PRASHANT BHUSHAN Advocate

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

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.

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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 22-

01-2008 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.

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(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 17-6-

2008, 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

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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

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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 29-5-

1989 and thereafter remained posted in Delhi till 18-4-

2002 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

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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

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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. 2, dated 31.10.2008 of the

Superintendent of Police, the CBI 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

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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