New Delhi: Calling upon the tax officials to work towards reducing the tax litigations, Finance Minister Pranab Mukherjee on Wednesday said sustained efforts would be needed to achieve indirect tax collection target of Rs 3.92 lakh crore, about 15 per cent more than the
last fiscal.

The Minister was addressing the annual conference of chief commissioners and directors general of CBEC here.

Noting that doubts were being raised over growth projection of 9 per cent for the current fiscal, Mukherjee said, it would be possible to achieve a growth rate of 8.75 per cent (plus-minus 0.25 per cent) with "hard work".

To realise indirect tax collection of Rs 3.92 lakh crore in 2011-12, the Minister said, "you (tax officials) would need a growth of nearly 15 per cent. The task before you is very challenging and will require sustained and strategic efforts throughout the (this) financial year".

On taxes locked in litigations, Mukherjee said it currently stood at around Rs 35,000 crore as against a little over Rs 9,000 in March 2005.

"This in an area of serious concern. You must, therefore, jointly devise a strategy for realisation and liquidation of at least 50 per cent of this locked up revenue during the current fiscal.

"This would also provide the necessary fillip to your efforts in attaining the budget revenue targets for 2011-12," he said.

Expressing concern over increasing number of "avoidable litigation with taxpayers", Mukherjee said this did not signify a healthy trend and was a pointer to serious administrative issues.

"This also requires introspection about routine filing of appeals," the minister said.

In the last five years, the number of appeals filed by the Department and pendency before the Supreme Court has grown by close to 25 per cent.

While such appeals before the High Court grew by over 65 per cent, it went up by 49 per cent in Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and 58 per cent before Commissioner (Appeals).

Mukherjee further said that to meet the expectations of taxpayers, the Government has decided to set up seven 'Indirect Tax Ombudsman'. They will be located at Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Ahmedabad and Lucknow.

"Using this establishment, CBEC can move for faster disposal of grievances leading to higher satisfaction level amongst the taxpayers," he said.

He asked the CBEC officials to continue their preparations for the roll out of proposed Goods and Service Tax (GST).

The Government had introduced a Constitutional Amendment Bill in the last Budget session and matter was referred to a Parliamentary Standing Committee for deliberations with the stakeholders.

"This process will take a little time....I would would advise you that there must not be any let up in your preparatory work for GST," he said.

After missing the original April, 2010 deadline for GST roll out, the government had proposed to introduce it in April, 2011.

‘Discussions on to further liberalise FDI policy’

Amid suggestions for opening up of multi-brand retail for foreign investments, Finance
Minister Pranab Mukherjee said discussions were on to further liberalise the FDI policy.

"Discussions are underway to further liberalise the FDI (foreign direct investment) policy," he said at the annual conference of chief commissioners and directors general of Central Board of Excise and Customs (CBEC) here.

He said with an aim to make the FDI policy user friendly, all prior regulations and guidelines have been consolidated into an comprehensive document. The document is reviewed every six months.

Mukherjee's statement comes within weeks of an Inter-ministerial Group (IMG) headed by Chief Economic Advisor Kaushik Basu recommending to the government opening up the multi-brand retail sector for FDI to tame inflation.

The IMG constituted in February by Prime Minister Manmohan Singh had favoured opening of the sector in a calibrated manner.

About entry of new players in the banking sector, he said that RBI is in the process of issuing additional banking licenses to private sector players.