Before GST roll-out, old cases in fast lane

Powers of commissioners to adjudicate on cases to be expanded

Preparing to roll out the goods and services tax (GST), the indirect tax department has formulated a strategy to fast-track adjudication for a pile of existing service tax and central excise cases quickly.

The adjudication powers of different levels of officers would be increased and redistributed to ensure this happens. The commissioner would be allowed to adjudicate on cases with tax amounts of Rs 2 crore and more. At present, he can rule on cases of Rs 50 lakh and more.

The GST regime is scheduled to be rolled out in April next year.

“As we move to GST from the next financial year, we will need to dispose all excise duty and service tax cases quickly. A strategy is being framed to fast-track adjudication by putting these on priority,” said a government official in the know of the developments.  

“We will raise adjudication powers of commissioners to Rs 2 crore and above from Rs 50 lakh, where there is maximum pendency,” he added.

Revenue Secretary Hasmukh Adhia, a source said, has pitched for a higher limit of Rs 3 crore and above for commissioners.

The final decision is expected in a few weeks.

The move is expected to take down the average case per commissioner from 380 currently to 70. A majority of cases are of duty involving Rs 50 lakh and above, leaving them for the commissioners to handle these, resulting in maximum pendency.

THE ROAD TO GST

Before the roll-out of the GST, the indirect tax department wants to clear the backlog of cases MEASURES

• Adjudication power of commissioners to be expanded from cases with a tax limit of Rs 50 lakh to Rs 2 crore and above
• Cases with tax limit of Rs 50 lakh to Rs 2 crore to be adjudicated by additional/joint commissioners

NOTE: Most pending cases have a tax amount of Rs 50 lakh each

EXPECTED RESULT

• Cases per commissioner would come down from 380 at present to 70

CHANGES ON CARDS

• CBEC likely to be renamed Central Board of Indirect Taxes
• A legacy commissionerate would dispose of pending cases within 5 years of GST roll-out

The government has limited the adjudication cases per officer to 100 cases a year, which made it impossible to avoid pendency. The vacancy rate of about 50 per cent has added to the pendency.

According to the new structure being deliberated, cases between Rs 50 lakh and Rs 2 crore will be handled by additional commissioners or joint commissioners, who currently look into cases between Rs 5 lakh and Rs 50 lakh.

Also, the Central Board of Excise and Customs (CBEC) is also likely to allow excise officers to adjudicate pending service tax cases for faster clearance.

“The adjudication in service tax is quite high, so we are looking at giving powers to chief commissioners within each zone,” another official said.

When it has been rolled out, the GST will subsume most central and state taxes, such as value added tax (VAT), excise duty, service tax, central sales tax, additional customs duty and special additional duty of customs.

The department is focussing on clearing older cases first.

It has identified about 13,500 pending cases, which are at least a year old to adjudicate by December 31. In fact, total pendency stands at 60,000 cases up to the principal commissioner level.

CBEC may be renamed the Central Board of Indirect Taxes (CBIT), as part of organisational restructuring.  A legacy division would look into pending service tax and excise cases for five years.

The CBIT might comprise six members — customs, IT, policy and infrastructure, central excise and legacy issues, personnel and vigilance, and audit.

According to the annual report 2015-16, 27,451 cases of services tax and excise duty were pending at commissioner (appeals), Custom Excise & Service Tax Appellate Tribunal (CESTAT), high court and the Supreme Court level as of December 2015.

However, early this year, the department identified about 7,300 indirect tax cases for withdrawal from high courts and CESTAT, as they are under the revised threshold limit of Rs 15 lakh and Rs 10 lakh.

“Some level of continuity will be required for some years at least to do handle the pending cases in service tax and excise. The legacy commissioner will look into that,” said the official.