National

Withdrawal of tax litigations will improve tax compliance

Piyush Goyal announces minimizing legal battles over tax

New Delhi

The government has decided to reduce tax litigations by withdrawing 41 per cent of direct tax dispute cases and 18 per cent of indirect tax dispute cases. It will affect only a fraction of the total value of the disputed amount, Finance Minister Piyush Goyal said on Thursday.

This, however, will be a great respite for Indians. The pre-GST era India seemed to be a place of a thousand traps for business houses – both tax traps and legal traps. Now, with the latest government decision holds the promise of a more matured working of the Indian economy

He said that as per estimates, there were tax disputes worth Rs 7.6 lakh crore pending in various appeal tribunals, high courts and the Supreme Court.

“Out of this, 66 per cent of cases amount to only 1.8 per cent value of the total litigation value of Rs 7.6 lakh crore,” Goyal told reporters here.

“Often it has been found that the cost of litigation is greater than the recovery amount… So to minimise litigation, the government has decided it will not file any appeals in appellate tribunals, High Courts and the Supreme Court in cases involving an amount less than Rs 20 lakh, Rs 50 lakh and Rs 1 crore (respectively),” the Minister said.

The earlier limit for filing an appeal in appellate tribunals was Rs 10 lakh while it was Rs 20 lakh for High Courts and Rs 25 lakh for the Supreme Court.

Goyal said this would lead to withdrawal of 41 per cent of existing cases related to direct taxes and 18 per cent of cases related to indirect taxes.

In case of income tax, out of total cases filed by the department in Income Tax Appellate Tribunal (ITAT), 34 per cent of cases will be withdrawn. In case of High Courts, 48 per cent of cases will be withdrawn and in case of Supreme Court, 54 per cent of cases will be withdrawn.

“Withdrawing 41 per cent of pending appeals would affect only 0.82 per cent of the total litigation amount,” he said.

Similarly, in case of Central Board of Indirect Taxes and Customs (CBIC), out of total cases filed by the department in Customs, Excise and Service Tax Appellate Tribunal (CESTAT), 16 per cent of cases will be withdrawn.

In case of High Courts, 22 per cent of cases will be withdrawn and in case of Supreme Court, 21 per cent of cases will be withdrawn.

“And withdrawing 18 per cent of indirect tax related appeals will affect only 1.45 per cent of the litigation amount. Altogether, only Rs 6,000 crore will be forgone by substantially reducing the number of pending litigation,” he said.

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