Increasing Tax disputes

[JAMES PG]

Honourable Mumbai High Court in the case of TECHNO ECONOMIC SERVICES PVT LTD Vs CCE (2010 (6) TMI 161 (HC)) commented that Govt is the largest litigant accounting for 70% of the three crore cases pending in various Courts. Duty involved in the subject case was only Rs 1, 21,219 and Hon HC directed CBEC to impress Deptal Officers not to file frivolous appeals where the duty impact is not substantial. Accordingly, Circular No 390/Misc/163/2010-JC dated 20.10.10 was issued prescribing at least some monetary limits to file appeals.

National Litigation Policy of Govt of India aims to reduce average pendency time of the cases pending in various Courts from 15 years to 3 years.

The Policy envisages that Government must cease to be a compulsive litigant. The philosophy that matters should be left to the courts for ultimate decision has to be discarded and the easy approach, “Let the court decide,” must be eschewed and condemned.

But in real practice, Dept’al Officers are taking the recourse to  “Let the Commissioner decide”  and the Commissioner will  pass it to Tribunals, Courts and so on and issues SCN’s or confirm the demand and washes their hands as  ‘Pilates’ does.

 Section 73 of the Finance Act has section 73 (3) read with 73 (4) which provides that if the assessee himself or on saying of the department pays the tax and interest thereon then the Dept will not levy any penalty unless the reason for short on non-payment tax was due to fraud, collusion, wilful mis-statement, suppression of facts and so on with intent to evade payment of service tax.

Similarly, Section 11A (2B) of the CEA, also provides that if the assessee himself pays the tax and interest thereon, then the Dept will not levy any penalty or issue an SCN unless the reason for short on non-payment of tax was due to fraud, collusion, wilful misstatement, suppression of facts etc.

But in majority of the cases, our prudent Deptal Officers would find out some means to invoke suppression or mis-statement and drags the tax payer unnecessary into litigation.

As per Board’s Circulars No. 5/83-CX.6 dated 10.03.83 and 206/02/2010-CX.6 dated 3^rd Feb,10 instructions have been issued to issue SCN immediately on receipt of an Audit objection from CERA, even if the objection is not admitted. The field formations have also been directed to issue protective demand notices and transfer the same to Call Book, till the settlement of the objection.

Further where a LAR ( Local Audit Report) has not been admitted by the Dept, and the same is not converted into SOF/ Draft Audit Para by CERA, then the SCNs issued on account of said LAR may be adjudicated after a period of one year from the date of sending the reply to the LAR.

All these ultimately aggravate the grievous distress of tax payers at large and by all these means, our Govt wanted to be the largest litigant of democratic India.

The famous quote from the Gospel of Mathew in Bible (5:25) reminds us:

“Agree with your adversary quickly, while you are with him in the way; lest perhaps the prosecutor deliver you to the judge, and the judge deliver you to the officer, and you be cast into prison” In order to get rid of the hassles in fighting a case and its consequent litigation costs, harassments and mental agony , most people prefer to pay off the tax demanded and it only  empowers and stimulates Govt to make further demands  and thus gets richer at the cost of its people