Govt files more cases than private companies: CAG report

A recent study by the government's official auditor revealed that the Central Board of Excise and Customs (CBEC), the agency responsible for collecting indirect taxes, has been the biggest litigant in the last three years, filing twice as many appeals in the Supreme Court than private companies. A case study conducted for the financial years (FYs) 2014, 2015 and 2016 on the total pendency of cases related to indirect tax disputes showed that on an average, the government has been filing over 1,700 appeals annually in the apex court, despite the fact that its success rate has come down from 19% in 2014 to 11% in 2016. In addition, the government has been filing at least 5,000 cases every year before various high courts. The success rate in high courts was worse, coming down from 34% in 2014 to 18% in 2016. After combining the total number of cases pending before several appellate tribunals and commissioners of appeal of the CBEC, the revenue locked in litigation was estimated to be around Rs 1.89 lakh crore at the end of March 2016. The Comptroller and Auditor General, who raised the issue in the Parliament has suggested that steps should be taken to bring down litigation, particularly in view of the department losing a large number of cases in the highest court. & quot Huge amounts of revenue remain outside the Consolidated Fund of India for substantial periods of time,& quot the CAG said, based on data analyzed from CBEC records. The auditor tabulated the pendency of cases in various forums, segregating them by those filed by private entities and the number of cases in which the government has gone in appeal before higher courts. The revenue locked in litigation was to the tune of Rs 1.37 lakh crore in 2014, which went up to Rs 1.55 lakh crore in 2015 and to Rs 1.89 lakh crore in 2016. Disputes related to indirect taxes take decades to get resolved starting from department related appellate authorities, the settlement commission, high courts and the Supreme Court. In many cases, the dispute arose due to & quot the department resorting to coercive recovery measures& quot while in some instances a dispute was allegedly allowed to remain unresolved for years which benefited private companies that find enough fiscal space by holding back on payment of assessed taxes.

The issue of large number of cases pending and delay in administration of justice by the courts has been a matter of discussion since ages. The present report of the CAG indicates one of the reasons behind the lag. Thus, certain measures are required to be taken with immediate effect to reduce the number of cases and alternate resolution forums should be established in order to handle the pending cases and recover the revenue stuck up in litigation of the same.