PRASHANT BHUSHAN Advocate

Off: C-67, Sector-14 NOIDA 201 301 U.P. Tel: 2512523, 914512695 Fax:2512694 Res: B-16, Sector-14 NOIDA 201 301 U.P. Tel: 2512411, 2512693 Chb: 301, New Lawyers Chambers Supreme Court New Delhi 110 001 Tel: 23070301, 23070645

Dated: 21.09.2011 To, The Hon'ble Mr. Manmohan Singh Prime Minister of India South Block New Delhi-110004 This is regarding the recent selection of Mr. H.K. Sharan and Mr. Rajendra Prakash for the post of Indirect Tax Ombudsman, Bombay and Lucknow respectively. I have learnt that their appointment is subject to the final approval by the Appointment Committee of Cabinet (ACC) which is yet to take final decision. I am therefore writing to you to bring to your knowledge certain facts regarding the afore-named persons which I have come to know from various reliable sources which cast serious doubts about their integrity and thus, make them totally unsuitable for the post for which they have been selected and names have been sent to the ACC for final approval. Although, as per the Indirect Tax Ombudsman Guidelines 2011, which has been announced by the Government for appointment of Indirect Tax Ombudsman to deal with the complaints of the tax payers (Annexure - A), the only eligibility criteria for appointment for Ombudsman is that he should have held a post in GOI in the HAG pay scale of 67,000 -79,000 on regular basis for atleast one year or in a higher grade and he should be a serving officer on the last date of receipt of application. Surprisingly no other qualifications or eligibility criteria is prescribed. However, it certainly goes without saying that since the Ombudsman has to deal with the complaints made by the taxpayer against the Revenue Department, he should be a man of competence and impeccable integrity beyond any shadow of doubt.

2 It is learnt that the Selection Committee comprising of Shri. R.S.Gujral, Revenue Secretary, Ms. Parveen Mahajan, Member CBE&C (P & V) and Shri. S.K. Goel, Member CBE&C (Customs) held a meeting on 29th Aug 2011, and selected Shri. S.D. Majumder, Ms. Lalita John, Shri. H.K. Sharan and Shri. Rajendra Prakash as Indirect Tax Ombudsman for Delhi, Bangalore, Mumbai and Lucknow respectively. I have received complaints & information about various irregularities and corrupt practices of Shri. H.K. Sharan while posted in Central Excise and Customs Department, particularly as Chief Commissioner, Kolkata and Shillong, and also against Shri. Rajendra Prakash while posted as Commissioner of Central Excise at New Delhi. Complaints against Mr. H.K. Sharan: (i) The Central Vigilance Commission vide OM No. 1513/8 dated 29-01-2008 forwarded complaints alleging corruption and collusion of Mr. H.K. Sharan with pan masala units in Shillong Commissionerate for illegally allowing the withdrawal of Rs. 60 crores from Escrow account for payment of the Government dues. The CBI and the Ministry of Finance also forwarded similar complaints against Mr. H.K. Sharan to the Directorate General of Vigilance, Central Excise and Customs, New Delhi. (ii) The Central Vigilance Commission vide OM No.

008/Central Excise/084, dated 22-10-2008, permitted the Directorate General of Vigilance, Central Excise and Customs to conduct Inquiries against Mr. H.K. Sharan. (iii) The CBEC by its letter No. 356/44/2007-TRU, dated 2201-2008 appointed a three Member Special Audit Team (SAT) to look into the unauthorized withdrawal of Rs. 60 crores by a particular gutka manufacturer from Escrow account in the North East Region. The said Committee submitted its Report under Letter F. No. 587/CESTAT/3/2008, dated 6-4-2009.

