The Central Boards of Revenue Act, 1963
The Central Boards of Revenue Act, 1963
🔹 Background and Purpose
The Central Boards of Revenue Act, 1963 was enacted to provide a statutory framework for the establishment and functioning of the Central Boards of Revenue, which are the apex bodies responsible for administering direct and indirect taxes in India.
Before this Act, the boards functioned under executive orders without statutory backing. The Act gave them statutory recognition, defining their constitution, powers, functions, and responsibilities. It aimed to streamline tax administration and ensure uniformity and efficiency in tax collection and enforcement.
🔹 Objectives of the Act
To constitute Central Boards of Revenue with statutory status.
To define the composition of these boards.
To delineate their powers and functions related to the administration of taxes.
To ensure efficient and effective tax administration and collection.
To provide a legal basis for boards to issue instructions and guidelines to tax authorities.
🔹 Key Provisions of the Act
1. Constitution of Central Boards (Section 3)
The Act provides for the constitution of two Central Boards of Revenue:
Central Board of Direct Taxes (CBDT)
Central Board of Indirect Taxes and Customs (CBIC) (originally called Central Board of Excise and Customs)
These boards consist of a Chairman and members appointed by the Central Government.
2. Functions of the Boards (Section 4)
The Boards are responsible for the formulation and administration of policy related to income tax, customs, excise, service tax, and other direct and indirect taxes.
They oversee the collection and enforcement of tax laws.
Issue instructions and guidelines to subordinate officers.
Advise the Central Government on matters related to tax administration.
3. Powers to Delegate (Section 5)
The Boards have the power to delegate their functions and duties to subordinate officers or authorities.
They ensure proper supervision and control of tax administration.
4. Consultation and Coordination (Section 6)
The Boards coordinate with other government departments and agencies for efficient tax administration.
They also consult with the State Governments and other stakeholders as necessary.
5. Expenses and Allowances (Section 7)
The Act provides for payment of salaries, allowances, and other expenses related to the functioning of the boards.
6. Miscellaneous Provisions
The Act empowers the Central Government to make rules for carrying out the purposes of the Act.
The Boards have legal standing to defend actions or suits related to tax administration.
🧑⚖️ Relevant Case Law
1. Commissioner of Income Tax vs. Vatika Township Pvt. Ltd. (2010)
Issue: Whether the instructions issued by CBDT carry legal force.
Judgment: The Supreme Court held that while CBDT circulars and instructions are not laws, they have persuasive authority and guide the tax officers in uniform application of tax laws.
2. Union of India vs. Azadi Bachao Andolan (2003)
Issue: Whether the Central Board of Revenue (now CBDT and CBIC) can interpret tax treaties and give binding instructions.
Judgment: The Court affirmed the Boards’ role in policy formulation and enforcement but clarified that ultimate judicial interpretation lies with courts.
3. Vodafone International Holdings BV vs. Union of India (2012)
Issue: Role of CBDT in clarifying tax positions and issuing advance rulings.
Judgment: The Supreme Court acknowledged the role of CBDT in administrative clarification but emphasized the judiciary’s role in dispute resolution.
4. Commissioner of Customs vs. Dilip Kumar & Co. (1977)
Issue: Authority of Central Board of Excise and Customs (predecessor of CBIC) to issue binding guidelines.
Judgment: The Court held that instructions from the Board are binding on subordinate authorities unless set aside by competent authority or courts.
🔹 Summary
| Aspect | Details |
|---|---|
| Purpose | Statutory recognition of Central Boards of Revenue for tax administration |
| Boards Constituted | CBDT (Direct Taxes), CBIC (Indirect Taxes & Customs) |
| Functions | Policy formulation, tax collection, enforcement, issuing instructions |
| Powers | Delegation of duties, coordination with other departments |
| Legal Status of Instructions | Persuasive and generally binding on tax authorities |
| Significant Judgments | Affirmed Boards’ role in tax administration and policy guidance |
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