Unclogging The Judicial System

Unwarranted litigations have been ingrained in our judicial system. When it comes to tax appeals the scenario is no different. The Government is not only the biggest litigator but also the most unsuccessful one. It is not that the Courts are against the revenue department, but, over the time it is observed that majority of the departmental appeals should not have seen the light of the day.

There are so many appeals filed by the department which lacks merits in the first place and thus they fail to hold ground in the courts. This creates bottleneck in the judiciary. Realizing this, vide Instruction F.No. 390/Misc./163/2010-JC dated 17.12.2015, the Union finance ministry raised the monetary limit for filing appeals before Tribunal, High Court and Supreme Court. The CBEC as well as CBDT has hiked the limit applicable to Department for filing of appeal before Judicial Forums. The Central Board of Excise and Customs has raised the monetary threshold for Departmental appeals before Appellate Tribunal (CESTAT) from Rs.5 Lakhs to Rs.10 lakh and for appeals before High Court from Rs.10 Lakhs to Rs.15 lakh.

While deciding the thresholds mentioned above, the duty involved shall be the decisive element. For example, in a case involving duty of Rs.8 lakh with mandatory penalty of Rs.8 lakh, no appeal shall henceforth be filed by the Department before tribunal as the duty involved is within the limit of Rs.10 lakhs.

The Finance Ministry, in order to facilitate trade and resolve disputes, has decided to withdraw all cases in High Courts and CESTAT where there is precedent Supreme Court decision. Recently in just two days, the Income-Tax Appellate Tribunal (ITAT) in Gujarat disposed of more than 1,500 appeals in tax disputes over amounts less than Rs.10 lakh. It is important that other Income Tax Tribunals as well as the CESTATs take a cue from this and put an end to litigations as per new guidelines.

Vide another Instruction issued from F.No. 390/Misc./67/2014-JC dated 18.12.2015, the Government has observed that there is large number of appeals pending / filed in the CESTAT / High Court and it has been a matter of concern. Therefore they have decided to withdraw cases pending in High Court / CESTAT, where Supreme Court has decided on an identical matter and the decision has been accepted by the Department. In an environment in which retrospectivity was attached only to the taxation and not to tax reliefs or concessions, such a paradigm shift in approach is unprecedented and possibly a game-changing initiative heralding a new era in thoughtful litigation management.

It is agonizing to see the public money go down the drain in for deciding small matters. This hike in monetary limits in litigation and the step to withdrawal of appeal where the apex court has already decided are more than welcome. The government should also ensure that genuine cases are resolved at pre-litigation stage itself. It will also save litigation costs from the end of the assessee and will unburden the judiciary.

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