Bring Out Black Money - One More Amnesty Scheme
CAG , CBI, PAC, SIT, Supreme Court - all together will not be able to bring in even a fraction of the black money stashed away in foreign banks and for that matter not even the black money in gunny bags in the backyard of almost every politician. We should seriously think of an amnesty scheme to unearth at least the black money lying around in India. The Finance Minister should also seriously think of putting an end to unwanted litigation and try to recover a little of the allegedly evaded taxes.
In Central Excise and Customs alone there are lakhs of cases pending from the level of Assistant Commissioners right up to the Supreme Court of India. It takes about a year or two for an Assistant Commissioner to decide a case, then another year for the first appellate stage, three to ten years for the Tribunal and five to ten years for the higher courts. Sometimes by the time a case is decided by the highest court, the issue is no more relevant! We also have cases pending with Settlement Commission and Revision Authorities. In Customs and Central Excise matters(for that matter any matter), the interests of the assessee is in postponing the liability as far as possible and that of the department in getting as much as possible as quickly as possible. In these contradictory goals, it is the lawyers and consultants who ultimately reap the benefits. Service Tax has already flooded the judicial system.
While everybody agrees that it is futile to be engaged in a long drawn out legal battle, nobody seems to prepared to get out of the legal wrangle, especially in fiscal matters. They say in a war, the first casualty, is Truth. It is true of many of our legal battles. A lot of money, time and paper are wasted in thousands of pending cases at various levels. Tons and tons of printed orders are delivered often repeating the same old decided cases, sometimes over-ruling sometimes distinguishing, sometimes just referring and almost always surely confusing everybody.
It was once believed that simplification of procedures and simple language of the laws would reduce litigation. The department has been on a long course of simplification and simple laws. And surely and steadily every simplification has provided an opportunity to the legal fraternity to reap rich harvests. Forty years ago there was no CESTAT, there was a Commissioner (Appeals) for three or four states, one tenth the present number of Commissioners, no publications, no web sites and the laws were tough to understand and implement. All the simplification has only added to litigation and all the adjudicating and appellate authorities are always busy churning out orders. And nobody is able to clear the arrears of pending cases. The amount of money spent in monitoring these pending cases is also quite huge. Several reports are called for and compiled about cases pending in various stages and even Parliamentary Committees scrutinise the alarming growth of pending litigation. Dutifully, periodical reports on amount of duty locked up in litigation are prepared, analysed and action plans devised to reduce pending litigation and realise arrears of revenue. But the mountain has been growing steadily from strength to strength and all efforts to reduce pending litigation have not met with any reasonable success, except with increased number of posts for arrears recovery.
WHY?
1. Perhaps basically, we are a litigation loving country.
2. Laws' delays are axiomatic in any country, but we thrive on only the delaying capacity of the judicial institutions. Many of our assessees go in appeal to Tribunal and courts not because they have any hopes of winning the case, but the very fact of delaying payment would help them and who knows what will happen tomorrow? May be there will be a Kar Vivad Samadhan or some such scheme which are meant more for the benefit of law breakers than the ones who obey the laws!
3. On the other hand the departmental officers are trained and tuned to the music of ‘err on the right side".
4. The departments are more litigation lovers than the assessees. The Commissioner (Appeals) is just an intermediate product, never an end. If the Commissioner's order is against the assessee, he will surely go in appeal. If it is in his favour, the department will promptly appeal. All the strictures against frivolous appeals by department go almost un-noticed.
5. So given an opportunity we will not let go of an opportunity to appeal. No wonder the appellate forums are full to the brink and overflowing.
In spite of a very apparently profitable proposition of waiver of penalty, interest and prosecution for a 50% payment of duty demanded, the earlier Kar Vivad Samadhan was not very successful. Department only lost cases where their cases were very strong and they would have certainly won. Other cases remained and these other cases constituted the major chunk. The Settlement Commission only offers yet another forum and litigation continues merrily.
Reports are published that thousands of crores are locked up in court cases. Actually this figure is highly exaggerated. Every rupee locked up in litigation is not revenue. Actually what you may ultimately get is only a fraction of the amount under litigation and that too after years of agonising court room battles and may be a little retrospective legislation!
Is there no way out? There is; if we are prepared to take some drastic realistic measures. There is no point in the blaming game for arrears. We should have another Kar Vivad Samadhan Scheme which should kill most of the pending arrears of cases.
The scheme would work like this:-
++ Ask the litigants to pay just ten percent of the duty demanded and give them total immunity from all liabilities pertaining to that case. Cases pending at all levels should be covered in the scheme.
++ After the scheme is closed, if still there are a large number of cases pending, have an Excise and Customs Adalat, again at all levels. The adalat would constitute of members from the trade, department and an independent judge. Once the amount to be paid is determined, give the party one year to pay the amount, if needed in installments.
There should be a Samadhan within the department also as follows:-
++ As a one time measure, close all the provisional assessments ordered before 1.1.2015 with absolutely no liability on either side.
++ Treat all the existing Audit paras, both internal and AG's as closed. Simply destroy all the audit files.
++ In all cases booked, if Show Cause Notices are not issued within six months from the date of seizure/detection, return all the seized goods and records with no liability to the assessee. Destroy all the case records.
++ Do away with the five year limitation for demands for the past five years. The five year period should apply prospectively from 1.1.2015.
Our offices and courts will have a better look with all those mountains of paper destroyed and with better looking officers having no worry about those pending arrears and audit objections. In another fifty years, we are bound to clog the system and all the ills will come back, but for now let there be Samadhan and let's start afresh.
A similar exercise should be done in the Direct Taxes side too.
This may make a lot of consultants lose their work, but consistency and clarity are far more important than consultancy.
(I made these suggestions in 2011 - - hope something of this sort will be done this year.)