Tax Litigation In India

Tax litigation is a very complex process and it requires a lot of knowledge and expertise to come out with a favorable verdict. There is much more to know regarding tax litigation and the primary and practical issues involving civil and criminal tax litigation. Ideally the process involves pre-court or pre-tribunal process, the trial process, witness and expert evidence, documentary evidence, closing the case through civil or criminal trials, judgment, decision, order, costs and appeals. You must also know about the recent developments in the law and different proposals for reform. The most significant factor that makes tax litigation more complex is the fact that it involves multiple jurisdictions.

The present scenario

There are a few common issues that are subject to tax litigation under the Indian judicial system. A large portion of the judicial time involves dealing and Representing for Tax Litigation in India. Add to that, the quasi-judicial appellate and adjudicating authorities spend a lot of time acting as a fact-finding body under the Income Tax Act 1961. It also follows the regulations mentioned in Customs Act 1962, Central Excise Act 1944, and Good & Service Tax Law. There are numerous judicial precedents set out to resolve tax disputes every day in the country by the Constitutional Courts in India. It comprises of Supreme Court of India and 24 High Courts in different states.

Issues subject to litigation

As of now, survey shows that there are 9300 cases lying pending before Supreme Court and 52,622 cases before High Courts and 175,676 cases pending before the Appellate Tribunals. All these cases amount to more than 1200 billion dollars. In most of the cases, tax disputes arise due to fall outs amongst partners but are also predominantly seen in individual business, charitable and other non-profit-organizations as well as cross-border matters related to attribution and permanent establishment. Apart from that, transfer pricing matters also ends up with tax litigations. These matters include marketing intangibles, royalty payments, management cross charges, location savings, compensation for development centers and service providers, comparable companies and even selection of methods for transfer pricing.

Other areas of disputes

There are also other areas of disputes that include matters related to tax withholding, General Anti Avoidance Rule, allowance for deductions and exemptions, corporate restructuring, reassessments and reopening of assessment, taxes on royalty income, penalties and black money in the form of undisclosed assets and foreign income. It also includes search and seizures, valuation disputes under Customs Act 1962, classification matters that are related to service tax as well as indirect tax on excise. Apart from all these, there may be a lot of other problems under the Goods and Service Tax Law.

Civil and criminal tax litigation

The top indirect tax firms in Delhi also handle civil and criminal tax litigation. While representing the civil cases they follow the principle legislation of the Income Tax Act 1961 as mentioned in Chapters XIX-A, XIX-B and XX. They also follow Income Tax Rules 1962 and The Constitution of India. Apart from that they look into the double taxation avoidance agreements, Appellate Tribunal rules 1963, Income Tax (Dispute Resolution Panel) Rules 2009 as well. As for the criminal case representation the Code of Criminal Procedure 1973 is followed apart from all other Income Tax Acts. Black money, Benami Transactions (Prohibition) Amendment Act, 2016 and Finance Act 1994 (Service Tax) is also followed.