borrowed less than 1lakh;govt will not ask for payment-diwali gift

TAX authorities will not take legal recourse in cases where the disputed amount is below a certain threshold, as the government looks to reduce unproductive litigation. 

The new rules are in sync with a national litigation policy that seeks to make the government an efficient and responsible litigant. 

“The purpose of the policy is to ensure that valuable time of the courts is not spent in resolving pending cases and to bring down the average pendency time in the courts,” a tax department official explained. 

The Central Board Of Excise and Customs (CBEC), the apex indirect taxes body, has directed its officials that an appeal will not be filed in the appellate tribunal if the amount involved, including fine and penalty, is `1 lakh and less. Similarly, appeals will not be filed in high courts if the disputed amount is `2 lakh and less. 

CBEC is responsible for the collection of indirect taxes — central excise, Customs duty and service tax. An amount of over `47,000 crore, more than the government’s disinvestment target for the current fiscal, is locked up in indirect taxes arrears. 

In the case of direct taxes, more than `75,000 crore—an amount close to a fifth of the government’s annual collections—is blocked in courts. The direct taxes body already has a rule in place to check litigation. 

Experts say the move is a step in the right direction, but add that the department needs to go a step further and shun litigation altogether.