Appellant:commissioner Of Income Tax, Jabalpur v. Respondent:northern Coal Fields Limited, Singrauli (Mp

THE HIGH COURT OF MADHYA PRADESH: JABALPUR(Division Bench) MAIT No. 90/2006 APPELLANT:Commissioner of Income Tax, Jabalpur Versus RESPONDENT:Northern Coal Fields Limited, Singrauli (MP) ------------------------------------------------------------------------------------------- Coram: Hon’ble Shri Justice Ajay Kumar Mittal, Chief JusticeHon’ble Shri Justice Vijay Kumar Shukla, Judge ------------------------------------------------------------------------------------------- Appearance: Shri Sanjay Lal, Advocate for the appellant. Shri Abhijeet Shrivastava, Advocate for the respondent. ------------------------------------------------------------------------------------------- O R D E R (Oral)[06.01.2020] Per: Ajay Kumar Mittal, CJ In the present appeal preferred by the Revenue under Section 260-A ofthe Income Tax Act, 1961, challenge is to an order dated 15.12.2005 passedby the Income Tax Appellate Tribunal, Jabalpur Bench in ITA Nos. 175 and177/JAB/2004 in respect of the Assessment Years 1997-98 and 1998-99whereby both the appeals of the appellant-Revenue have been dismissed. 2.This appeal was admitted vide order dated 20.09.2006 fordetermination of the following substantial question of law:- “Whether COD’s approval is mandatory in cases whereassessee is not P.S.U. but D.D.Os who are disbursing thepayments to the employees and contractors are forced to deducttax as per provisions of Chapter XVII-B of the Act?” 3.The appellant-Revenue preferred appeals before the learned Tribunalagainst two separate orders both dated 26.03.2004 passed by theCommissioner of Income Tax (Appeals)-II, Jabalpur [for short “theCIT(A)”] pertaining to the assessment years 1997-98 and 1998-99 whereinthe CIT(A) partly allowed the assessee’s application under Section 154 ofthe Income Tax Act, 1961 (for short “the Act”) for rectification of themistake in the order of the Assessing Officer dated 21.03.2002 passed underSection 263/154 of the Act deleting certain additions. The learned Tribunaldismissed both the appeals vide order dated 15.12.2005 on the ground thatboth the appeals were filed by the Revenue without obtaining COD(Committee on Disputes) approval and as on the date of decision also nosuch COD approval was placed on record. The learned Tribunal whileassigning the said reason took note of the judgment in ONGC vs. CCE(1992) Supp (2) SCC 432 wherein the Supreme Court held that when anydispute arises between a public sector undertaking and the GovernmentDepartment, the appellant was required to obtain necessary approval fromthe COD. It is in this background, the present appeal has been filed by theRevenue. 4.Learned counsel for the appellant submitted that the COD’s approvalwas not at all necessary in relation to the respondent-assessee, which is aDDO for the purposes of disbursing the payments to the employees andcontractors and while doing so, failed to deduct tax as per the provisions ofChapter XVII-B of the Act. The approval of the COD was required onlywhere the appeal relates to disputes between Government Department andPSUs. Learned counsel has further submitted that the Supreme Court inElectronics Corporation of India Limited vs. Union of India and others (2011) 3 SCC 404 has reversed its earlier judgment in ONGC’s case(supra). 5.Learned counsel for the respondent could not dispute the aforesaidproposition. However, it was contended by him that the appeal was admittedin 2006 and the ONGC’s case (supra) was holding the field then, therefore,no substantial question of law arises. Further, it was contended that in suchcircumstances, the decision of the Supreme Court in ElectronicsCorporation (supra), would not be applicable in the present case. 6.We have heard learned counsel for the parties and find that the presentappeal deserves to be allowed. (2011) 3 SCC 404 has reversed its earlier judgment in ONGC’s case(supra). 5.Learned counsel for the respondent could not dispute the aforesaidproposition. However, it was contended by him that the appeal was admittedin 2006 and the ONGC’s case (supra) was holding the field then, therefore,no substantial question of law arises. Further, it was contended that in suchcircumstances, the decision of the Supreme Court in ElectronicsCorporation (supra), would not be applicable in the present case. 6.We have heard learned counsel for the parties and find that the presentappeal deserves to be allowed. 7.Undoubtedly, the Constitution Bench of the Supreme Court inElectronics Corporation (supra) has reversed its earlier decision inONGC’s case (supra) and held that approval of the COD in terms of itsearlier judgment was not required. The relevant extract of the said decisionreads as under:- “12.By order dated 11-9-1991, reported in Oil and Natural GasCommission v. CCE, 1992 Supp (2) SCC 432, this Court noted that“public sector undertakings of the Central Government and the Union ofIndia should not fight their litigations in court” (SCC p. 432, para 3).Consequently, the Cabinet Secretary, Government of India was “calledupon to handle the matter personally”. 