The Central Board of Excise and Customs (CBEC), the agency responsible for collecting indirect taxes, has been the biggest litigant in the last three years, filing twice as many appeals in the Supreme Court than private companies, a study by the government’s official auditor showed.

A case study for financial years (FYs) 2014, 2015 and 2016 on the total pendency of causes related to indirect tax disputes shows that on an average, the government has been filing over 1,700 appeals annually in the apex court, despite the fact that its success rate (winning cases) came down from 19% in 2014 to 11% in 2016.

In addition, the government has been filing at least 5,000 cases every year before various high courts. The success rate in high courts was worse — coming down from 34% in 2014 to 18% in 2016.

If we combine cases pending before several appellate tribunals and commissioners of appeal of the CBEC, the revenue locked in litigation was estimated at Rs 1.89 lakh crore at the end of March 2016.

The Comptroller and Auditor General, which raised the issue in its latest report tabled in Parliament on Friday, has suggested that steps should be initiated to bring down litigation, particularly in view of the department losing a large number of cases in the highest court.

“Huge amounts of revenue remain outside the Consolidated Fund of India for substantial periods of time,” the CAG said, based on data analysed from CBEC records.

The auditor tabulated the pendency of cases in various forums, segregating them by those filed by private entities and the number of cases in which the government has gone in appeal before higher courts.

The revenue locked in litigation was to the tune of Rs 1.37 lakh crore in 2014, which went up to Rs 1.55 lakh crore in 2015 and to Rs 1.89 lakh crore in 2016. Disputes related to indirect taxes take decades to get resolved, starting from department related appellate authorities, the settlement commission, high courts and the Supreme Court.


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