Govt ups threshold cap for tax dept appeals in courts to reduce litigation

The government on Wednesday hiked the threshold limit for tax departments to file appeals in tribunals and courts, which will bring down litigation substantially.

Accordingly, the tax department will file appeals in ITAT/CESTAT if the tax amount involved is Rs 2 million or more, up from Rs 1 million at present.

Appeals would be filed in High Courts if the tax amount involved in litigation is Rs 5 million, up from Rs 2 million at present.

For the Supreme Court, the threshold limit has been hiked to Rs 10 million, from Rs 2.5 million at present.

"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," a Finance Ministry statement said.

The government has decided to increase the threshold monetary limits for filing departmental appeals at various levels in order to reduce the long pending grievances of taxpayers, minimise litigations pertaining to tax matters and to facilitate the ease of doing business.

In case of the Central Board of Direct Taxes (CBDT), out of total cases filed by the department in Income Tax Appellate Tribunal (ITAT), 34 per cent of cases will be withdrawn.

In case of High Courts, 48 per cent of cases will be withdrawn and in case of the Supreme Court, 54 per cent of cases will be withdrawn.

"The total percentage of reduction of litigation from department's side will get reduced by 41 per cent. However, this will not apply in such cases where substantial point of law is involved," the statement added.

Similarly, in case of the 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filed by the department in Customs, Excise and Service Tax Appellate Tribunal (CESTAT), 16 per cent of cases will be withdrawn.

In case of the High Courts, 22 per cent of cases will be withdrawn and in case of the Supreme Court, 21 per cent of cases will be withdrawn.

"The total percentage of reduction of litigation from Department's side will get reduced by 18 per cent. However, this will not apply in such cases where substantial point of law is involved," the ministry said.

This step will also reduce future litigation flow from the revenue department side.