The Supreme Court has said that litigation between the government and its various bodies or departments has eroded the health of the judiciary. A major hurdle in resolving disputes between central public sector enterprises and the government is that bureaucrats abstain from decision-making. Officers are hesitant to take responsibility due to the predictability of future consequences.

The apex court said taxation is one of the largest areas of litigation for the government. The tax department's petition rate in the apex court is 87 percent. In view of this, the Supreme Court has recommended the Central Government to consider the advance tax ruling system. The court said, the government should broaden the system as a tool for the settlement of disputes. He has to avoid fighting at various levels in matters involving private or public sectors.

A bench of Justices Sanjay Kishan Kaul and Indu Malhotra said that the advanced ruling system will not only help in settling disputes between the government and its departments but will also prevent litigation at various levels. One way could be to create an Advance Tax Ruling Council based on the New Zealand system. To make the dispute resolution system effective, a committee of legal experts may be formed under the chairmanship of a retired judge. The bench made this recommendation in a decision to settle a 44-year-old dispute between the National Cooperative Development Corporation and the Income Tax Department.

The decision to send finance and law to the ministry

The bench hoped that the post-corona agreement would seriously consider dispute resolution. The court said, arbitration has proved to be effective in most countries. India has signed the Singapore Convention on Mediation. We understand that bringing a comprehensive law to institutionalize arbitration will be seriously considered. The court has directed to send a copy of the judgment to the Ministry of Finance and Law and Justice.

The unnecessary burden on the judiciary

"Government and bodies are at the top of litigation," the bench said. The Central and State authorities repeatedly emphasize the policy of litigation. They believe that all things should be brought to the court so that they will avoid the responsibility of taking decisions. This unfortunate situation is increasing the burden on the judiciary. The National Litigation Policy was formulated in 2010 and amended in 2015, 28 years after the Law Commission's 126th report recommended reduction of litigation.