The National Judicial Reference System (NJRS) is a project of Indian Income Tax Department to streamline its tax litigation system. NJRS aims to be a comprehensive repository of all Appeals and Judgments related to Direct Taxes in India. The Income Tax Department is the largest litigant in India and NJRS will help the department in decongesting and streamlining the huge backlog of litigation in various courts and Tribunals related to direct tax cases. The portal was launched in March 2015. Continuous improvements and public access are in progress. The portal will enable the department to monitor appeals progress through the appeal stages, undertake policy analysis for issues leading to rising litigation and do research for strengthening their cases by taking reference from previous orders made by the courts tax appeals.^[1]

Background

The Income Tax Department (ITD) is responsible for collecting Direct Taxes and administering the Income Tax Law and other direct tax statutes for Government of India. The department has offices in 510 cities and towns across India. There are 3420 assessment units in the department and a sanctioned strength of about 8600 at the level of ITOs and above. These are to increase to about 4500 and 11600 respectively as a result of the recently approved restructuring in the department.

Tax litigation is an integral component of any modern tax administration. It not only helps resolve disputes between the tax payers and the tax administration, it also helps in the interpretation of tax issues and in planning transactions.^[2]

The Indian Tax laws also provide an elaborate mechanism for resolution of tax disputes - both administrative involving the Commissioner of Income Tax (Appeals) and various Alternative Dispute Resolution mechanisms, as well as, through the appeal jurisdictions of the Income Tax Appellate Tribunal, High Courts and the Supreme Court of India. However, increasing volumes of litigation in various tribunals and courts, the long time taken for finalization of a tax dispute and varied interpretations of tax law taken by both tax officials and various judicial fora has become a cause of concern. The CAG, in its Performance Audit Report No. - 20 of 2009-10,^[3] states that the dimensions of disputes in income tax are staggering and that it takes a long time to settle tax disputes. The report also states that the Income Tax Department lacks credible and reliable data on the volume and impact of appeals which points to weak internal controls. Inadequate internal control in turn lead to time barring of appeals and delays in implementation of appellate orders. The CAG report recommended automation of receipt and disposal of appellate orders.

Besides maintenance of proper litigation database, there is also a need to continuously identify contentious legal issues, analyse them and take corrective action to clarify the law. An Office Memorandum of the Central Board of Direct Taxes states that a large part of litigation in the Direct Taxes matters involves interpretation of legal provisions. Inconsistent approach on contentious legal issues by officers of the department gives rise to further litigation.^[4] There have also been suggestions to identify and flag areas through the departments website where there are issues relating to interpretation of the tax law, so as to give taxpayers an insight into existing areas of litigation so they can avoid, as far as possible, taking litigation prone positions in their tax returns.^[5]

The NJRS project was taken up by the Income Tax Department to create an electronic platform as a replacement for the manual method of managing litigation.^[6]

NJRS will have two components:^[7]

• Appeals Repository & Management System - an electronic database all pending appeals at Income Tax Appellate Tribunal(ITAT), High Courts (HCs) and Supreme Court of India (SC).
• Judicial Research & Reference System - an electronic database of all orders/judgments of ITAT, Authority of Advance Ruling, HCs and SC.^[8]

Both databases will be cross referenced, have suitable metadata & key-phrases and have enterprise class search engine to be enable identification of disputed issues across cases for improved decision making.

