In one of the most desirable moves at the instance of the Finance Minister, the CBEC has formed a Committee to suggest measures to reduce litigations. While this is not the first time for such a move, it is always better to try again. Unfortunately the way the committee has been formed, it is destined to fail. It is an internal committee of two Members of Board and some juniors and one from the law ministry. Such internal committees are not able to get at the truth. Junior officers will not be able to say that appeal to Supreme Court should not have been filed at all by their seniors. Only a rank outsider can tell senior Revenue officers that some types of cases should not go to Court. The Committee should be headed by a fiscal economist of known ability. National Institute of Public Finance and Policy has the expertise to do such work. Earlier several times studies have got done through this Institute when service tax was imposed or when VAT and MODVAT was considered.
Let me begin with the Supreme Court where the majority of cases are lost by Revenue. Before writing this treatise, I have personally gone through the chronologically latest 50 judgments of the Supreme Court on customs, excise and service tax. Here is the statistical analysis. My sample is small but it is indicative.
Out of 50 cases, Revenue lost 27, won 14, eight were remanded and one referred to larger Bench. Out of 50 cases Revenue filed 20 cases and lost 16 out of them at the admission stage (80 per cent) and won four (20 per cent). Twenty-two out of 50 were rejected in admission stage. On merit, Revenue won only seven cases out of 41 cases , eight having gone for remand and one for larger Bench. So the win is only just about 17 per cent on merit and the win in the admission stage is 20 per cent. So to put is precisely, at the admission stage Revenue wins 20 per cent cases and at the merit stage again it wins less than 20 per cent cases.
So the inevitable conclusion is that Revenue goes to Supreme Court far too often just to file appeal. And even on merit it loses eight out of 10 cases. These figures are for Supreme Court only. For Tribunal and Appellate Commissioner also the same should be true. The cavalier way of filing appeal before Tribunal and Supreme Court has made the justice system far fetched. Tax payers have taken it for granted that they will not get justice at the Assistant Commissioner's or Commissioner's level. They routinely reject the cases either to play safe or for some thing worse. So the first action should lie in limiting the number of appeals to be filed. Field officers,senior or junior, whose orders are set aside too often at appellate level should be asked why they did not pass order correctly. Where the legal position is so clearly and heavily against the government no appeal should be filed. But they keep on doing it. It seems they have no respect for Tribunal judgments and no respect for law settled by High Courts and Supreme Court.
Second, there should be a regular monthly session of the full Board to consider why the Supreme Court and High Courts have set aside the view point of the department in the previous month.
Third, the full Board should decide whether to file appeal when there is a decision of the Supreme Court or a Section 37-B Order or a Board's clarification in party's favour.
Fourth, the Attorney General also, it is respectfully suggested, should have a monthly review of cases lost and of reasons why.
Fifth, abolish the system of three Chief Commissioners deciding whether to file appeal since it is a failed institution .
Sixth, let the tariff become less complicated. Make one-chapter-one-rate, in as many chapters as possible. Let there be less exemptions.
Lastly, let there be abolition of laws which are basically litigation prone. The worst is the Law of Unjust Enrichment which has to its credit 2,307 cases in the last six years in Tribunals and Courts.