TaxTMI 
TaxTMI 
TaxTMI 
We have heard of tax rates going up in indirect taxes often in the past but reduction in rate is a rare phenomenon. The Entire Team of GST Council and CBIC have worked tremendously to make this possible in the recently concluded meeting on 03/09/2025. Honourable Prime Minister has hinted that this reform shall continue which gives us huge scope on improvement in managing the GST across India.
The biggest challenge in GST law is the litigation and it is expected that a minimum of four lakhs cases are likely to be filed in GSTAT in the next few months. It will take minimum three to four years to clear this backlog whereas cases are bound to pile up in the GSTAT, unless the focus is on reduction in litigation at adjudication as well as first appeal level itself.
Two strong suggestions are made on behalf of the entire taxpayers of this country to reduce litigation significantly so as to enable taxpayer to focus on business and the tax officials to focus on improving the tax collection.
The first suggestion is to enhance the basic exemption for supply of service to 50,00,000/ per annum and for supply of goods to 1,00,00,000/ per annum. This is strongly suggested as the old limit has seen more than eight years and considering the inflation and other business factors, the suggested limits are very fair. For a hunter of fish, it makes sense to fetch fishes with more weight than to fetch larger number of small fishes. In order to leave small fishes and to focus on bigger ones, we must spare ponds having only small fishes. The enhancement in basic exemption as suggested above may be implemented from the next financial year.
Taxpayers suffer a lot on cases being decided by improper application of section 74, 129 and 130. There are amble number of high court decisions on this count across all jurisdictional high courts. This is high time that CBIC may come with strong instructions to field formation to focus on proper application of the correct legal provisions, in order to ensure that the orders passed at adjudication level as well as first appeal level are not set aside and quashed later by GSTAT, as GSTAT is operational now.
The next suggestion is to review section 17(5) on ITC and either abolish this sub section in total or make necessary modifications to ensure that ITC is denied only with proper logic. The section 17(5) is against the principles of seamless flow as well as the denial is only on genuine business expenses which are incurred in furtherance of business or in line with the tradition of the business. Cases covered on building construction or works contract are the huge suffers as in many cases, the expenses are revenue in nature which does not required any reversal of ITC but the officers pass orders denying ITC incorrectly. Due to lack of awareness, many taxpayers end up paying the demanded amount.
The first leg of journey that began on 01/07/2017 has seen more that eight years without GSTAT in place. Now the second leg of journey has already started and huge expectations are there from the taxpayers that there will be drastic reduction in litigation, once the benches start passing appropriate orders. This is high time that GST Council as well as CBIC must put their efforts in ensuring that only a lesser number of orders passed under first appeal level or revision level reaches the GSTAT to ensure that over the period of next three to four years, GSTAT is in a position to dispose the cases within one year from the date of filing the respective appeal.
This will happen when the Government is determined to reduce litigation by considering the above few suggestions.