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Interim Finance Minister Piyush Goyal has said that raising the threshold for filing litigation will lead to withdrawal of cases involving over ₹5,600 crore. This will create an environment of trust between tax departments and tax payers.
The Finance Ministry has decided to increase the threshold monetary limits for filing Departmental Appeals at various levels, be it Appellate Tribunals, High Courts and the Supreme Court. Limit for filing appeal in tribunals to be raised to ₹20 lakh from ₹10 lakh. Similarly, for high courts new limit will be ₹50 lakh as against ₹20 lakh and for Supreme Court, the limit has been enhanced to ₹1 crore from present limit of ₹25 lakh. Here the limit implies disputed tax amount.
“We expect cases related to direct taxes of ₹4,800 crore to be withdrawn, while the amount for indirect taxes would be around ₹800 crore,” Goyal told reporters here on Thursday. This represents 0.82 per cent in terms of total direct tax disputed amount and 1.45 per cent for indirect tax disputed amount. Over ₹7.6 lakh crore are stuck in litigations at various levels putting a strain on not just tax authorities’ resources but on tax payers.
Direct tax disputes
The amount related with cases being withdrawn may appear small, but number-wise it is huge. In the case of direct taxes, of the cases filed by the Department in ITAT, 34 per cent will be withdrawn while it will be 48 per cent for High Courts and 54 per cent for Supreme Court. Overall, the number of tax cases may reduce by 41 per cent.
Indirect tax cases
Similarly, for indirect taxes, of the cases filed by the Department in CESTAT, 16 per cent will be withdrawn while it is pegged at 22 per cent for High Court and 21 per cent for the Supreme Court. The number of tax cases is expected to come down by 18 per cent.
The exceptions
However, Goyal made it clear that new limits will not be applicable in such cases where substantial point of law is involved. In other words, in cases that affect a large number of people and if decisions in such matter has potential for huge precedent value, tax authorities will be free to approach appeal fora without any limit.
The government feels that this is a major step in the direction of litigation management of both direct and indirect taxes as it will effectively reduce minor litigations and help the department to focus on high value litigations.
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