Settlement commission under direct tax laws in India: a critical study

Abstract

The purpose of the current study is to specify the main causes which are responsible for the disputes between both the parties i.e. tax payers and the tax collecting agencies. Further, the researcher will highlight the various steps to improve the present condition which may be beneficial for policy makers, academicians and for the whole economy. The setting up and functioning of Settlement Commission drew sharp reaction from all quarters including the Apex Court; but whatever may have been the views, reactions, aspersions, reservations or criticisms, the utility of Settlement Commission in settling complicated tax matters in the last about 30 years cannot but be appreciated. It has done commendable service to both the exchequer and the taxpayer by disposing off a number of cases effectively and amicably which would have otherwise been litigated for a fairly long period, thus, blocking collection of rightful taxes to the nation and causing wasteful loss of time, energy and money in appeals and counter appeals. Though it appears theoretically wrong to afford concessions to the errant and evasive taxpayers, the nation cannot afford to be very rigid in this regard. The Wanchoo Committee had recommended for a settlement machinery to have settlement with the Tax-payee at any stage of proceedings considering each case on merits subject to full disclosure, not only of the income, but of the modus operandi of its build up, thussealing off chances of continued evasion. Hence, we suggest that, a high level separate body, within the department, to ensure a fair, prompt and independent settlement, Audit has, however, notice that the Settlement Commission has not been setting thecases promptly. The pending cases continue to be as high as 1892 on 31 March 1999. The cost of settlement of cases is also very high. In the year 1999-2000 the average cost of disposal per case was Rs. 83,300. The average cost per case for the last 5 year(1995-96 to 1999-2000) was Rs. 48780.