No.1001:41:DR February 07, 2007

Shri P Chidambaram

Hon’ble Union Minister of Finance

North Block

New Delhi 110 001

Subject : Request for amendment of Clause 13 of the National Tax Tribunal Bill, 2004 to recognize the profession of Company Secretaries for appearing as an authorised representative before the National Tax Tribunal.

Dear Sir,

This refers to the news item appearing in newspapers (Business Standard, The Financial Express both dated 25th January,2007) about the proposed Ordinance on National Tax Tribunal Bill cleared by the Cabinet proposing to authorize only lawyers and Chartered Accountants and Party-in-Person to appear before the Tax Tribunal.

In this connection, on behalf of the Institute of Company Secretaries of India, a professional body set up under the Company Secretaries Act, 1980 (No. 56 of 1980) to develop and regulate the profession of Company Secretaries, we draw your kind attention to the following:

Section 13 of the National Tax Tribunal Act, 2005 has provided as under:

“13. Appearance before the National Tax Tribunal.

(1)A party to an appeal other than Government may either appear in person or authorize one or more chartered accountants or legal practitioners or any person duly authorized by him or it to present his or its case before the National Tax Tribunal.

(2)The Government may authorize one or more legal practitioners or any of its officers to present its case before the National Tax Tribunal.

Explanation—For the purposes of this section,--

(a)“chartered accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of Section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section (1) of Section 6 of that Act;

(b)“legal practitioner” means an advocate, a vakil or any attorney of any High Court and includes a pleader in practice”.

The ordinance now proposes, as we comprehend from the newspaper reports, to allow only legal practitioners and chartered accountants, apart from the Party-in-Person, to appear before the Tax Tribunal.

It appears to us that the intention of the Government is to restrict the appearance by all and sundry before the National Tax Tribunal under the residuary clause and to allow only the members of the regulated Professions to appear before the said Tribunal. While welcoming the decision of the Government we wish to bring it to your kind notice that, in this process, the members of our Institute will not be able to appear. This seems to be an inadvertent and un-intended omission.

We wish to bring to your kind notice that there are about 20,000 Company Secretaries which include about 3500 Company Secretaries who hold Certificate of Practice and are in full time practice. A large number of our members are already practising in the areas of Income Tax, Central Excise, Customs and Service Tax and are appearing before relevant tax authorities, Income Tax Appellate Tribunal and Customs, Excise, Service Tax Appellate Tribunal.

At the foundation level, our members are taught Financial Accounting including the complex topics like, Single Entry System, Control Accounts, Branch and Departmental Accounts, Hire-Purchase and Lease Accounting etc.

In the Elements of Business Law Paper, at the Foundation Level, our members are taught important Business Laws including the sources and meaning of law.

At the Intermediate Level, under General and Commercial Laws, our members are taught the Constitution of India, interpretation of Statutes, Code of Civil Procedure, Criminal Procedure Code, Law of Evidence and several other enactments.

In the Company Accounts and Cost and Management Accounting, at the intermediate stage, our members learn Financial and Cost and Management Accounting in relation to companies in substantial detail.

In the Tax Laws at the Intermediate stage, a Company Secretary is taught Income tax law and practice in all its aspects, the Wealth tax Law, Central Excise laws , Customs Laws and Central Sales tax Laws.

Once again, at the Final stage, our members are taught Advanced Law and Practice relating to Income tax and Wealth tax Laws, Customs and Central Excise, Service tax laws.

A Company Secretary is governed by the code of Conduct contained in the Company Secretaries Act, 1980 and is therefore, subject to disciplinary jurisdiction of the Institute, which is a statutory body. This Code of Conduct is at par with the Code of Conduct governing Chartered Accountants under the Chartered Accountants Act, 1949.

