Mr Chidambaram, go for another amnesty and forget your arrears!
The Finance Minister is serious about collecting arrears and has even appointed several Commissioners to monitor arrears collections. They will all generate and waste tons of paper telling him how much arrears have been collected by misleading statistics and as pointed out by one of our learned contributors recently in our Budget run up, the FM is going to end up paying the flight bills of these officers without getting any arrears realised. The best way to liquidate the arrears would be to write them off. I am not tired of repeating this, hoping that one day things will change.
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 six 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!
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 overruling, 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. A quarter century ago there was no CEGAT, there was a Commissioner (Appeals) for three or four states, one fourth 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.
In spite of a very apparently profitable proposition of waiver of penalty, interest and prosecution for a 50% payment of duty demanded, our earlier Kar Vivad Samadhan was not very successful. It speaks volumes about the quality (or the lack of quality) of our adjudication orders! The Settlement Commission only offered 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 we 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. I would suggest another amnesty Scheme which should kill most of our pending arrears of cases.
My 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 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 instalments.
There should be a Samadhan within the department also as follows:-
As a one time measure, close all the provisional assessments ordered before 1st March 2005 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 1.4.2005. That is for an offence committed in 1.1. 2002, no demand can be issued after 1.4.2005. However for offences committed after 1.4.2005, the limitation can be five years.
Review all the circulars issued so far and by 1.10.2005 bring out a new set of instructions and declare that all the circulars issued earlier are rescinded.
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.
This may make a lot of consultants lose their work, but consistency and clarity are far more important than consultancy.