PMO raps FinMin dept for clogging up tribunals

The Prime Minister's Office has rapped the indirect tax department for piling up huge number of cases at the tribunals. Principal secretary to the prime minister, Nripendra Misra, has asked the department to take measures to ease those numbers, including advising tax officers to drop cases where there is little chance of winning a favourable verdict.

After the sharp comments, the chairman of the Central Board of Excise and Customs, Najib Shah, called all his senior members for meetings this week, to work out a response to Misra.

According to finance ministry data, the number of cases pending at the Customs, Excise, and Service Tax Appellate Tribunal, reached 98,950 as on December 31, 2015. The revenue implication of these cases is Rs 1,35,000 crore, or a fifth of the total indirect tax receipts for 2015-16.

Nearly 3,200 cases are more than 10 years' old, most of them with Mumbai and Delhi benches of the tribunals.

Misra's letter to the department is unusual, since the Prime Minister's Office restricts such communication to the finance minister's office, instead of asking departments within the ministry to act.

A source said the letter follows repeated concerns expressed by domestic and foreign investors to the Prime Minister's Office on how these tax cases block up their finance, and their time. their executives who chase cases through courts.

Misra has asked the CBEC chief to restructure the appellate wing of the department if necessary to ensure that there is a substantial fall in the number of pending cases with the tribunals.

Last month speaking at the golden jubilee of the income tax appellate tribunals finance minister Arun Jaitley had said the government has decided that in cases where the tax claimed is up to Rs.10 lakhs, one need not go to tribunal. "If it is less than Rs.20 lakh, one need not go to the high court. So the numbers of appeals are being restricted."

The Principal Secretary has said the board must encourage the officers holding charge of excise, customs and service tax units to decide at their levels on cases whose revenue implications are small or have little chance of being realised, instead of carrying them over indefinitely.

The intervention coincides with the effort the PMO and the finance ministry is making to get the ambitious Goods and Services Tax bill become a law. To make the new tax law work the CBEC will have to deploy a large number of its officers. This will reduce the time available with the tax department to keep adequate number of officers engaged with the work of the tribunals.

In turn it will shoot up the level of pendency in the tax tribunals already to an alarmingly high level.