With the announcement of monetary limits for the government to file GST litigation, the BJP led NDA government has hit the ground running on two policies in the last two weeks aimed at reducing litigation.
The central government is the largest litigant in India, with its ministries filing thousands of cases in courts every year. This resulted in an increase in the pendency of cases leading to the judiciary finding it difficult to grapple with the sheer volume of cases.
The national litigation policy was the first document signed by law minister Arjun Ram Meghwal after he took charge on June 11.
The litigation policy will essentially lay down conditions for filing litigations by the central government, under which a ministry or a department will not be allowed to pursue cases if they do not fulfil certain conditions. This will not burden the judiciary and give them time to clear cases quickly. The policy came out of cold storage after 14 years.
Finance ministry’s litigation policy
Among the union ministries, the finance ministry is fighting the highest number of cases in court. As of July 2023, the ministry was fighting over 1.5 lakh cases. The majority of these litigations are directly attributable to taxes. Time and again, budgetary announcements are made to reduce tax disputes pending in court.
Thus, the ministry had to come up with a comprehensive policy to reduce litigation.
In 2019, the Ministry of Finance increased the limit for filing appeals by the income tax department. For appeals before the Income Tax Appellate Tribunal (ITAT), the limit was enhanced to Rs 50 lakh, and for appeals before high courts, it was enhanced to Rs 1 crore, while for special leave petitions (SLPs)/appeals before the Supreme Court, the limit was increased to Rs 2 crore. Thus, if the amount in dispute is less than that mentioned above, the department cannot file an appeal.
Similarly, for central excise and service tax, the government can file an appeal in the Customs Excise Service Tax Appellate Tribunal (CESTAT) if the amount in dispute is a minimum of Rs 50 lakh, in HCs if it is Rs 1 crore and in the SC if its Rs 2 crore. For customs, the limit is Rs 5 lakh before CESTAT, Rs 10 lakh before HC, and Rs 25 lakh before the SC.
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