3 (iv) As per the said report, the approval authorizing

withdrawal of Rs. 56.44 crores from the Escrow account for payment of government recoveries was illegal, because the amount available in the escrow account is either to be invested for the development of the North-East region or to be forfeited to the Government and it cannot be used for payment of Government dues as assesse has no claim or lien on the said amount except for investing in some project (see also Para 23 to 25 of the said report enclosed as Annexure - B). As per the note sheets dated 28-12-2007 to 2-1-2008 (Annexure - C) the said illegal withdrawal of Rs. 56.44 was approved by Mr. H.K. Sharan, as Chief Commissioner of Central Excise, Shillong. The fact that Mr. H.K. Sharan, Chief Commissioner illegally allowed recovery of said amount by way of withdrawal from the Escrow account is evident from Para 6 III of letter dated 17-62008, of the Commissioner of Central Excise, Shillong (Annexure - D). This illegal action of Shri. H.K. Sharan has resulted in loss of Rs. 112.88 Crores to the public exchequer in as much as the amount of Rs. 56.44 which was initially foregone by Govt. had not been spent for the purpose it was allowed to be waived. Secondly, another amount of Rs. 56.44 crore has been withdrawn from the Escrow account on account of recovery against the assessee. It seems that, this Report of three Member Special Audit Team, has not been given due consideration by the Directorate General of Vigilance while closing the vigilance case against him. (v) I have learnt that Mr. H.K. Sharan had recently applied for the post of Member in the Settlement Commission for Central Excise Custom which is a lower post then the

4 Member CBEC, but he was not selected even for Settlement Commission. Similarly, Mr. H.K. Sharan had also applied for the post of Member Technical in the Custom and Excise Appellate Tribunal CESTAT but there also he was not selected. (vi) In fact, there is another charge against Mr. Saran that he while posted in Delhi he obtained LLB degree from Surinder Nath Law College at Kolkata as a regular student of Calcutta University. The University of Kolkata by its letter dated 22-9-2009 (Annexure - E) has confirmed that during the years 1986-87 to 1996-97, there was no correspondence or distance education course for LLB at Calcutta University and for L.LB regular course, minimum attendance was 75% and 50% attendance in moot court. The Calcutta University further informed that there is no provision of any relaxation in percentage of attendance. This shows either he was skipping the office or someone was impersonating for him to attend the College at Calcutta. (vii) As per the note dated 27-10-1988 (Page 3 of

Annexure F) of the Office of the Collector of Customs, Bolpur, Mr. H.K. Sharan joined Law College on 28-10-1987 for doing LLB from Calcutta University, for which no prior permission was sought, though such permission was required under Rule 3 of Conduct Rules. (viii) Mr. H.K. Sharan, then Deputy Collector C.E.,

Durgapur applied for joining Law College on 31-08-1988 (Annexure - G). However, by letter dated 30-09-1988 (Annexure - H), Mr. H.K. Sharan informed that he has already joined Law College on 28-10-1987 for L.LB examination for Session 1986-87. The Collector of Central

5 Excise, Bolpur vide his letter 8-11-1988(Annexure - I) granted permission to him to sit for LLB examination for the year 1986-87, but warned that he should have applied for permission before registering for the LL.B. Course. (ix) On 29-5-1989, Shri. H.K. Sharan joined Directorate of Enforcement, New Delhi on deputation as Additional Director and thereafter, remained posted at New Delhi till 18-4-2002, on various posts in the Central Excise and Customs Department. (x) Mr. H.K. Sharan, Additional Director, Enforcement, New Delhi by letter dated 20-11-1990 (Annexure - J), informed the Directorate of Enforcement that he has already appeared in L.LB Part I exam of Calcutta University and passed it and he now intends to appear in LLB Part II exam of the Calcutta University and as such, he sought for permission to appear for the LLB Part II exam declaring that it would not affect his official duties. The said application was forwarded to the Ministry of Finance and after processing, the permission to appear in LLB Part II exam was granted by letter dated 24-1-1991 (Annexure K). Thus, Mr. H.K. Sharan had apparently joined Law College at Kolkata for doing LLB as a regular student from Calcutta University while he was posted at Durgapur. Therefore, it was practically not possible for him to attend the said college at Kolkata even while serving at Durgapur. He joined Directorate of Enforcement at New Delhi on 29-51989 and thereafter remained posted in Delhi till 18-42002 on various post in Excise & Customs Department. In November 1990, he sought permission for appearing in LLB Part II examination at Kolkata. Mr. H.K. Sharan is

