President calls for innovation to deal with rising tax cases

President calls for innovation to deal with rising tax cases

Stressing on the need to improve India’s ranking in ease of doing business, President Pranab Mukherjee today said rising tax disputes and the amount involved call for innovative tax litigation management to add to the country’s growth story.

Inaugurating the two-day Platinum Jubilee Celebrations of Income Tax Appellate Tribunal (ITAT) here, he said there has been a sharp increase in direct tax litigations over the years.

“With the development of Indian economy, the direct taxes and number of tax payers have increased manifold, which have put pressures on the tax dispute redressal system.

“The rising trends in tax disputes and the quantum involved in tax litigations, call for an innovative tax litigation management system,” Mukherjee said.

The President highlighted transfer pricing, taxation of digital economy and international taxation as the frontier areas of taxation which require special skill sets to deal with disputes.

Although taxation department has responded to meet the challenges through capacity development, Mukherjee said the rising disputes in “these areas call for trained manpower” in both the tax department as well as tax judiciary to keep India globally competitive in the tax judiciary system.

He further said tax disputes resolution is an integral component of the ecosystem for promoting investments and attracting business.

“As per World Bank Group 2016 Report, India is ranked at 130 in the ‘Ease of Doing Business’. This status must be improved.

“Through speedy justice, consistent orders, fair approach and business-oriented litigation management system, you (ITAT) can contribute to the growth story of India, which is unfolding itself,” the President said.

Stating that the Indian economy has undergone a major change over the years, he said the collection of direct taxes in 1860-61 was only Rs 30 lakh, when Income Tax was introduced in India in July 1860 and the same is estimated to increase to Rs 7.98 lakh crores for the year 2015-16.

“This indicates the rising importance of direct taxation in India since introduction,” he said. The event was also attended by Chief Justice of India Justice T S Thakur and Union Law Minister D V Sadananda Gowda, among others.

The technical sessions at the ITAT event will deliberate on three important areas of taxation — tax jurisprudence in cross-border transactions, emergence of technology in justice delivery system and tax litigation viz-a-viz ease of doing business in India.

“These three are critical components of taxation policy and litigation management system for providing a stable, fair and equitable taxation regime,” Mukherjee said.

Due to technology, the speed of business has increased exponentially, he said. “The tech-savvy entrepreneurs and global Indians demand justice delivery system in line with the best global practices. Meeting the expectations of these 21st century entrepreneurs is a challenging job,” Mukherjee said.

He expressed hope that ITAT members and the Ministry of Law will respond to these challenges pro-actively at a time when the growth and expansion of direct taxation system has put extra responsibility on the Tribunal.

There are 63 ITAT benches, which operate from 27 centres spread across the country. Referring to the initiative of e-courts, through which members of the Tribunals are disposing of cases through video conferencing, Mukherjee said the example set up by members of ITAT at Ahmedabad, who disposed of 300 appeals at Rajkot in a month, is an indication of willingness on the part of the members to adopt new processes and procedures.

“You need to replicate such kinds of practices all over the country and become a true symbol of bringing tax justice at the doorsteps of the tax payers,” the President said.

Till the setting up of Tribunal in 1941, the adjudication of tax disputes was through an internal administrative mechanism, which lacked neutrality and independence.

The established model of ITAT has been used to set up Tribunals in the areas of indirect taxes, administration, railways and foreign exchange.

“The replication of ITAT model in constitution of other tribunals makes it a ‘Mother Tribunal’ of the country,” the President said.