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Non-decision Making: A Paralysed System
22 August, 2012 Ahmedabad :
Non-decision Making: A Paralysed System

Is it just lethargy or incompetence or lack of in-depth knowledge or corruption or a blend of all these? One sometimes wonders as to why there is a constant rise in the number of frivolous and futile litigations, which at the end do not yield a penny to the government exchequer, but will definitely result in drawing some holes in the shallow pockets of the tax payers!

At any given point of time there are thousands of such pending cases awaiting decisions at various judicial and quasi-judicial forums. But, when we closely monitor the amount of revenue realised or the number of cases which ultimately are decided in the favour of the government, the figures tell a very different story. The frustration in the eyes of the service providers, manufactures and stake holders is but obvious. The decision making mechanism in our country is totally collapsed and paralysed.

A look from closer quarters will help us understand the internal working system, which in turn will throw some light on the moot problem of these increasing futile litigations. Take for instance an audit party visiting the business premises of the service provider or manufacturer who is a registered tax payer with the department.

The audit party is expected to study the business profile of the company during the course of the desk review. However, it is common practice that while auditing, they might come across certain accounting and business methodology which are a part of established practice in that field, which the officers are not familiar with. They may not be holding special qualifications to understand that peculiar transaction.

Simply put, the audit officer may not be competent enough to understand and comprehend the finer points. We are all small men with big egos and so are they. No one likes to be told or made to realise that they lack in-depth knowledge or are not technically qualified to decide a particular issue. As a result, a non-existing issue is converted into an audit objection memo, demanding tax and explanation.

As per the procedure laid down in the audit manual, all such matters are discussed in the internal monitoring cell meeting which is chaired by the head of the department. The sole purpose of this cell is to weed out all such frivolous objections and futile issues raised by their staff and to approve only those points which have some substance and which will ultimately result in revenue recovery. Unfortunately, the sad state of affairs continues here too, due to the lack of decision-making power by the one who is at the helm of the affairs. The authority does not want to take the “risk” of dropping an audit objection because the “stakes are high”.

As a result, the tribunals and the quasi-judicial forums are flooded with cases. This burden of pending cases increases day in and day out, which is a direct result of the lethargy, incompetence, lack of in-depth knowledge, lack of decision making, corruption or a blend of all these exhibited by some of the officers.

This creates pressure on those who are supposed to finally decide on the matter – It has a cascading effect on the quality of judgments as they are supposed to meet their targets of disposal of the pending cases.

A net result of this gross abuse of the system is no revenue to the government exchequer and holes in the pockets of the common man who has no choice but to fight till the end.

Courtesy: From the desk of Monish Bhalla, Founder, www.servicetaxonline.com
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