small cases which are covered one way or the other, as many as 5 to 6 counsels are marked docket.  Even two senior counsels are appointed in innocuous cases.

The list can go on and on”.

            This narration above brings about the most pathetic way in which cases in the Supreme Court are dealt with.  No wonder the success rate in indirect tax cases is so pathetic.  It is even less than ten percent. Recently the Minister of State in a reply to a Parliament Question supplied the following information on the 5th of September 2012.

(iv) Sending docket without the brief is a regular feature.  Even when a brief is sent, some pages or annexures go missing.  Sometimes counter-affidavit or other crucial papers or annexures are not sent.  Sending an incomplete and truncated brief is a rampant phenomenon.

(v)  Sometimes counter-affidavits and rejoinders are not filed without reasons or filed with considerable delay jeopardising thereby the interst of the revenue.

(vi)   Office report about the case, as given by the Supreme Court Registry, are often withheld from the brief.

(v)  Considerable delay is caused in Central Law Agency in filing cases due to insensitive attitude at various stages such as drafting, typing giving opinions, movement of files by messengers, etc.

(vi)  Sometimes in very small cases which are covered one way or the other, as many as 5 to 6 counsels are marked docket.  Even two senior counsels are appointed in innocuous cases.

The list can go on and on”.

            This narration above brings about the most pathetic way in which cases in the Supreme Court are dealt with.  No wonder the success rate in indirect tax cases is so pathetic.  It is even less than ten percent. Recently the Minister of State in a reply to a Parliament Question supplied the following information on the 5th of September 2012.

Success rate of departmental litigation in Courts and Tribunal during the last four years are as follows:

Year                 Supreme Court

2008-09                       9.81%

2009-10                       7.85%

2010-11                       5.5%

2011-12                       10.64%

This information was given by the Minister of State for Finance Shri S.S.  Palanimanickam in written reply to a question in Lok Sabha”.  While this figure is official, it is also corroborated by a count of such cases which I did myself.  In March 2012 I personally went through the chronologically latest 50 judgments of the Supreme Court on customs, excise and service tax. My sample was small but it is indicative. The data showed that at the admission stage Revenue wins 20% cases and at the merit stage again it wins less than 20% cases.   So the inevitable conclusion is that Revenue goes to Supreme Court far too often just to file appeal. And even on merit it loses 8 out of 10 cases.

In an overall manner the truth is unfortunately that far too many appeals to the Supreme Court are filed in a routine manner without ever considering that there is no merit in the case.  I have come across many such cases while reading judgements for the purpose of writing articles which I have been doing for the last 18 years after my retirement.    Another revealing fact is that just about 2.5% of cases of CBEC are lost in the Supreme Court due to delay in filing, the appeals late.  The Revenue Secretary wrote to the Additional Solicitor General that “out of 827 appeals filed in the Supreme Court during the period 1-4-2009 to 29-11-2010 (20 months), only 21 cases have been dismissed on grounds of delay” [page 103 of the book].  That is to say, only 2.5% cases are lost on grounds of delay.  So it is clear that Revenue loses 97.5% cases on merit at the Supreme Court. This leads to the most disquieting conclusion that Revenue loses practically all (97.5%) cases in the Supreme Court on merit.  This is astoundingly disastrous information for Revenue.  For it shows that cases are sent to Supreme Court without considering the merit, that is, the chance of winning the case.  This does not speak well of the Member CBEC in charge of litigation.  It is quite clear that the Member simply pushes up the file to the Central Law Agency and the later pushes up the file to the Supreme Court. 

The ASG has suggested that the Central Law Agency should not be dealing with litigation on behalf of CBEC and CBDT.  This amounts to disbanding the Central Law Agency. The ASG says that all litigations should be handled by the concerned Commissioners independently.  He writes the following:

“In my view, each Commissionerate should be made completely independent in matters pertaining to litigation.  Independence would obviously include the freedom to choose lawyers etc.  Once this is done, full accountability will be automatically ensured.   Blame game then will stop.  Each Commissionerate should report to CBDT and CBEC on a post facto basis for each case.  The two Boards, namely CBDT and CBEC, can then exercise full control and accountability over each Commissionerate.  Role of the Central Agency in revenue litigation should be discontinued.  Both CBDT and CBEC must be made completely independent of the Central Agency in all matters pertaining to tax litigation.  Unless this is done, in my view, the situation will not improve.  In fact this must have been the intention of creating two posts of ASG Indirect Tax and ASG Direct Tax”. (page 106). 

This suggestion of the ASG is that the Commissioner should deal directly with ASG. I do not agree to this.  That is not practicable.  All Commissionerates are not near to Delhi and the officers cannot be expected to directly deal with the ASG.  The proper suggestion is that the CBEC should deal directly with the ASG and with the special lawyers in the panel of indirect taxes.  Cutting out the Central Law Agency is justified.  I fully and whole heartedly agree to this suggestion. As Collector of Customs and Central Excise, I had always found difficulty in conducting cases in the Supreme Court through the Central Law Agency. That is 25 years ago. It seems the same problem continues. 

The advantages of direct dealing with the ASG will be the following:

1.     The responsibility is now divided between the CBEC and the Central Law Agency.  Once the CBEC is made to handle a case directly with ASG, the responsibility for losing a case will be directly on the CBEC.  The ASG also will be responsible in an overall manner. 

2.    The CBEC will be more empowered to choose the lawyers in the panel for indirect taxes and also to brief the ASG directly.  Emergency situations where when a case comes up on the next day, can be more easily handled by the CBEC.

3.   Interim orders given by the Supreme Court can be much more easily handled by the CBEC than by a non-descript middleman type of organization which is the Central Law Agency. 

4.     Efficiency in conducting litigation will surely improve because of the possibility of briefing the ASG and the lawyers directly by the Board’s officers accompanied by the field officers.

      Apart from the above suggestions, which are very important, I have got some more suggestions to improve the functioning of Revenue in regard to litigation in the Supreme Court.

a)    The first action is to limit the number of appeals to be filed. Field officers, do not seem to have any respect for Tribunal judgments and hardly any respect for  law settled by High Courts and even Supreme Court.   They recommend filing appeal blindly and everybody above simply goes on okaying the suggestion.  This attitude must change. 

b)      This attitude mentioned above can change only on the pain of being punished for suggesting frivolous appeal to each and every order. 

c)     There should be a regular monthly session of the full Board to consider why the Supreme Court and High Courts have set aside the view point of the Department in the previous month.

d)   The full Board should decide whether to file appeal when there is a decision of the Supreme Court or a Section 37B Order or a Board's clarification in party's favour.

 e)   The Attorney General also, it is respectfully suggested, should have a three monthly review of cases lost and of reasons why. 

 f)    Abolish the system of three Chief Commissioners deciding whether to file appeal since it is a failed institution.

 g)  Let there be an abolition of Laws which are basically litigation prone. The worst is the Law of Unjust Enrichment which has to its credit 2369 cases in the last six years in Tribunals and Courts.

Conclusion: 

     We should take advantage of the book written by ASG which has highlighted certain crucial defects in the functioning of the Central Law Agency.  The performance of Revenue (indirect tax) is pathetic in the Supreme Court.  Much of it is because of (i) non-performance of Central Law Agency whose contribution is either nil or negative and (ii) infructuous appeals being filed by Revenue. The remedy lies in the following. First, cut out the Central Law Agency and establish a direct relation between ASG/panel lawyers and the CBEC. I am not suggesting the abolition of Central Law Agency which might be needed by other departments.  Second, improve the functioning of the CBEC in regard to litigation by chastising the officers who suggest frivolous litigation.