Objective

The project for setting up a National Judicial Reference System (NJRS) and the project for setting up an Institutional Mechanism for formulating a 'Departmental View' on contentious legal issues are the two key measures being taken up by the Central Board of Direct Taxes to streamline the litigation management system in the department.^[9]

NJRS is proposed to be a comprehensive electronic database of all appeals and judgments in Direct Tax cases pending before various judicial authorities i.e. Income Tax Appellate Tribunal, High Courts and the Supreme Court of India. It will also bring automation in the work-flows of the Judicial wings of the department. Such a system will help link the units engaged in litigation work in the department and in tracking tax appeals on a 24X7 basis. It is also expected to act as a knowledge repository that will assist officials in issuing consistent orders utilising the judicial information available in it online.^[10]

The NJRS has facility to club similar cases, weed out weak ones and help make a stronger argument before various tribunals and courts.^[11] NJRS will facilitate Computer-assisted legal research and provide easy accessibility to judicial information, case laws and judgments, thereby enabling the tax officers to take a more informed and consistent approach in tax audits. It will also assist the Department's Representatives/Counsels in improving the quality of representation before Tribunal & Courts and enhancing the success rate of the department in appeals.^[12]

The National Judicial Reference System (NJRS) is thus envisaged as a tool for effective tracking and monitoring of Appeals at various stages, reduce disputed tax demand by targeting high demand cases, a comprehensive reference system and a decision support system to achieve efficiency in the tax litigation process of Income Tax Department (ITD), Government of India.

Implementation Approach

The project is being implemented through an Implementation Agency engaged through an open competitive bid process in April, 2014.^[13] The Implementation Agency is a consortium of a Systems Integrator - NSDL eGovernance Infrastructure Ltd and a company specializing in legal databases - Skorydov Systems Pvt Ltd.^[14][15][16]

The project is being implemented on a Public Private Partnership (PPP)model, where the technology risk has been passed on to the IA. The IA has the flexibility to generate additional revenues (besides the project payments from the government) by utilizing the judicial database for commercial purposes subject to certain restrictions.^[17]

The project leverages upon the advancements in computerisation of the registry functions of the Tribunals and Courts achieved under the e-Courts Mission Mode Project^[18] taken up under the National e-Governance Plan(NeGP). As the case filing, scrutiny and case registration services have been automated in the courts, the NJRS project envisages collation of data from such external data sources. The Income Tax Department in India has also developed several computer systems to for its own internal workflows and to manage the data base of the returns filed by the tax payers. The unifying factor across these computer systems is the Permanent Account Number (PAN) allocated to identify each tax payer uniquely. The data collected in from the external court systems will be collated in NJRS with the help of taxpayers information stored in the PAN database and other computer systems of the tax department. In addition, the appeal case files will also be scanned through a network of 28 regional scanning centers specially established under the project across the country. The scanned case files will be processed at a BPO like facility for writing case summaries, keyphrases, metadata and linking the case files with the case data obtained from external court systems. Creation of NJRS will thus be a mammoth exercise, requiring the active co-operation of a number of agencies, including the judicial bodies.^[19]

Logo

The NJRS logo has been conceived with a view to create a visual perception of Knowledge, Transparency and Reliability. The bold, clean font and the choice of a flat colour scheme using red and black colours create this presence.

The red dot is a specific choice in the design language. As the system is a data recording repository of appeals and judgments, the red dot is a visual cue for the "recording" or assimilation of knowledge. This creates an association with audio visual devices which have a similar red icon for recording information.

Finally, black and white colours also represent clarity and eliminate ambiguity, further emphasizing the transparency that this system holds.

NJRS Citation

The Citation nomenclature followed within NJRS Case citation#India helps identify any judgment / order uniquely. e.g. * Chandra Ranganathan & Ors. v. Commissioner of Income-tax 2009-LL-1021, which refers to NJRS citations.

This Citation further allows to add the Authority / Court name after the citation. This does not form an integral part of Citation but can be used to enhance the value of the Citation. e.g. * Chandra Ranganathan & Ors. v. Commissioner of Income-tax 2009-LL-1021-SC, which refers to NJRS citations with additional Court Name. Here, in this case - SC stands for Supreme Court.

References

• Income-tax News- Article by Shri Arun Kumar Jain, IRS
• I-T dept goes for tech upgrade to tighten tax net - Business Standard
• Finance ministry launches ambitious national electronic I-T judicial database - Economic Times

External links

• Finance Ministry
• Income Tax department