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Do you want to know what are tax litigation and how to overcome taxation issues? DSRV India has simplified the process of settling tax disputes. Find it here in the blog.

What Is Tax Litigation In India By DSRV India: A Complete Guide: Blog Poster

Taxation is a necessary component of any economy. It funds public services and infrastructure development. However, the complexities of tax regulations can often lead to disagreements between taxpayers and tax authorities. Tax litigation, the process of resolving these dispute through legal means, is crucial to maintain the integrity of the tax system.

In this detailed blog on "What is Tax Litigation", brought to you by DSRV India, a reputable chartered accountant firm in India, we will break down the complexity of tax litigation.

 What is Tax Litigation In India?

Taxes are payments made to the government by individuals or businesses. They're contributions that everyone is required to contribute, regardless of how much money they make or how well their business does. These contributions help the government in obtaining funds for crucial purposes such as boosting the country's economy and people's living conditions.

 Seeking expert advice is crucial in this complex process, and a tax consultant in Gurgaon can provide valuable assistance. They can offer hassle-free taxation services to help you run your business smoothly under the Indian tax legislation.

 Tax litigation is the legal procedure through which taxpayers and tax authorities settle arguments about tax liabilities. It covers a wide range of tax disputes, including those involving direct and indirect taxes.

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Direct Tax Litigation

Direct tax litigation involves disagreements about income tax and corporation tax. The Central Board of Direct Taxes (CBDT) is in charge of these tax issues and determines what needs to be done.

They are part of the Department of Revenue and are in charge of setting rules and decisions regarding these taxes.

Indirect Tax Litigation

Indirect tax litigation involves disagreements over the Goods and Services Tax (GST) and customs duty. GST is collected when someone sells goods, such as a shopkeeper or an internet business.

They are known as taxpayers, and any legal issues concerning these taxes fall under this system. Even though GST began in 2017, there are some older cases from before that time. As a result, we may divide these taxes into two categories:

Pre-GST Regime Litigation

Before the implementation of the GST system in India, tax litigation was classified into two categories: central and state taxes. Central taxes included excise duty, service tax, and central sales tax, whereas state taxes included VAT, entry tax, and other levies.

GST Litigation

Following the implementation of GST, new tax laws and regulations were created. However, civil tax disputes continue to develop as a result of the difficulties inherent in interpreting GST laws.

These lawsuits can be related to the classification of goods/services, denied input credit claims, procedural non-compliance, valuation-related concerns, import/export transactions, and so on.

Want To File ITR, Check This First: What You Must Keep In Mind When Filing Income Tax Return (ITR)

What Are The Various Types Of Tax Litigation Controversies?

Tax Controversy

This is when there is a tax issue or argument related to tax matters. Individuals or businesses may disagree with the government on how much tax they must pay.

Civil Tax Controversies

These are tax conflicts that are more about money and tax rules. It's all about calculating how much tax to pay. It has nothing to do with breaking the code of civil procedure.

Criminal Tax Controversies

This is a more serious matter. It's when someone is accused of doing something extremely wrong with their taxes. It might be failing to pay when they should or intentionally defrauding the government. It's similar to a legal issue that might lead to serious consequences.

Illegal Actions In Tax Evasion

It is important to note that certain types of tax evasion practices are considered illegal and criminal acts under Indian law. Here are some examples of tax evasion –

  • Smuggling goods across borders.
  • Unreported money found during official operations.
  • Attempting to hide or relocate assets in order to avoid paying taxes.
  • Attempting to avoid paying taxes intentionally.
  • Giving incorrect details to deceive tax department authorities.
  • Illegally collecting and retaining service taxes.
  • Steps taken prior to filing a court or tribunal case.

Parties Involved In Civil And Criminal Tax Litigation

The Taxpayer: Individual/business entity involved in the dispute.
Tax Authorities: Tax-collection agencies of the government (such as the income-tax department).

Appellate Authorities: Bodies established for hearing appeals filed by taxpayers against decisions made by lower-level authorities.

High Court And Supreme Court & Tribunals: Cases may be escalated in courts if parties are still dissatisfied with an appeal authority's ruling

Which Courts Handle Tax Disputes In India?

Usually, when someone has a tax issue, the tax authority is the first to become involved. They work much like judges of the High Court and the Supreme Court. They examine the tax matter and decide what is correct.

There's another group, the first appellate body that also checks these tax matters and makes decisions. They have similar powers to the tax authority. The second category is the Income Tax Appellate Tribunal (ITAT) which does dispute resolution just like a court.

The Supreme Court of India and the High Court are the next two groups. They're important courts that only deal with important tax litigation cases. They form a dispute resolution panel to make final decision on tax disputes.

Tax Assessment and Appeals In India

Tax assessment is the procedure used by tax authorities to calculate a taxpayer's tax burden. It involves assessing the taxpayer's financial documents and tax returns. If there are disagreements, taxpayers can initiate appeals to challenge the assessments.

These disagreements are resolved by appellate bodies including the Income Tax Appellate Tribunal and the Commissioner of Income Tax.

How Can DSRV India Help You In Preventing Tax Litigation In India?

DSRV India provides a wide range of accounting, auditing, and tax consulting services. These services are designed especially for people and companies doing business in India.

We can help you every step of the way, from ensuring proper documentation during the filing process to representing on your behalf before authorities' appellate forums if necessary.

Partnering with us ensures that you don't face any penalty and have a financially healthy future in India.


Frequently Asked Questions

FAQs About Tax Litigation In India

Questions that you can ask us about tax litigation in India.

What Is Tax Litigation?

Tax litigation is a legal procedure used to settle disagreements between taxpayers and tax authorities about matters related to tax liability and payments.

What Are The 4 Types Of GST In India?

The four types of GST in India are IGST, SGST, CGST, and UTGST.

How Can Tax Disputes Be Brought Before Indian Courts?

Tax disputes can be brought before Indian courts by appealing to higher authorities. Start from the tax authority, move to appellate bodies like the Income Tax Appellate Tribunal, and ultimately reach formal courts like the High Court or the Supreme Court for substantial legal issues.

Who Can Help With Tax Dispute Cases?

Tax consultants and legal experts like DSRV India can help with tax dispute cases by offering proper guidance.

 Which Court Has Jurisdiction To Hear Tax Disputes?

Tax disputes in India are heard by Tax Courts, Income Tax Appellate Tribunal (ITAT), High Courts, and the Supreme Court.

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