MUMBAI: When a tax consultant recently visited the Vadodara office of the commissioner of appeals, central excise and service tax, the first thing he noticed was a new 40-inch TV.
The picture on the screen looked like a graphic on any news channel but the numbers seemed to have so transfixed the official that he was barely listening to the consultant.
That’s when he took a closer look–the digits flashing on the screen were the number of indirect tax cases that are pending. It’s part of a pilot project in which 10 such TVs have been placed in the offices of tax commissioners. By July, when the goods and services tax (GST) is expected to be rolled out, more offices across the country will feature the sets. It’s part of a move to clear up the massive backlog of indirect tax disputes in the next two-three years as India adopts GST, which will subsume all such levies.
“There is significant pendency at commissioner (appeals) level for excise, customs and service tax matters and in many cases the pendency could be reduced by clubbing similar matters and rejecting frivolous appeals,” said MS Mani, senior director, Deloitte Haskins & Sells. Tax offices will be given targets, with the TVs acting as a live reminder, said people aware of the matter.
“The TV set shows the number of pending cases and the days that are remaining to resolve these cases. Every month at least 10% pendency has to be reduced,” said one of the persons cited above. “The scrolls on the TV show the details of the cases, while other graphics show the days remaining to resolve particular cases.” The counter starts as soon the office lights are switched on–and can’t be turned off or paused until closing time.
Experts said the government may issue a directive calling for all old indirect tax cases to be resolved within a deadline–say, 24 or 36 months. “The government could consider announcing a specific timeframe within which all pending appeals pertaining to present indirect taxes are disposed after the GST rollout in addition to working on reducing the pendency even before GST is rolled out,” said Mani. ET could not independently verify whether the government was contemplating such a move.
The CBEC and the revenue secretary didn’t respond to emailed queries. A tax official pointed out that some of the cases were frivolous. For instance, a petrochemical company paid Rs 1lakh to a security agency to capture and sterilise stray dogs, then claimed Rs 12,000 input credit.
“We had challenged this and now this case is under dispute for a long time. Such cases could be resolved at the commissioner level,” the official said. “Often many companies file frivolous appeals, knowing very well that they will lose but they want to delay the process.”
On the other hand, companies and their tax consultants say that some tax demands are not based on a sound footing and officials delay hearings for one reason or another. The procedure demands that a tax dispute is debated at the commissioner level and then at the appellate level.
“In the recent past, the process of resolving pending cases and refunds has been on a fast track under the supervision of the CBEC (Central Board of Excise and Customs),” said Sachin Menon, national head, indirect tax, KPMG India.
“This was effective in the first stage of refund processing. However, decisions on appeals against rejected refund claims are yet to gain momentum.” The disposal of appeals in some jurisdictions like Mumbai is slow, Menon said, calling for a timeline for resolving all past cases once GST is rolled out.
The backlog is said to be highest in sales tax and VAT disputes with most of them stuck at the commissioner appeal level.