India’s Press Information Bureau released a statement from the Ministry of Finance regarding the Supreme Court’s resolution of 573 tax cases on 24 September 2024. The measures are expected to significantly reduce the burden of tax litigation and expedite the resolution of tax disputes in alignment with the Government’s efforts to promote “Ease of Living” and “Ease of Doing Business”.
The Union Budget 2024-25 provided for an enhanced monetary limit for filing appeals related to Direct Taxes, Excise, and Service Tax in the Tax Tribunals, High Courts, and Supreme Court and the limits were increased to INR 60 lakh, INR 2 crore and INR 5 crore respectively.
In pursuant to the Budget 2024-25 announcement, the CBDT and CBIC had issued necessary orders to enhance the monetary limit for filing appeals in their respective domains. As a result, it is expected that the cases pending before various appellate fora will come down and reduce tax litigation.
Direct Tax
As per the announcements in the Union Budget 2024-25, the monetary thresholds for filing tax dispute appeals by the department were enhanced as follows:
- For Income Tax Appellate Tribunal (ITAT): Increased from INR 50 lakh to INR 60 lakh.
- For High Courts: Increased from INR 1 crore to INR 2 crore.
- For Supreme Court: Increased from INR 2 crore to INR 5 crore.
As a result of these revised limits, it is estimated that around 4,300 cases will be withdrawn from various judicial forums over the course of time:
- ITAT: 700 cases
- High Courts: 2,800 cases
- Supreme Court: 800 cases
Indirect Taxes
Similarly, the limit for filing appeals for the specified legacy Central Excise & Service Tax cases was increased:
- For CESTAT (Customs Excise and Service Tax Appellate Tribunal), the limit was increased to INR 60 lakh from INR 50 lakh
- For the High Court, the limit was increased to INR 2 crore from INR 1 crore.
- For the Supreme Court, the limit was increased to INR 5 crore from INR 2 crore.
As a result of these revised limits, it is estimated that around 1,050 cases pertaining to specified legacy Central Excise & Service Tax cases are estimated to be withdrawn from various judicial forums:
- Supreme Court: 250 appeals
- High Courts: 550 appeals
- CESTAT: 250 appeals
Along with Direct Tax Vivad Se Vishwas Scheme, a measure introduced recently to reduce pending litigation, these measures on the Direct tax and Indirect tax front are expected to significantly reduce the burden of tax litigation and expedite the resolution of tax disputes.
In addition, steps have been taken to deploy more officers dedicated to hearing and deciding income tax appeals, particularly those involving significant tax amounts. These initiatives reflect the government’s commitment to improve the ‘Ease of Living’ and ‘Ease of Doing Business’ across the country by reducing pending litigation.
