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The Government of India has time and again felt the need to control the sprouting tax related litigations. The Economic Survey of 2018 had noted earlier this year that even though the success rate in such litigations is around below 30%, but there has been a high rate of filing of petitions by the Indian tax authorities including the Central Board of Direct Taxation (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC) [Authorities] against defaulters. It further stated that the success rate for appeals in cases of indirect tax was only 11%, whereas in cases of direct tax, it was 27% in the Supreme Court of India. With a view to manage the indirect and direct tax related affairs and to eliminate minor litigations, the Government has hiked the threshold limit for appeals by the Authorities before the tribunals and the courts on 11th July, 2018 as follows:

APPELLATE FORUM PRESENT LIMIT FOR FILING APPEAL

(in INR)

CHANGED LIMITS FOR FILING APPEAL

(in INR)

Income Tax Appellate Tribunal (ITAT)/ Customs, Excise and Service Tax Appellate Tribunal (CESTAT) 10 Lakhs 20 Lakhs
High Courts 20 Lakhs 50 Lakhs
Supreme Court 25 Lakhs 1 Crore

 

In addition to this, the CBDT has decided to withdraw an aggregate of 41% cases that it had filed in ITAT, High Courts and Supreme Court except those cases that involve a substantial question of law. Further in case of CBIC, the litigation from its side in CESTAT, High Courts and Supreme Court would reduce by 18% except those cases involving substantial points of law.

According to the Economic Survey 2018, the delay and pendency of economic cases may have a severe toll on the economy in terms of delayed projects, accumulating legal costs and diminished investments. It further highlighted that the Authorities continue with the litigation despite high rates of failure in the appellate stage which adds to the pendency.

This decision of the Government aims to promote ease of doing business in India and to minimize the pending grievances of taxpayers pertaining to tax matters. It aims to reduce future litigation flow from the Authorities. This may also benefit small and medium taxpayers as they can focus on doing business than being bothered about litigating in the various fora.

Harini Daliparthy,

Senior Legal Associate

with

Sukriti Goyal

School of Law, University of Petroleum and Energy Studies

Intern,

The Indian Lawyer

 

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