Narendra Modi’s non-adversarial tax regime

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• Introduction
• On 19 March 1955, Shri Jawaharlal Nehru, while
  addressing the members of the High Court of
  Punjab at the inauguration of its new building in
  Chandigarh, had said "Justice in India should be
  simple, speedy and cheap". He remarked that
  litigation was a disease and it could not be a
  good thing to allow any disease to spread and
  then go out in search of doctors. What he meant
  to embark upon was the fact that the judiciary of
  India is looked up with great respect and with a
  feeling of trust, faith and confidence by its
  various stakeholders. Thus, it would not be a
  good sign if the litigation syndrome would be
  allowed to broaden without having the adequate
  number of doctors, i.e. the courts, available to
  cure such diseases.
• As per the data released by the Ministry of Law
  and Justice recently in relation to pending
  cases, as on 19 February 2016, 48,418 civil cases
  were pending in the Supreme Court (out of this,
  1,132 cases have been pending for more than 10
  years). Further, as on 31 December 2014,
  31,16,492 civil cases were pending in the High
  Courts (out of this, 5,89,631 cases have been
  pending for more than 10 years).Often it has been
  observed that once a matter goes into the
  judiciary pipeline, it can take around 10-15
  years until the final verdict can be delivered by
  the Supreme Court of India off course, it is
  true that not all matters would travel till the
  Supreme Court, but the long drawn litigation
  battle in India still does not get over in 3-4
  years to say the least.

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• 2. Indian Government - Perceived as a Litigation
  Loving Regime!
• 2.1 Nobody is oblivious to the fact that the
  Indian government, perhaps, more often than not,
  appears in the Petitioner/Appellant side of a
  case title. In a recent interview, the Law
  Secretary has acknowledged that given the sheer
  size of the government and the number of
  decisions taken, the government will always be
  the biggest litigant. Hundreds of decisions are
  taken every day, and some of them are challenged
  in the courts. He also expressed that with
  respect to the disputes between two departments
  of the government, there should be an in-house
  mechanism for dispute settlement and said that
  this will form part of the government's soon
  to-be-announced National Litigation Policy. He
  said that "Under this, there should be a public
  grievance redressal system, and after that ADR
  methods should be tried. Only if these don't work
  should the courts be approached, and if a
  judicial forum has given a decision based on
  facts and not on law, to the extent possible,
  further filing of appeal by the government should
  be avoided."
• 2.2 Indian government has always been perceived
  as a litigation (many a times, frivolous or
  vexatious) devoted government. This has led to
  the (un)popular notion among the corporate world
  that India's regulatory framework, in particular
  the revenue and commercial laws segment, is full
  of uncertainty and prone to change in the blink
  of an eye. Every businessman always dreams of a
  tax-payer friendly regulatory regime which is
  non-adversarial and low on sudden or abrupt
  changes. Often, the cost of fighting the case is
  more than the amount that would be recovered from
  the taxpayer as these cases take years before
  they are resolved.

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• 3. How to Reduce Litigation?
• 3.1 Apparently, there can only be two modes which
  can lower the large number of pending suits in
  the different judicial for a of this country
  either reduce the time in which a case is decided
  by the courts or reduce the number of case
  filings. Indian judiciary, being one of the most
  highly regarded judicial set-up in the world,
  ought not to be alleged as being sluggish in
  delivering judgments. Thus, the lone way to
  lessen the litigation burden would be to reduce
  the large number of, often repetitive, lawsuits
  being filed.
• 3.2 Off-course, the legislature cannot bar a
  citizen from taking its case to the court room
  for final adjudication. Resultantly, what the
  government is required to do is to put in place
  binding guidelines/instructions/directions for
  its lower authorities which either diminish the
  scope for differential interpretation to the
  already settled legal issues or forbid them from
  initiating legal action in some situations on the
  basis of the materiality of the issue involved
  (for instance, under the income tax law, the
  government has set various monetary thresholds
  below which the tax authorities are precluded
  from filing appeals against the taxpayers).

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• 4. Modi Government - Attempt for Stable Tax
  Regime
• 4.1 Recently, the Prime Minister outlined for the
  tax department a five point agenda called RAPID
  Revenue, Accountability, Probity, Information
  and Digitization and stressed the need for tax
  officials to carry forward the agenda. He
  emphasised that while there should be respect for
  rule of law among citizens and measures to
  disincentives tax evasion, people should not be
  harassed. The trust deficit between the
  income-tax department and taxpayers should be
  bridged. The government's aim is to increase the
  taxpayer base from the present level of 54.3
  million to 100 million in this regard, the
  Minister of state of finance pointed out "that
  there are 250 million households in the country,
  of which about 150 million may be agricultural
  households that don't have to pay tax. But this
  still leaves us with 10 crore (100 million)
  households".
• 4.2 In line with these objectives, in the recent
  past, the tax department has taken a number of
  steps in this direction. The process from filing
  the tax return to the filing of an appeal before
  the first appellate authority has been
  digitalised. A pilot project for e-assessments
  has also been launched in some states. With an
  aim to have a consistent and coherent approach to
  the issue of tax policy and having regard for
  need to have an interdisciplinary approach, the
  government has recast the institutional
  arrangement for tax reforms and legislation,
  creating a Tax Policy Council headed by the Union
  Finance Minister. Currently, this function is
  handled separately by the Central Board of Direct
  Taxes (CBDT) and Central Board of Excise and
  Customs (CBEC) through Tax Research unit (TRU)
  and Tax Policy and Legislation (TPL) wings. The
  heartening thing to note that it is not just at
  the strategic level that the changes are being
  made the government is also taking substantial
  steps to reduce the litigation, especially on the
  tax side, in the country.

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