1. Tax talk: Time to move away from must-file appeal policy

Tax talk: Time to move away from must-file appeal policy

The government and its various agencies are the pre-dominant litigants in courts and tribunals.

By: | Published: January 8, 2016 12:06 AM

The government and its various agencies are the pre-dominant litigants in courts and tribunals. They have kept adding cases to the over-burdened courts despite losing more than 80%. The must file appeal policy has resulted in a piquant situation – the Centre and states together account for nearly 70% of the more than 3 crore cases clogging the three-tier justice dispensation system.

Many government appeals relate to petty issues or involve paltry sums. The vast number of cases pending in the Supreme Court as well as the lower courts has defeated the very purpose of the judicial system.

For decades, governments and bureaucrats have scrupulously adhered to a must file appeal policy in every single case where the authorities suffered a reverse in lower courts. If the government lost a case in the trial court, an appeal is invariably filed in the high court. If the HC did not find merit in the appeal, the government without fail approached the Supreme Court.

The government has realised that there is a dire need to think smart when it comes to attempting to solve disputes, and the courts should be a place of last resort.

The National Litigation Policy aimed at reducing the pending cases in various courts in India, was formulated and is expected to be implemented soon. Fast-track courts have been set-up and AP Shah committee report was accepted to bring clarity and end the litigation around the issue of MAT on FIIs.

Constructive step to minimise litigation: In order to minimise tax litigation, the CBDT has recently enhanced the monetary limit of tax effect for filing of appeal by the department in tax matters before the Income-tax Appellate Tribunal (ITAT or tribunal) and High Court.

The monetary limits of tax effect for filing of appeals by the department before the tribunal and the high court was R4 lakh and R10 lakh, respectively, which has now been enhanced by CBDT to R10 lakh and R20 lakh, respectively. The revised limits have been made applicable retrospectively to pending appeals also, which means that pending appeals which are below the revised monetary limits have to be withdrawn or not pressed.

Interestingly, ITAT has already starting taking action in this direction and the appeals which are pending before the tribunal but where the monetary limit of tax effect is below the threshold are being dismissed.

However, one has to note that that the monetary limits above shall not apply to writ matters and direct tax matters other than Income tax.

To ensure conduct of responsible litigation by the government, accountability should be the touch-stone of this movement. As part of accountability, there must be critical appreciation on the conduct of cases.

Complacency must be eliminated and replaced by commitment. It is a well known fact that frequent adjournments are resorted to by the government lawyers, hence, unnecessary and frequent adjournments should be frowned upon. This movement of the government would go a long way in providing tax certainty, reducing litigation and consequently boosting investors’ confidence in India’s growth story.

The writer is is managing partner, Nangia & Co

Tags: Tax
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