Last June, the Modi government had decided to increase the threshold on monetary limits for filing appeals. The object was to decrease the number of pending tax litigations at different levels. With Rs 7.6 lakh crore stuck in tax litigations, as of March 2017, the move was predictable to lead to 41% reductions in income tax cases and 18% decrease in indirect tax cases.
However, nearly 23% of the 8,300 appeals in high courts and 22.8% of 7,785 appeals at the Income Tax Appellate Tribunal (ITAT) are yet to be withdrawn by tax officials. So the Central Board of Direct Taxes (CBDT) has now fractured the whip on expediting the process.
"The entire implement of removal of appeal must end by January end," Neena Kumar, member of CBDT, said in a January 15 letter sent to the principal commissioner all over the country. The letter allegedly stated that data received hitherto showed considerable scope for withdrawal of recognized appeals. "Kindly ensure that instant efforts are made to arrange personal meetings with a senior official of registry of Income Tax Appellate Tribunal and High Court so that appeal withdrawal process is completed quickly," Kumar added.
The threshold for filing the appeal at the ITAT and The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) was augmented from Rs 10 lakh to Rs 20 lakh in June 2018. For High Courts, the limit has been increased from Rs 20 lakh to Rs 50 lakh and in case of Supreme Court, the limit has been increased four-fold to Rs 1 crore.
The following month, the CBDT had issued another circular stating that the pending appeal or special leave petitions (SLPs) should be withdrawn "on priority" to allow the department to focus on high-value litigations. The circular had also instructed the Principal Chief Commissioner of Income Tax to "personally make sure that the exercise of withdrawing/not urgent such appeals are completed latest by August 20, 2018". But clearly, the deadline was not met.
"The CBDT order highlights the government resolves to cut down on litigation by effective monitoring of their earlier circular," Amit Maheshwari, the partner at CA firm Ashok Maheshwary & Associates LLP, Said.