New Delhi: Over 1 trillion 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 1 lakh crore is a matter of concern," the CAG said in its latest report.

It said that 62,543 crore was pending at the end of March 2011, 70,572 crore at the end of March 2012 and about 1.02 trillion at the end of March 2013.

At the Commissioner (Appeals) and CESTAT (Custom Excise and Service Tax Appellate Tribunal) level, 83,000 crore has been locked up in appeals. Pleas worth 12,371 crore and 7,172 crore are pending in the high court and Supreme Court respectively at the end of March 2013.

The 2011-12 budget had said steps had been initiated to reduce litigation and focus attention on high revenue cases.

Instructions have been issued raising the 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 CAG said.

It added that appeals worth 18,678 crore have been disposed of during the last three years ending March 2013, down from 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 FY13 indicates the number of cases pending are on the increase," CAG 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.

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