A brief list of quasi-judicial bodies for appearance before which Company Secretaries in Practice have already been recognized under various Statutes, Rules and Regulations is given hereinbelow:

  1. Income Tax Appellant Tribunal under the Income Tax Act, 1961 and Income Tax Rules, 1962 (Section 288(2) and Rule 50);
  2. Customs, Excise and Service Tax Appellate Tribunal under Central Excise Act, 1944, Central Excise (Appeals) Rules, 2001 (Section 35Q and Rule 12), Customs Act, 1962 and Customs (Appeals) Rules, 1982 (Section 146A and Rule 9);
  3. National Company Law Tribunal and National Company Law Appellate Tribunal [presently the Company Law Board] (Section 10 GD of Companies Act, 1956);
  4. Competition Commission of India (Competition Act, 2002) (Section 35, Explanation (b));
  5. Telecom Disputes Settlement and Appellate Tribunal under Telecom Regulatory Authority of India Act, 1997 (Section 17 and Explanation (b));
  6. Securities Appellate Tribunal under Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957 (Section 22C, Explanation (b)), Securities and Exchange Board of India Act, 1992 (Section 15V, Explanation (b)) and Depositories Act, 1996 (Section 23C, Explanation (b)).

We had made a presentation before the Department Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice, which examined the National Tax Tribunal Bill, 2004. The Committee had recommended that Company Secretaries should also be able to act as authorized representatives before the National Tax Tribunal.

To be precise, the said Committee had recommended the following in its Report presented to the Rajya Sabha on 4th August, 2005 and laid on the table of the Lok Sabha on 4th August, 2005 in connection with Clause 13 of the Bill.

"CLAUSE 13.

The Committee feels that the provision in clause13(1), authorizing any person duly authorized to appear before the National Tax Tribunal has to be modified, otherwise such a provision will encourage persons who are not well versed with law and the procedural aspects to appear before the Tribunal, whereas knowledge of law is mandatory, as the Tribunal decides on substantial questions of law. The Committee, therefore, opines that only professionally qualified persons such as Advocates, Company Secretaries, Chartered Accountants, Cost and Works Accountants may be authorised to appear before the National Tax Tribunal. Subject to the above, the Clause is adopted."

Members of the Institute who are in public practice (Practising Company Secretaries) regularly appear before Tax Tribunals like Customs, Excise and Service Tax Appellate Tribunal and Income-tax Appellate Tribunal and have been doing substantial work representing the cases of their clients.

In its order dated January 9, 2007 [2007-TIOL-06-SC-NTT] in Sandeep Goyal Vs. Union of India and Ors. the Supreme Court observed as follows:

"One of the provisions under challenge is Section 13 of the Act which, inter alia, permits 'any person duly authorised' to appear before the National Tax Tribunal. In the affidavit filed in T.C. No. 150/2006 on behalf of the Union of India, it is inter alia, stated that the Government would make appropriate amendments in the Act to ensure that only lawyers and Chartered Accountants and party-in-person are permitted to appear before the Tribunal. We feel it would be appropriate that the matter is further heard after amendments in Section 13, as stated in the affidavit, or such other amendment which the Government may want to make in the Act are in fact made." (emphasis supplied)

We submit that , in the interest of equity, justice and fairplay for Practising Company Secretaries and also to make available the knowledge and experience of these professionals to the public at large, it would be appropriate on the part of the Government to amend the said Section 13 by including Company Secretaries in the categories of professionals who can represent before the National Tax Tribunal. The suggested amendment is spelt out below :

The amendment can be made by deleting the words “or any person duly authorized by him or it” and inserting the words, “company secretary or”, after the words, “one or more chartered accountants or” and before the words, “legal practitioners” in Sub-section (1).

Also, the definition of the term “company secretary” be included in the Explanation by inserting a new clause (b) as given below and re-naming the existing clause (b) as clause (c)—

(b) “company secretary” means a company secretary as defined in clause (c) of sub-section (1) of Section 2 of the Company Secretaries Act, 1980 (56 of 1980) and who has obtained a Certificate of Practice under Sub-section (1) of Section 6 of the Act”.

We shall be pleased to furnish any further information as may be desired by you in this regard.

We seek your valuable time so that we can come and meet you in person and explain our case to you and shall be grateful for an appointment.

Thanking you,

Yours faithfully,

Sd/-

(PREETI MALHOTRA)

PRESIDENT

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