Tax Case Pendency in Indian High Courts

Recent analysis highlights a significant backlog of tax cases in Indian high courts, with over 4,000 cases awaiting their first hearing after a decade. This situation is prevalent across various sectors and states, affecting both direct and indirect tax cases.

Case Statistics and Analysis

• An analysis by DAKSH, covering 320,000 unique cases, found: 
  • 12,000 tax cases pending for over 10 years without a hearing, constituting 33.7% of such cases.
  • 56,000 tax cases pending overall in high courts.
• Indirect tax cases pending for a decade without hearing: 45.8%.
• Direct tax cases pending for a decade without hearing: 20.6%.
• Indirect tax claims pending in high court as of 2023-24: ₹2 trillion.
• Direct tax litigation pending: ₹5.6 trillion.

Impact on Businesses and Suggested Reforms

Pendency adversely affects smaller businesses due to limited resources to expedite cases. Judicial reforms and systematic case management practices are suggested to improve access to justice.

Government and Judicial Measures

• The government has raised the litigation threshold, aiming to reduce the number of cases.
• High courts disposed of more tax cases pre-pandemic due to fewer filings.
• Lack of tax-specific benches and specialist judges contribute to delays.

Challenges at Lower Levels

• Faceless appeals process at the National Faceless Appeal Centre (NFAC) has encountered technological challenges.
• Commissioner of Income Tax (Appeals) level faces significant backlog.
• Opportunity for the Income Tax department to devise a framework to address pendency effectively.

The text emphasizes the need for coordinated judicial and administrative reforms to manage the backlog effectively.