More effort, same result

The government's decision to set up a National Tax Tribunal (NTT) is intended to cut the delays in settling tax disputes; besides having 25 additional benches in different cities to hear the cases, the obvious advantage is they will be specialising in tax matters.

The problem, however, lies in the fact that the benches may not achieve the main objective they're being set up for""to shorten the judicial process.

In the case of indirect tax disputes, the NTT will actually add another layer of judicial intervention. Under the current law, indirect tax disputes are heard by the customs excise and service tax appellate tribunal (CESTAT) and then by the Supreme Court in the case of an appeal; so the NTT serves no purpose since, even after it has ruled on a case that has been dealt with by CESTAT, citizens can still appeal to the Supreme Court.

In the case of direct taxes, since the first appeals are at the High Court level, the NTT can theoretically change things since appeals will be heard by it instead of in different courts across the country.

But since the right of writ cannot be take away, there is no reason why aggrieved parties won't go to various High Courts first, and then to the Supreme Court.

Since this is not the spirit behind the NTT, the only way to ensure that things work out according to plan is for courts to be circumspect in entertaining appeals against NTT orders. That is not easily assured.

One of the arguments in favour of the NTT has been that it will help free tens of thousands of crore rupees worth of disputes currently locked up in various courts and tribunals like CESTAT; implicitly, the NTT will help the government collect more revenue.

But, compared to the figure of Rs 13,000 crore of disputed taxes before CESTAT that is often bandied about, CESTAT officials themselves say the figure is more in the region of Rs 4,000 crore.

In the case of CESTAT, the majority of cases are decided against the government. In one celebrated case, the customs commissioner of Kolkata levied a Rs 1,952 crore duty-cum-penalty on Indian Oil Corporation for failing to pay duty on the demurrage of Rs 170 crore paid by it on its crude imports""IOC argued that demurrage could not be viewed as an import cost because it was due to the port being choked that they had to pay extra money to their shipper, and there was a 1991 circular from the Central Board of Excise and Customs saying demurrage was not part of import costs.

Nevertheless, the case dragged on for years, and after CESTAT dismissed the penalties imposed, the government went to the Supreme Court, which also ruled against it.

Indeed, since the government is the biggest litigator, just getting it to file appeals only where there is a strong case will solve much of the problem of delays in the courts. It would also help if the finance ministry set up more benches for the existing tax tribunals""for years, the CESTAT demand for Ahmedabad and Indore benches has been put on ice.