Govt steeply hikes monetary ceiling for appeals in tax cases

The government has decided to increase the threshold monetary limits for filing departmental appeals at various levels, be it the appellate tribunals, high courts and the Supreme Court, in order to reduce the long pending grievances of taxpayers and to minimise litigations pertaining to tax matters and to facilitate the Ease of Doing Business.

Accordingly, the threshold monetary limit for tax department to file appeals in tribunals and courts handling income tax as well as customs, excise and service tax disputes has been raised from Rs10 lakh to Rs20 lakh.
In the case of high courts, the monetary threshold is now Rs50 lakh instead of Rs20 lakh earlier. In the Supreme Court, the threshold has been increased from Rs25 lakh to Rs1 crore.
The monetary threshold for filing appeals in tribunals handling income tax as well as customs, excise and service tax disputes has been doubled from Rs10 lakh to Rs20 lakh, the finance ministry said.
Union finance minister Piyush Goyal said the hike in the threshold would result in withdrawal of 41 per cent of cases from Income Tax tribunals and various courts. These cases involve litigation over recovery of Rs 5,600 crore.
The decision is likely to benefit small tax payers facing litigations in tribunals and courts. The higher limit would mean that 34 per cent of the tax cases filed in Income Tax Appellate Tribunal (ITAT) will be withdrawn. About 48 per cent of the cases in High Courts would be withdrawn. Similarly, 54 per cent of cases in the Supreme Court will be withdrawn.
The government estimates that an increase the threshold for filing appeal in tax cases may result in around 27,000 cases being withdrawn.
Minister of state for finance Santosh Kumar Gangwar had informed Parliament in April 2017 that more than 88,730 direct tax cases were pending in the tribunal, though some of the appeals may have been filed by the assessee.
Gangwar said 41,960 direct tax cases were pending in high courts and 5,272 in the Supreme Court.
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 release stated.
In case of CBDT, out of total cases filed by the department in ITAT, 34 per cent of cases will be withdrawn. In case of high courts, 48 per cent of cases will be withdrawn and in case of the Supreme Court 54 per cent of cases will be withdrawn.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 litigation will get reduced by 41 per cent. However, this will not apply to 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 per cent of cases will be withdrawn. In case of High Courts, 22 per cent of cases will be withdrawn and in case of 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.