Major Steps taken for Reducing Tax Litigations

Last updated: 13 July 2018

In an effort to reduce tax litigation at all levels of appeal filing authorities and reducing long-pending grievances of taxpayers, Government of India (GOI) has decided to increase the threshold monetary limits for ITAT/CESTAT = Rs. 20 Lakhs, For High Court = Rs. 50 lakhs, for Supreme Court = Rs. 1 crore. Although this will not apply where the substantial point of law is involved.

Therefore, to reduce the long pending grievances of taxpayers and to minimise litigations pertaining to tax matters and to facilitate the Ease of Doing Business, Government of India 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 in the following manner-

Sl. No.	Appeal Fora	Present limit for filing appeal (In Rs.)	Enhanced limit (In Rs.)
1.	ITAT / CESTAT	10 lakhs	20 lakhs
2.	High Courts	20 lakhs	50 lakhs
3.	Supreme Court	25 lakhs	1 Crore

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.

In case of CBDT, out of total cases filed by the Department in ITAT, 34% of cases will be withdrawn. In case of High Courts, 48% of cases will be withdrawn and in case of Supreme Court 54% of cases will be withdrawn. The total percentage of reduction of litigation from Department’s side will get reduced by 41%. However, this will not apply in such cases where substantial point of law is involved.

Similarly, in case of CBIC, out of total cases filed by the Department in CESTAT, 16% of cases will be withdrawn. In case of High Courts, 22% of cases will be withdrawn and in case of Supreme Court 21% of cases will be withdrawn. The total percentage of reduction of litigation from Department’s side will get reduced by 18%. However, this will not apply in such cases where substantial point of law is involved.

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