The Reserve Bank of India (RBI) had on January 4 released the Annual Report of the RBI-run ombudsman schemes. The report makes impressive reading. There has been an increase in the volume of complaints, reflective of the trust in the institution. A total of 4,18,184 complainants were received, with a 97.97 percent disposal rate. Most maintainable complaints (63.63 percent) were resolved through mutual settlement/conciliation/mediation.This also starkly reminds us that the institution of the ombudsman is missing in the Goods and Services Tax (GST) regime. Given that GST Tribunal is also a work in progress this is a serious lacuna. GST could take a leaf from the RBI.

The RBI had three independent schemes: The Banking Ombudsman Scheme (BOS) 2006, the Ombudsman Scheme for Non-Financial Companies (OSNBFC) 2018, and the Ombudsman Scheme for Digital Transactions (OSDT) 2019. There was an avoidable overlap between the activities of the schemes. In 2021, the schemes were integrated, and one scheme was launched — the Integrated Ombudsman Scheme (RB-IOS).

The RB-IOS saw the establishment of a centralised receipt and processing centre at RBI Chandigarh. Non-scheduled cooperative banks with deposits of Rs 50 crore and above also came under its ambit.

The RB-IOS empowers the ombudsman to consider all complaints of the regulated entities relating to any deficiency in service. This is a wide term and would cover a whole gamut of areas. There is no limit on the amount in a dispute that can be brought before the ombudsman. For any consequential loss suffered by the complainant, the ombudsman has the power to provide compensation of up to Rs 20 lakh. Further, it is empowered to award up to Rs 1 lakh for the loss of the complainant’s time, expenses, and mental anguish.

Similarly, the insurance sector also has an ombudsman. Thus, where there is a delay in the settlement of claims, any partial or total repudiation of claims by the insurer, disputes over payment of premiums or misrepresentation of policy terms and conditions, the insurance ombudsman can be approached.

The insurance ombudsman is empowered to mediate or pass an award based on the pleadings and evidence on record. The quantum of the award cannot exceed Rs 30 lakh. The insurance ombudsman has also been a success story in speedily addressing grievances — and at no extra cost to the complainant.

Alternate grievance redressal platforms are extremely necessary for a country like India. The ombudsman provides a channel for ordinary citizens to submit grievances. They are independent and impartial and act as effective referees between the complainant and the organisation. Without this mechanism, complainants must go to the department or the courts.

GST, of course, emerged inter-alia from the erstwhile Central Excise and Service Tax. The Central Board of Excise & Customs (CBEC), the predecessor of the present Central Board of Indirect Tax & Customs (CBIC), had provisions for an ombudsman. There were six ombudsmen with distinct jurisdictions. The ombudsman had powers to receive complaints on matters relating to delay in refunds, rebates, adjudication or in registration, giving effect to appellate orders, non-adherence to the principles of ‘first come, first served’, delay in the release of seized documents, rude behaviour — in other words, all matters which directly impact the ordinary taxpayer in his dealing with the department.

This office suffered from a lack of powers — the ombudsman was supposed to encourage settlement between the complainant and the department through mediation. The ombudsman could direct the department to settle pending matters expeditiously. The compensation powers were restricted to a token amount not exceeding Rs 5,000.

The Central Board of Direct Taxes (CBDT) similarly had the office of the ombudsman; their duties were similar, but their powers were even less. The maximum compensation amount they were empowered to sanction was Rs 1,000. The offices of the ombudsman for both income tax and indirect tax were closed in an ill-conceived order in 2017.

The Ombudsman (from the Swedish ombudsmand) means a representative, a proxy attorney authorised to act for someone else. It is an institution that, over the centuries and across countries, has been recognised as a cost-effective method of dealing with grievances. The role of an ombudsman as an alternate grievance redressal channel cannot be overemphasised. They are given a large degree of independence and powers to mediate, recommend and sanction an ‘award’ binding on the complainant and the organisation.

In this background comes the surprising absence of the office of an ombudsman in the GST regime. The GST administration deals with more than 1.41 crore registrants. There are bound to be issues, minor and major. If the office of the ombudsman is there, at least some issues can be nipped in the bud.

The GST Council should seriously consider creating an office of the ombudsman. Given that the jurisdiction and administration of GST are distributed between the Centre and States, there will be administrative challenges, but there is nothing that cannot be resolved. It would be a significant step in addressing taxpayer grievances and reducing the burden on tribunals and courts.