Govt to set up panels to resolve cross-border taxation disputes

MUMBAI: The government plans to set up eight panels consisting of senior income-tax officials to quickly resolve disputes over cross-border taxation.

The 2009 Budget had said that a collegium of commissioners would be established for resolving tax disputes between India’s tax authorities and multinational companies. The rules for this were framed and subsequently announced in a notification issued three days ago.

The panel of commissioners is expected to consider appeals from aggrieved tax payers within a month of receiving the draft assessment order. The panel’s decision is binding on the Income-tax (IT) department, which is not allowed to appeal against the order before the I-T Appellate Tribunal. However, the tax payer is free to do so. The panel has the power to call for fresh evidence.

The panels will be set up in Delhi, Mumbai, Ahmedabad, Kolkata, Chennai, Hyderabad, Bangalore and Pune. The Mumbai panel will have jurisdiction over Mumbai, the rest of Maharashtra (except Pune), Goa, Madhya Pradesh and Chattisgarh.

The whole exercise is driven by the need to ensure that tax cases should not be prolonged beyond an acceptable period. At present, a dispute can take as long as 20 years to resolve.

Currently, dispute resolution follows a long and circuitous route. Starting with the commissioner (Appeal), the dispute moves to the first appellate authority and then to the IT Appellate Tribunal before it reaches the High Court and Supreme Court. The panel of commissioners are expected to bring down the number of cases between the tax payer and the IT department. According to the IT department, over Rs 2,00,000 crore is locked up at various stages of disputes.