6 learned to have completed his LLB while he was posted as Additional Commissioner of Customs Delhi AirPort during May 1991 to March 1994. It is impossible for a person to remain posted at New Delhi at the Enforcement Directorate and Customs Dept. and at the same time, also to attend classes at a LawCollege at Kolkata. (xi) It would be pertinent hereto mention that as per letter dated 25.05.2011 of the Joint Secretary, Department of Revenue, Delhi (Annexure - L) and Circular letter dated 30.05.2011 of the Central Board of Excise and Custom (Annexure - M), surprisingly 29.06.2011 has been fixed as the last date for receipt of application. It means 29.06.2011 has been prescribed as cut-of-date on which an officer has to be in service to become eligible for appointment as Indirect Tax Ombudsman. This date has no rational or nexus with the appointment of Ombudsman but it appears that it has been designed to accommodate Mr. Sharan who was due to retire on 30.06.2011. Complaints against Mr. Rajendra Prakash: 1) Mr. Rajendra Prakash Chief Commissioner of Central Excise has been selected for the post of Indirect Tax Ombudsman, Lucknow. It is learnt that CVC vide its O.M. No. 226/04/7342 dated 11.10.2004 directed CVO of the CBEC for investigation into one complaint received by it against Mr. Prakash. 2) Thereafter, vigilance inquiry was undertaken by the Directorate General of Vigilance, Central Excise and Customs under File No. V-551/2/05. 3) The CVC vide its OM No. CONF/226/04 dated 08.04.2005, forwarded the complaints against Mr. Rajendra Prakash to the CBI and requested that the points raised in this

7 complaint may be investigated by the CBI. Another complaint against Mr. Rajendra Prakash was forwarded by the CVC to CBI vide their OM No. 007/Central Excise/065 dated 06.07.2007. 4) The CBI registered a case vide RC 1 (A) /2005-ACU-IV) and investigated all the complaints against Shri Rajendra Prakash. 5) As per Report No. of 2, Police, dated the 31.10.2008 CBI of the Superintendent recommended

prosecution of Mr. Rajendra Prakash. However, despite the recommendation of the CBI to prosecute Mr. Prakash, the case has been closed by the CBEC in consultation with CVC, on the basis of some reports obtained from the Chief Commissioners of Central Excise and Customs, New Delhi that there was no loss of revenue and there was only a technical lapse. Thus, the case against Mr. Rajendra Prakash has been closed on the basis of reports from his colleagues in the Revenue Department and ignoring the reports and recommendations of CBI.

The aforementioned facts clearly make both the afore-named persons unsuitable for the post like Indirect Tax Ombudsman. The Institution of Indirect Tax Ombudsman is being established for the first time; therefore, it is all the more important that govt. must select persons with sterling character, impeccable integrity and upright behavior. The selection of Mr. H.K. Sharan and Mr. Rajendra Prakash against whom there have been complaints of corruption and vigilance cases and against one of them the CBI had sought permission for prosecution would seriously damage the credibility of the institution like Ombudsman. In fact, it would also go against the avowed and stated stand of the government to fight against corruption. I therefore hope that the

8 ACC would take all these facts into consideration before taking any final decision.

Sincerely yours,

(Prashant Bhushan) Copy to: 1. Mr. V.Narayanasamy Minister of State Ministry of Personal Public Grievance & Pensions North Block New Delhi-110001 2. Mr. Ajit Kumar Seth Cabinet Secretary Govt. of India Rashtrpati Bhawan New Delhi-110004