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Supreme Court won’t tolerate delays by tax authorities, benches begin dismissing cases

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Different benches headed by justices Sikri, Chelameswar, Gogoi and Nariman pull up income tax and revenue departments for repeated delays.

New Delhi: Upset with the repeated delays in the appeals filed by the income tax department, the Supreme Court has decided to make it a rule to dismiss such cases. However, if the revenue department is able to justify the cause of delay, the apex court will consider giving it a chance and hear the matter.

So far this month, several cases have been dismissed, with different benches making it clear that the court will not tolerate delay.

Sikri & Bhushan’s observations

In a case pertaining to a cement company, the bench of justices A.K. Sikri and Ashok Bhushan allowed the delay, but imposed a cost of Rs 20,000 payable to the Supreme Court Legal Service Committee. However, in another matter pertaining to Vision Finstock Limited, a company based in Baroda, Gujarat, the plea was dismissed.

“There is a delay of 159 days in filing the present petition, which is not satisfactorily explained. Notwithstanding the same, we have gone into the merits of the case and do not find any substance in the special leave petition. The leave petition is dismissed on the ground of delay as well as on merits,” the bench observed while dismissing the plea.

Additional Solicitor General (ASG) Vikramjit Banerjee, representing the IT department, objected to the dismissal. But Sikri observed that the tax department had been given enough indulgence on the grounds of delay.

“Till now, indulgence was a given, since it was a matter of revenue coming in,” Sikri observed. However, despite imposing costs, it appeared that there was no change in the department, he added.

Attorney General K.K. Venugopal, who was present in court for an unrelated matter, jumped in and pointed out almost all the matters filed by the tax department were considerably delayed. “In one day there are nine tax matters,” he said, all filed with delay.

“We have written letters to the income tax department to ensure that there are no delays. An order from the court would go a long way,” Venugopal said. “However, it is the system that needs to change.”

Other benches also miffed

Sikri’s bench in not the only one upset with the delays. Benches led by Jasti Chelameswar, Ranjan Gogoi and Rohinton Nariman have also been fairly intolerant of delays that cannot be explained.

In one tax matter, dated 7 May, a three-judge bench comprising Ranjan Gogoi, R. Banumathi and Navin Sinha said: “We are not satisfied that the delay that has occurred in filing the present Special Leave Petitions should be condoned. That apart, the delay of 448 days in filing the Reference Application(s) was refused to be condoned by the High Court on grounds which we consider to be good grounds. Consequently, the Special Leave Petitions are dismissed both on the ground of delay as well as on merits.”

‘Changing approach is a positive sign’

At least four cases being handled by advocate Jasmeet Singh have so far been dismissed – in each of these cases, he was representing the companies being taxed. And though his clients got relief as a result of the judges’ changing approach, he acknowledged that there would be a substantial loss to the revenue department, but also said it was a positive message to society at large.

“The perspective and tolerance towards tax litigation is changing. Honourable judges in the tax rosters now seek justifiable explanation for delay in filing SLPs, rather than accepting routine excuses like ‘the file takes time to move’, ‘took time to take legal advice/opinion’. So now, the tax department doesn’t get any ‘special indulgence’, and has to satisfy the court on condonation of delay, like any other litigant,” Singh said.

“This sometimes leads to the dismissal of the SLP, raising an important question of law, merely on delay, causing substantial harm to the union (of India). However, the union needs to be more vigilant and can’t afford to take delay for granted.

“The changing approach of the judges is sending a positive message to the society at large,” he added.

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