Theoretically, it may sound irrational that the tax officials should themselves be playing the role of adjudicators when the tax department itself is a party to the disputes. However, experience has shown that tax officials, acting as quasi judicial authorities, have contributed enormously. They examine the facts, give earnest consideration to the rival contentions and pass speaking orders. To a great extent, the danger of bias that may creep in has been overcome by well-established appellate machinery. The trade and industry often complain that generally departmental authorities tend to be highly revenue biased.

On the other hand, many tax officials harbor a strong belief that even a technical lapse or an unintended error in a decision against the department may be viewed with motive by the higher ups. The fear of administrative action, transfer or loss of position cripples their judicial thinking. Each may be half-truth. But what is certainly true is that any unrealistic or exaggerated projection of either of the two impinges upon the fairness and impartiality expected of tax officials sitting in judgment as quasi-judicial functionaries.

Nevertheless there are remedies to correct any distortion in an order passed by a tax official. Taxpayer can resort to appeal, if felt aggrieved by such order. Department also is not helpless if an order is prejudicial to revenue interest. Most tax laws provide for review of wrong orders. Of course, wrong orders have implications. An appeal forced upon a taxpayer adds to his financial burden and increases his mental agony. The department also runs a risk. Failure to undertake timely review may result in loss of revenue. Be that as it may, should the department suspect malafides and charge its officials of misconduct as a matter of routine? Does mere negligence or wrong interpretation of law necessarily call for administrative action?

Surely, these important questions must have answers. But no answer can be more convincing than coming from the apex court. In Zunzarrao Bhikaji Nagarkar vs Union of India-1999 (112) ELT 772 (SC)- the facts were simple. In one case, the appellant commissioner of central excise had upheld the charge of evasion of excise duty but in the order did not mention about the imposition of penalty. The administrative authorities sought to charge-sheet the commissioner for this negligence.

The commissioner contested the charge of negligence or motive and fought for his point unto the Supreme Court. The apex court upheld that the commissioner ought to have imposed penalty, yet he could not be hauled up by the administration for negligence. The charge against him? "Failure to maintain absolutely integrity, devotion to duty and acting in manner unbecoming a government servant" was not upheld by Supreme Court. The court explained that an error in the order of the commissioner could be corrected by judicial review. However, negligence by a quasi-judicial authority cannot be perceived as carelessness, inadvertence or omission but as culpable negligence. The apex court ruled that a wrong interpretation of law could not be a ground of misconduct unless it is deliberate and actuated by malafide. The court considered it necessary to warn: "If, every error of law were to constitute a charge of misconduct, it would impinge upon the independent functioning of quasi judicial officers." The task ofadjudicating any dispute is onerous. It is recognised that tax disputes often elude easy solutions. Weighty arguments advanced by experts and consultants to overzealously safeguard the interests of the clients, supported by a catena judgments and case laws, has rendered the task of departmental officers extremely painstaking. They have to come to conclusions on justified reasons and fair assessment of the rival contentions. By any standard it is a difficult job. Many feel that it is only fair that the apex court has pronounced some words of wisdom to the rescue of tax officials. "The entire system of administrative adjudication whereunder quasi-judicial powers are conferred on administrative authorities would fall into disrepute if officers performing such functions are inhibited in performing their functions without fear or favour because of the constant threat of disciplinary proceedings."