CBDT’s electronic repository of cases to curb litigation
Given that, at Rs 8.3 lakh crore, the outstanding tax arrears are higher than the direct tax collection target for FY16, and the taxman’s poor recovery-record, litigation management needs to be taken as seriously as the revenue collection function. The taxman fails to win cases at various appellate levels because cases are developed and tax demands raised without properly assessing whether they would stand legal scrutiny. The CBDT setting up the National Judicial Reference System (NJRS) may help fix this. Besides being the electronic database of all appeals and judgments in direct tax cases pending at the departmental level, appellate tribunal, high courts and the Supreme Court, it will also link the judicial wings of the CBDT and help tracking of appeals on a 24X7 basis. It is also expected to act as a knowledge repository that will assist officials in issuing consistent orders utilising the judicial information available in it online.
To begin with, more than one lakh appeal files—3,000 from the Supreme Court; 16,000 from high courts; and 90,000 from ITAT—have been scanned and are being processed at the Central Data Processing Centre in Nashik. Though there is no guarantee that contentious issues, like that of MAT on FPIs, will completely disappear once NJRS is fully operational, the taxman will have access to the latest judgments to know how courts are looking at an issue—on taxing FDI in the Cairn and Shell cases, for instance—and can use this before issuing notices or deciding to pursue/abandon existing cases. The NJRS’s facility to identify similar cases can help weed out weak ones; and it can also club cases to help make a stronger argument before various tribunals and courts. While the NJRS is a good idea, it is obvious it will be of little help if there is no change in the mindset of tax officials.