Govt to withdraw 7,500 small indirect tax cases

The government has identified 7,500 cases related to service tax and Customs it plans to withdraw from tribunals and high courts.

These cases are where the disputed tax is below the threshold set in December at Rs 10 lakh for the Customs Excise & Service Tax Appellate Tribunal (CESTAT) and Rs 15 lakh for high courts.

The Central Board of Excise and Customs (CBEC) has started filing applications with the tribunals and high courts seeking withdrawal of the cases. The step was taken to make the tax regime non-adversarial, with a focus on quality rather than meeting collection targets, officials said.

"We have begun the process of withdrawing cases. We have identified approximately 7,500 cases in the CESTAT and the high courts. Now, it is up to the judicial bodies to allow the withdrawal," said an official.

The CESTAT is an independent appeals forum against orders passed by commissioners of customs and excise relating to service tax, customs and central excise.

The department, however, is not seeking withdrawal of cases from the Supreme Court. "We are not touching the Supreme Court because cases at that level are few and most relate to matters of law," the official added. The move is expected to clear the litigation backlog. Already, about 75 per cent of cases are settled in favour of taxpayers.

"The move will help reduce congestion at tribunals and high courts. But the answer lies in increasing the number of benches and having more members," said Saloni Roy, a senior partner at Deloitte.

The CBEC is also periodically instructing tax officials to issue notices based on merit alone."We are sensitising the staff that notices should be strictly according to the law. We are training them on how to issue legally sound notices and orders. We have also withdrawn the vigilance order that caused fear among tax officials. Now they can decide cases on merit," another official said.

The CBEC has instructed zonal chief commissioners and principal commissioners to hold monthly or bi-monthly meetings with all the adjudicating and appellate authorities in their zones and advise them on how to pass orders.

Besides, training is being imparted on the qualities of a good adjudication order, advocacy, interpretation of statutes as well as drafting of laws.

Pre-notice consultation at the level of principal commissioner and commissioner has been made mandatory in all cases where the tax involved is above Rs 50 lakh.

The government has also come out with a new appraisal system for tax officials in which the focus will be on the quality of orders issued. The move is aimed at discouraging taxmen from issuing frivolous tax demands.

The performance of assessing officers will also be measured for quality of assessment, pace of disposal, and efforts made towards widening the tax base rather than meeting the annual collection targets.

EASING OUT

• As many as 136,365 indirect tax dispute cases are pending before CESTAT, Commissioner (Appeal), high courts and the Supreme Court at the end of Sept 2015
   
• These cases have a financial implication of Rs 2,11,881 crore as on September 2015
   
• To reduce litigation, CBEC decides to withdraw cases with disputed amount of less than Rs 10 lakh in CESTAT and Rs 15 lakh in high courts
   
• It has identified about 7,500 cases to be withdrawn from CESTAT and high courts
   
• But, no plan to withdraw cases from the Supreme Court
   
• There is also a new appraisal system for tax officials in place, which discourages them to issue frivolous tax notices