Over Rs 1 Lakh Crore Locked in Excise, Service Tax Litigation: National Auditor

New Delhi: Over Rs 1 lakh crore of taxes were locked up in various stages of litigation in service tax and central excise at the end of March 2013, the Comptroller and Auditor General of India (CAG) has said.

"As no action can be initiated for recovery of revenue till the appeal is pending, locking up of revenue of Rs 1 lakh crore is a matter of concern," the national auditor said in its latest report.

It said that Rs 62,543 crore was pending at the end of March 2011, Rs 70,572 crore at the end of March 2012 and Rs 1,02,581 crore at the end of March 2013.

"The amount is increasing every year," the report noted.    

At the end of Commissioner (Appeals) and CESTAT level, Rs 83,000 crore has been locked up in appeals. Further, Rs 12,371 crore and Rs 7,172 crore worth pleas are pending in High Court and Supreme Court, respectively, at the end of March 2013.

The Budget 2011-12 had said steps have been initiated to reduce litigation and focusing attention on high revenue cases. Instructions have been issued raising limit of tax effects below which tax disputes will not be pursued by government in higher courts of appeal.

"These measures are expected to enhance productivity of resources employed in raising revenue," the auditor said.

It also said appeals worth Rs 18,678 crore have been disposed of during the last three years ending March 2013, down from Rs 21,781 crore at the end of March 2012.

"Departmental efforts is showing a declining trend in disposal cases... The pendency at the end of FY'13 indicates the number of cases pending are on the increase," it said.

It suggested that policy needs to be analysed carefully and a time bound action plan put in place to dispose of long pending cases.