The direct tax arrears and disputes have cost the exchequer dear -- locking up over Rs 1,13,000 crore (Rs 1,130 billion) in revenue till now, which if recovered would almost wipe off the fiscal deficit of the Centre.

Moves are afoot to expeditiously set up the National Tax Tribunal and increase the number of benches at the Income Tax Appellate Tribunals by 50, finance ministry officials told PTI in New Delhi on Thursday.

The gravity of the problems could be judged by the fact that the total outstanding tax demand or arrears have mounted to Rs 70,670 crore (Rs 706.70 billion) till May 2003.

"While the total outstanding demand is over Rs 70,670 crore till May, arrears amounting to Rs 46,033 crore are uncollectable. Thus, the net collective tax demand is Rs 24,637 crore (Rs 246.37 billion)," the officials said.

On top of this, over 315,000 cases are pending in various courts, locking up Rs 42,860 crore (Rs 428.60 billion) worth of revenue, they said.

While the number of pending cases in Supreme Court alone is over 4,610, the number crosses 28,840 in high courts.

"The total amount involved in pending cases in Supreme Court and various high courts is over Rs 1,820 crore," they added.

To reduce the number of disputes going to high courts, officials said, "A National Tax Tribunal is proposed to be set up which will take up all appeals against orders of ITAT lying with the high courts."

"Appeals against the orders of the national tribunal would lie with the Supreme Court," they said.

The number of cases at the commissioner (appeals) levels has mounted to over 100,000 locking up Rs 30,586 crore (Rs 305.86 billion) in revenue. It is as high as 180,000 at ITAT, involving Rs 10,450 crore (Rs 104.50 billion).

Apart from seeking to reduce the pendency of cases in various courts, the finance ministry is also expediting the process of recovery of arrears through various means.

The government has already taken a major legislative decision in making it a statutory obligation for ITAT to decide on appeals within 180 days where stay has been granted.

The Income Tax Act has also been amended to take away the powers of the commissioner (appeals) to set aside a case or refer it back to the assessing officer.

"These steps are expected to result in passing clear-cut orders by commissioners. It also prevent misuse by tax-payers of the stays granted by the tribunals by delaying the final disposal of the appeals," the official said.

The Central Board of Direct Taxes has also issued a set of instructions to officers for faster recovery of tax demands and streamlining the procedures.

The end result has been reflected in the reduction of net collectible tax demand to Rs 24,637 crore (Rs 246.37 billion) in May this fiscal compared to Rs 28,732 crore (Rs 287.32 billion) in the same period last fiscal.

Tax arrears also came down slightly to Rs 72,290 crore (Rs 722.90 billion) in the last fiscal compared to Rs 73,013 crore (Rs 730.13 billion) in 2001-02, the revenue officals said.