Budget 2017: With an aim to make India a better place to do business and create tax-friendly regime, the Narendra Modi government is likely to cite withdrawal of over 15,800 appeals from tax tribunals and various high courts during the last 12 months, in the forthcoming budget. This is to make a case for its commitment towards a non-adversarial tax administration. Among the appeals, 400-odd appeals have been withdrawn from high courts on issues that have been settled in favour of the taxpayers, according to government data till November 2016, according to The Indian Express report.
Earlier, asked if Income Tax, Excise and Customs departments were the biggest litigants before the counts and Government will direct them to desist from appealing against verdicts of tribunals and high courts, Minister of State for Finance Santosh Kumar Gangwar had said:” More than 15,800 appeals have been withdrawn by the Income Tax Departments till November 2016.” Moreover, more than 400 appeals have been withdrawn from high courts on issues which have been settled in favour of taxpayers, the minister said. “Further, filing of appeal has also been restricted only to cases which have the required merits and which have tax effect exceeding the revised monetary thresholds.” he had said in a written reply in Rajya Sabha.
Watch this video
A March 2016 report prepared by the Central Board of Direct Taxes had concluded that in more than 30 per cent tax-related litigations pending in courts, appeals had been filed by the I-T department mechanically, “without appreciation of the maintainability of the issue involved”. Officials said the department of revenue had subsequently directed its field units to file appeals on merits and not in a routine manner merely on the basis of high revenue effect. It had buttressed this order by way of circular No. 21/2015 dated December 10, 2015 issued where it had prescribed high monetary thresholds for filing appeals before ITAT, high courts and Supreme Court and these revised thresholds were applied retrospectively, resulting in withdrawal of appeals already filed.
Watch this video
In parallel, NDA government’s move to revive the UPA’s National Litigation Policy is aimed at nudging different arms of the administrative machinery to curb prolonged litigation and draw a line beyond which there will be no appeal in legal disputes.
Earlier, terming it as the biggest litigant, the Bombay High Court in July 2014 had in rebuked the government and said that it ought to be aware of the pendency of cases in the high courts and should work towards reducing frivolous and speculative litigation, which involves public money that can not be wasted in such litigation. Acknowledging the criticism faced from various courts over the quality of appeals filed before the Income Tax Appellate Tribunal (ITAT), HC and SC, the income tax department had subsequently asked its officials to ensure that “frivolous appeals are not filed and where an appeal is filed, proper grounds of appeal or questions of law are framed”. It has also enhanced the monetary limit for filing appeals before ITAT from Rs 3 lakh to Rs 4 lakh to cut down on litigation.
Watch this video
According to the World Bank Group’s comparative survey on doing business, India came in at the bottom of the heap when it comes to enforcing contracts to resolve a commercial dispute, with a rank of 188 among 189 countries.