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A whopping Rs 4 lakh crore stuck in tax appeals

By Jayshree P Upadhyay
February 27, 2015 08:26 IST
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Total number of tax disputes in SC cross 10,000, in HC -- 32,000 in tribunals over 300,000

The centre and Supreme Court are taking progressive measures to reduce the tax litigation in India but it may not be an easy task.

As per an analysis of the annual report of the ministry of finance for the fiscal year 2013 -- 14 the quantum of money stuck in tax appeals come up to a mind boggling figure of Rs 3 lakh crore (Rs 3 trillion).

And these appeals are stuck at only the commissioner level.

The finance minister in his maiden speech last year had stated that the tax demand in litigation would be more than Rs 4 lakh crore (Rs 4 trillion).

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"Tax demand of more than Rs 4 lakh crore is under dispute and litigation before various courts and appellate authorities.

"This is one of the serious concerns of all taxpayers in this country. In order to reduce litigation in direct taxes, I propose to make certain legislative and administrative changes," said Arun Jaitley.

If we take a look at the tax disputes that are stuck in Supreme Court, various high courts and Income Tax Appellate Tribunal the number comes to 350,000 cases.

As per Supreme Court's own admission a total of 10,843 tax disputes are pending before the apex court as on date.

To tackle these cases recently the Supreme Court constituted a separate bench for both the direct and indirect tax matters.

This bench would have the first sitting from March 9 and would sit everyday from Monday to Friday for a speedy disposal of tax matters. The bench constitution is not known however, it would incorporate specialized personnel.

Even under the current circumstances Supreme Courts, High Courts have dedicated court rooms to handle tax litigations with specialised bench overlooking the cases.

With such provisions already in place lawyers dealing with tax matters say that setting up a separate bench may not be enough.

"Although the Supreme Court setting up a specific bench is a positive step, it may not be enough.

"The Government would need to introduce definite measures to reduce tax litigation and to clear up the pending backlog.

"An important step forward would be to prescribe mandatory time-limits and consequences for conclusion of proceedings before tax authorities or Courts and penalties for frivolous litigations initiated by the tax authorities," said Sriram Govind, Senior Member, International Tax Practice, Nishith Desai Associates.

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Jayshree P Upadhyay in New Delhi
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