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How do tax litigation services help deflate untenable tax disputes?

Published on January 24, 2023

Tax Litigation under the India Judicial system is time-consuming. Tax litigation services support clients to achieve a quick resolution of tax disputes and related issues.

It is referred to as the initiation of legal proceedings concerning disputes that arises due to non-compliance with tax laws. To deeply understand how tax litigation services help deflate untenable tax disputes, it is essential to understand what exactly tax litigation is and what areas it covers.

Tax Litigation refers to the practice of resolving disputes with federal, state, local and foreign tax authorities. To dive deep into Tax litigation, we first need to understand what taxes are.

Basically, Taxes are a required contribution by individuals or corporations who fall within the tax bracket of the government. The government imposes taxes on the citizens to generate revenue for commercial ventures, advance the national economy, and improve living standards.

Litigation on the other side is ‘the process of taking legal action in a court of law’. Thus, tax litigation involves legal actions around disputes arising from tax non-payment or delayed payment by the taxpayers or unwanted/unauthorised tax collection by the authorities etc.

A tax controversy may involve a business whether for profit or not for profit, trust, estate or individual and can result in any form of taxation including income tax, local property tax, state sales, estate and gift tax and use tax. In general, disputes are separated into civil and criminal matters.

Tax Litigation mostly occurs in the below-given areas:

  • Matters of partnership and individual
  • Case of non-profit making business organisations
  • Transactions of the cross border that occurs on permanent establishment and ascription
  • Matters related to withholding of tax
  • Restructuring of Corporate
  • Liability of tax in Royalty income case
  • Issues related to Valuation under the Customs Act,1962

Difference between Direct and Indirect Tax Litigation

Taxes are broadly categorised into two main types. These are Direct Tax and Indirect Tax. There is litigation for all types of taxes. Let’s understand what exactly Direct Tax Litigation and Indirect Tax Litigation are.

Direct Tax Litigation

‘Direct Taxes’ as the name itself suggests are levied by the government directly on an individual or a company, and they cannot be transferred to another person or entity. The Department of Revenue’s Central Board of Direct Taxes (CBDT) is the only entity in charge of governing or making decisions regarding direct taxes. All kinds of litigation related to direct taxation fall under this category.

Indirect Tax Litigation

Indirect taxes are taxes that are levied on products and services provided by businesses to consumers. In July 2017, many of the indirect taxes were subsumed and the country moved to a ‘One Nation One Tax’ conduit channelling the entire tax collection to a single authority. Goods and Service Tax replaced all of the other tax structures (GST). The person selling the product, such as a shopkeeper, an online merchant, etc., is the middleman through which GST is levied and collected on goods. This person is referred to as the taxpayer. Therefore, any GST-related litigation comes into this category.

Government’s Initiative to REDUCE TAX DISPUTES

As we told at the starting of this article, Tax Litigation under the Indian Judicial system is a time-consuming process, so to address the Tax Litigation issue, one of the measures the government has proposed is a direct tax dispute resolution scheme for pending tax appeal cases through legislation, ‘The Direct Tax Vivad se Vishwas Bill 2020′ that translates to ‘’From Dispute to Trust’ introduced in Parliament.

Why Tax Litigation Services?

Facing a severe tax controversy, investigation or litigation can be one of the most challenging times for any organisation. These are times when it’s crucial to have conceivable consultants you can delegate.
Currently, tax litigation in India takes more than two decades to reach a decision. Most of the tax litigation cases pending at various forums are of multinationals, for which they cannot give their precious time and thereby appoint tax advocacy professionals to take care of their cases in the courts of law. Tax Litigation Services helps organisations address a wide range of cases, investigations, and regulatory issues at all levels during the appeal process. Here is a range of tax litigation services companies provide, which can benefit the organisation facing tax disputes.

  • Assistance in strategising tax litigation
  • Assistance in representations before the CIT(A), Dispute Resolution Panel (DRP) and Income Tax Appellate Tribunal.
  • Explore alternative tax dispute resolution avenues
  • Assistance in preparation of the advance ruling application and providing support for representation before the Authority for Advance Rulings (AAR) for settling a tax position
  • Assistance in drafting and presenting applications to the competent authority for Mutual Agreement Procedure (MAP) under the tax treaties
  • Assisting counsels in preparing/representing appeals/petitions before high courts and Supreme Court.