Tax litigation in India is like a vast maze that occupies a large portion of judicial time. This is due to the ever-changing, complex laws and structural lack. Also, depending upon the type of taxes, there are differences in laws and jurisdictions. According to data on the law ministry’s Legal Information Management and Briefing System (LIMBS) website, the finance ministry has the most cases pending, with 1,59,240 pending cases in which it is a party to the litigation.
The judicial procedures are long and tedious. The need for a structured litigation management system is felt by almost all the businesses involved in litigation and assessments. Finance Minister Nirmala Sitharaman stated in her budget announcement on February 1, 2022, that the government will create a litigation management system “to avoid repetitive appeals by the department.”
In this article, we will discuss the basics of Tax Litigation in India, the two main types of taxation, and the litigation associated with it that businesses need to be aware of.
What is Tax Litigation?
To understand Tax litigation, let us first understand what are taxes?
Taxes can be defined as an obligatory contribution to the Government by individuals or corporations who fall within the tax bracket. Taxes are levied on citizens to generate revenue for commercial ventures, improve the country’s economy, and raise the national standard of living.
Litigations on the other hand can be defined as ‘the process of taking legal action in a court of law’. Corporate litigation law deals with disputes that arise from non-criminal business and commercial activities.
Thus, tax litigation consists of legal actions taken around disputes arising from tax non-payment or delayed payment by the taxpayers or unwanted/unauthorised tax collection by the authorities etc.
Broadly, there are two main types of taxes – Direct Tax and Indirect Tax. And there is litigation for all types of taxes.
1.1 What is Direct Tax Litigation?
1.2 What is Indirect Tax Litigation?
1.2.1 Pre-GST Regime Litigation
1.2.2 GST Litigation
If you are looking for an efficient Litigation Management Software, choose IRIS LMS!
How can LMS help you?
IRIS LMS is a Litigation Management Solution (LMS) developed by IRIS in association with DAA Consulting, a specialized Indirect Tax Consulting Organization with in-depth experience in litigation, knowledge of the subject and understanding of the practical difficulties faced by various industries.
IRIS-DAA have combined their individual strengths of Technology and Subject Matter Experiences & Expertise to develop a robust product anticipating the needs of the industry in light of the faceless assessments under GST which is in pipeline.
LMS is a cloud-based litigation management software with Artificial Intelligence, Proactive alert mechanism, extensive reporting and analytics dashboard for enterprises.
LMS is here to assist you in facing GST departmental audits and to efficiently manage GST litigations.
Further, Integration through API with GSTN Portal is under request with GSTN to enable better tracking.
What can you do with IRIS LMS?
- Track: Status of Litigations on real-time basis at GSTIN Level
- Store: Complete trail of Litigation from 1st Letter to Replies, Hearing Proceedings to Final Order
- Retrieve: Data through friendly UI with custom categorizations
- Archive: Gst Returns Data and Various Reconciliations to handle Departmental Audit in the future
- Alerts: For various Due Dates for Pending Replies, Appeals, Personal Hearings, Written Submissions