13.This was followed by the order dated 11-10-1991 in ONGC-II case(1995 Supp (4) SCC 541, Oil and Natural Gas Commission v. CCE),where this Court directed the Government of India to “set up a Committee consisting of representatives from theMinistry of Industry, the Bureau of Public Enterprises and theMinistry of Law, to monitor disputes between Ministry andMinistry of Government of India, Ministry and public sectorundertakings in between themselves, to ensure that no litigationcomes to court or to a tribunal without the matter having beenfirst examined by the Committee and its clearance for litigation”(SCC pp. 541-42, para 3). *** *** *** 15.By another order dated 20-7-2007 (Oil and Natural GasCommission v. City & Industrial Development Corpn. Maharashtra Ltd. -(2007) 7 SCC 39 case) this Court extended the concept of disputeresolution by High-Powered Committee to amicably resolve the disputesinvolving the State Governments and their Instrumentalities. The ideabehind the setting up of this Committee, initially, called a "High-PoweredCommittee" (HPC), later on called as "Committee of Secretaries" (CoS)and finally termed as "Committee on Disputes" (CoD) was to ensure thatresources of the State are not frittered away in inter se litigations betweenentities of the State, which could be best resolved, by an empowered CoD.The machinery contemplated was only to ensure that no litigation comesto court without the parties having had an opportunity of conciliationbefore an in-house committee. [See SCC paras 3-4 of the order dated 7-1-1994 in (2004) 6 SCC 437, Oil and Natural Gas Commission v. CCEcase]. 16.Whilst the principle and the object behind the aforestated orders isunexceptionable and laudatory, experience has shown that despite bestefforts of the CoD, the mechanism has not achieved the results for which itwas constituted and has in fact led to delays in litigation. We have alreadygiven two examples hereinabove. They indicate that on same set of facts,clearance is given in one case and refused in the other. This has led a PSUto institute a SLP in this Court on the ground of discrimination. We neednot multiply such illustrations. 16.Whilst the principle and the object behind the aforestated orders isunexceptionable and laudatory, experience has shown that despite bestefforts of the CoD, the mechanism has not achieved the results for which itwas constituted and has in fact led to delays in litigation. We have alreadygiven two examples hereinabove. They indicate that on same set of facts,clearance is given in one case and refused in the other. This has led a PSUto institute a SLP in this Court on the ground of discrimination. We neednot multiply such illustrations. 17.The mechanism was set up with a laudatory object. However, themechanism has led to delay in filing of civil appeals causing loss ofrevenue. For example, in many cases of exemptions, the IndustryDepartment gives exemption, while the same is denied by the RevenueDepartment. Similarly, with the enactment of regulatory laws in severalcases there could be overlapping of jurisdictions between, let us say, SEBIand insurance regulators. Civil appeals lie to this Court. Stakes in suchcases are huge. One cannot possibly expect timely clearance by CoD. Insuch cases, grant of clearance to one and not to the other may result ingeneration of more and more litigation. The mechanism has outlived itsutility. 18.In the changed scenario indicated above, we are of the view thattime has come under the above circumstances to recall the directions ofthis Court in its various Orders reported as (i) 1995 Supp (4) SCC 541, Oil S/ and Natural Gas Commission v. CCE dated 11.10.1991, (ii) (2004) 6 SCC437, Oil and Natural Gas Commission v. CCE, dated 7.1.1994 and (iii)(2007) 7 SCC 39, ONGC-IV dated 20.7.2007.” 8.Since the Supreme Court in Electronics Corporation (supra) hasrecalled its all earlier judgments whereby following the decision in ONGC’scase (supra) reported in 1992 Supp (2) SCC 432, direction was issued toresort to mechanism of settlement of inter/intra government disputes byreferring matter to Committee on disputes and the said committee was setup, therefore, the judgment in ONGC’s case (supra) no longer holds thefield and it would be deemed that there was no requirement of CODapproval for filing the appeal. The substantial question of law framed is thus,answered accordingly. 9.In view of the foregoing discussion, the impugned order passed by theTribunal dismissing the appeals only on the ground that there was nosanction from the COD, is unsustainable and is hereby set aside. The matteris remanded to the learned Tribunal to re-decide the appeals on merits inaccordance with law. 10.Accordingly, the present appeal stands allowed and disposed of. (Ajay Kumar Mittal) (Vijay Kumar Shukla)Chief Justice Judge