Tax Proposals in response to `Union Budget – 2020’.
Budget 2020' as usual was expected to be at par with the expectations of the public at large with prime focus on rationalization of the individual tax slabs apart from extending numerous concessions in forms of rebates/deductions to assessees. Chapter III of the Finance Bill 2020 (Bill No. 26 of 2020) introduced variety of amendments through substitutions/ insertions / omissions ranging through a catena of about 104 Clauses. In perhaps one of the longest running speech of the Hon'ble Finance Minister Smt. Nirmala Sitharaman on the podium of the parliament, radical changes were promulgated principally in form of incorporating the taxpayers charter which can be structurally designated as the Magna Carta in the statute itself, reforming the tax brackets with and without concessions of deductions/exemptions as per the riders of venturing into new and old tax regime, enhancing the tax audit threshold limits from the present one crore to five crore, introduction of faceless appeals before the authorities besides travelling from the 'Vivad to Vishwas' scheme i.e. No Dispute But Trust Scheme etc. in order to ingrain/instill confidence building measures in the people. Amongst the amendments proposed, most importantly it was in the fitness of things to flip the provisions pertaining to the appeal(s) under the direct taxes on a similar note of what has been making a mark under the Indirect Taxes regime i.e. Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 which resulted in settlement of about 1,89,000 cases.
Proposed 'No Dispute But Trust Scheme'
The Hon'ble Finance Minister in her Para No.126 of her Budget Speech 2020-2021 dated 01st February, 2020 proposed the so called 'Vivad se Viswas Scheme' alternatively 'No Dispute But Trust Scheme'. As per the said proposal, the taxpayer will be required only to pay the disputed tax involved/locked in the litigation and will gain complete waiver of the ancillary charge of interest and penalty with a rider that the obligation to pay disputed tax is discharged by 31st March, 2020. The benefits conferred by the above said proposal can be availed post 31st March, 2020 until 30th June, 2020 subject to payment of additional amount and the taxpayers can accordingly avail the benefit at any level of the appellate proceedings. The proposal enshrined in Para No.126 associated with the 'No Dispute But Trust Scheme' per verbatim stands produced as under:-
126. No Dispute but Trust Scheme - 'Vivad Se Vishwas' Scheme • Sir, in the past our Government has taken several measures to reduce tax litigations. In the last budget, SabkaVishwas Scheme was brought in to reduce litigation in indirect taxes. It resulted in settling over 1,89,000 cases. Currently, there are 4,83,000 direct tax cases pending in various appellate forums i.e. Commissioner (Appeals), ITAT, High Court and Supreme Court. This year, I propose to bring a scheme similar to the indirect tax SabkaVishwas for reducing litigations even in the direct taxes. • Under the proposed 'Vivad Se Vishwas' scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by 31st March, 2020. Those who avail this scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June, 2020. • Taxpayers in whose cases appeals are pending at any level can benefit from this scheme. • I hope that taxpayers will make use of this opportunity to get relief from vexatious litigation process.
It is pertinently submitted that the Chapter X of the Finance Act, 2016 introduced Direct Tax Dispute Resolution Scheme in order to ease out the monumental burden of amounts locked in direct tax litigation before various forums be it the Commissioner (Appeals), Income Tax Appellate Tribunal, High Court or the Supreme Court. In so far as the narratives of the proposals tabled by the Hon'ble Finance Minister qua Finance Bill No.26 of 2020 were concerned, introduction of amnesty scheme on similar lines was the need of the hour. It is to be acknowledged that the department has from time to time taken a strong lead in reducing the litigation cover by revising the monetary limits applicable for counter contesting the findings of appellate authorities at various level of the direct taxes regime. But at the same time, the path-breaking observations of the Hon'ble Supreme Court of India from time to time cannot be just by-passed and overlooked to say that there exist of a complete non-adversarial tax regime. Hon'ble Supreme Court of India in the landmark pronouncement of Vodafone International Holdings B.V. vs. Union of India (2012) 204 Taxman 408 (SC) in Civil Appeal No.733 of 2012 vide Para No.188 of the pronouncement observed that 'the demand of nearly Rs.12,000/- crores by way of capital gains tax, would amount to imposing capital punishment since it lacks authority of law and therefore, stand quashed.
On a similar note, Hon'ble Supreme Court of India in Director of Income Tax, Circle 26(1), New Delhi vs. S.R.M.B.Diary Farming Private Limited (2018) 252 Taxman 1 (SC) categorically observed :-
2. The propensity of Government Departments and public authorities to keep litigating through different tiers of judicial scrutiny is one of the reasons for docket explosion. The Income Tax Department of the Government of India is one of the major litigants. There are two departmental scrutinies at the level of the Assessing Officer and the Commissioner of Income Tax (Appeals) and thereafter an independent judicial scrutiny at the Income Tax Appellate Tribunal (hereinafter referred to as the 'ITAT') level followed by the legal issue which can be inquired into by the High Courts. The last tier is, of course, the jurisdiction under Article 136 of the Constitution of India before the Supreme Court.
3. Mindful of the phenomenon of the docket explosion and the rising litigation in the country, the Union of India in order to ensure the conduct of responsible litigation framed what is today known as the National Litigation Policy, to bring down the pendency of cases and get meaningful issues decided from the judicial forums rather than multiple tiers of scrutiny just for the sake of it. The Government, being a litigant in well over 50 per cent of the cases, has to take a lead in not being a compulsive litigant.
The Budget 2020' when relatively understood from a layman's point of view offers much to the aid in form of relaxed tax brackets, enhancement tolerance limits in real estate transactions, provisional registration of charity institutions, faceless hearing of appeals besides uncomplicated trip to litigations by promoting and promising cushy dispute settlements at any level. In anticipation of the non-adversarial tax regime, the intention of the government in importing the 'Taxpayers Charter' in the statue is another welcome step which will go a long way in promoting the confidence building measures. Furthermore, the relative claim of the Hon'ble Finance Minister in her longest running Budget speech that the direct tax rates are the lowest, simplest and smoothest requires to be tested on the anvil and pedestal of the actions of the department so as to filter a promising view of the situation. 'Vivad to Viswas' will undisputedly benefit the interest of assessees looking for an expeditious and rapid settlement of tax claims raised by the department especially in light of the provisions pertaining to sections 115BBE, 144 and 148 rws 147 etc. and the consequential claims raised through assessments framed in real estate matters.