Though the revenue demand in tax cases have gone up dramatically arrears in direct taxes increased in FY13 to R4,82,027 crore from R3,33,079 crore in FY12 and R2,48,927 crore in FY11,in indirect taxes it increased to R1,03,975 crore in FY13 from R33,791 crore in FY09 and service tax arrears registered a ten-fold rise in FY13 the success of the revenue department in the courts has improved only marginally,in some cases gone down drastically.
In direct taxes,of the 20,884 cases disposed of at the income-tax appellate tribunals (ITAT) in FY12,13,656 were filed by the department. In case of direct taxes,the number of appeals filed by the assessees is more than the number filed by the department,the outcome remains the same at various appellate authorities .
Now the government has decided to look at ways to reduce the number of cases. Planning Commission deputy chairman Montek Singh Ahluwalia last week indicated that the government had initiated discussions on constituting an internal mechanism for settling disputes with the private sector.
This is after a parliamentary panel on finance in its report said,As regards tax arrears,both direct and indirect taxes,the committee finds that the situation is becoming grimmer by the day,and recommends urgent,time-bound and concrete action-plan to clear the backlog and realize revenue dues.
The data on the success rate of the department at different appellate bodies during FY10 and FY12 shows that at the ITAT level,out of a total of 6,674 cases,only 23% of the cases filed by the taxpayers were decided in favour of the department a 35% jump in FY12. At the high court level,the success rate in cases filed by the assessees improved from 26% in FY10 to 36% in FY12. However,in the Supreme Court,the success rate dropped to 14% in FY12 from 42% in FY11.
In the cases filed by the department,the success rate went down from 21% in FY10 to 19% in FY12 at ITAT,increased from 16% in FY10 to 20% in FY12 at the high court level and dropped from 15% in FY10 to 10% in FY12.
In indirect taxes,80% of the departmental appeals were rejected in FY10 and 85% in FY12 at Customs Excise and Service Tax Appellate Tribunal (CESTAT).
In case of appeals filed by the assessees,the rejection rate improved from 54% in FY10 to 44% in FY12. as against 54% filed by the assessees. At the high court level,80% of the departmental appeals were rejected in FY10 and 73% in FY12. Rejection of assessee appeals reduced substantially from 63.6% in FY10 to 25% in FY12. In the Supreme Court,90% of the appeals filed by the department got rejected in FY10 and 87% in FY12.