Just a moment...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 TMI Notes - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Law:
---- All Laws----
  • ---- All Laws----
  • Benami Property
  • Bill
  • Central Excise
  • Companies Law
  • Customs
  • DGFT
  • FEMA
  • GST
  • GST - States
  • IBC
  • Income Tax
  • Indian Laws
  • Money Laundering
  • SEBI
  • SEZ
  • Service Tax
  • VAT / Sales Tax
Types:
---- All Types ----
  • ---- All Types ----
  • Act Rules
  • Case Laws
  • Circulars
  • Manuals
  • News
  • Notifications
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
RelevanceDefaultDate
    Retrospective Cancellation of GST Registration: Analysis of Delhi High Court’s Ruling in 2024 (1) ...
    Case LawsIncome Tax
    Deciphering Tax Implications on Capital Reduction: Navigating the Complexities of Section 115QA in I...
    Case LawsCustoms
    Navigating Regulatory Compliance: Analysis of a CHA License Revocation and Restoration Case
    Case LawsIncome Tax
    Interpreting Section 153A: ITAT Delhi's Stand on Incriminating Material in Assessments: Assessments ...
    Case LawsIncome Tax
    Reaffirming the Bounds of Section 153A: Analysis of Delhi High Court's Approach: Assessment post sea...
    Case LawsIncome Tax
    Navigating Rectification and Revised Returns: Legal Insights from ITAT Bangalore's Ruling
    Case LawsIncome Tax
    Mutual Fund Gains and Deemed Dividends: Analyzing the Delhi High Court's Landmark Judgment
    Case LawsCustoms
    Judicial Scrutiny of Customs Seizure and Redemption under the Indian Legal Framework: Foreign Curren...
    Case LawsCustoms
    The Duty of Diligence: Understanding the Legal Implications for Customs Brokers
    Case LawsCustoms
    Legal Analysis of a Customs Appeal Case Involving Mandatory Pre-Deposit Requirements
    Case LawsCentral Excise
    Legal Elucidation of Homeopathic Product Classification under Central Excise Tariff Act: Medicament ...
    The Supreme Court's In-Depth Ruling on Corporate Insolvency: Legal Implications Explored
    Money Laundering and Bail: Supreme Court's Interpretation of Section 45 PMLA
    Case LawsIncome Tax
    Reassessing Income under Section 147 Post-Quashment of Sections 153A/153C: The Waiver of Limitation ...
    Case LawsIncome Tax
    Section 153A of the Income Tax Act: A Critical Analysis of the Supreme Court's Interpretation in the...
    The Intersection of Politics, Corruption, and Judicial Review: A Case Study: Validity of order of Hi...
    Case LawsIncome Tax
    Clarity and Precision in Tax Penalty Proceedings: Insights from a High Court Judgment
    NCLAT's Authority to Recall Judgments: The Intersection of Tribunal Authority and Justice
    Detention and Release of Goods under CGST Act: Discrepancies in the CGST registration of the consign...
    The Detention of Goods under GST Law: Doubts regarding the genuineness of the consignee
❯❯
MaximizeMaximizeMaximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

    +

    Are you sure you want to delete "My most important" ?

    NOTE:

    Notes
    Showing Results for :
    Reset Filters
    Results Found:
    Show All SummariesHide All Summaries
    Case LawsGST
    Show AI Summary
    Retrospective GST cancellation: court limits retroactive effect, stressing objective grounds and hearing rights for taxpayers.
    The court held that retrospective cancellation of GST registration cannot be applied mechanically and must be supported by objective grounds; mere non-filing does not automatically justify cancelling registration for earlier compliant periods. Procedural fairness requires an opportunity of being heard before imposing retrospective cancellation, and the temporal effect of cancellation should align with the taxpayer's cancellation application rather than an earlier retrospective date, given potential impacts such as denial of input tax credit.
    Case LawsIncome Tax
    Show AI Summary
    Capital reduction transactions treated outside buyback levy when executed pre amendment; buyback tax not attracted.
    The Tribunal held that the capital reduction did not qualify as a buyback for purposes of the buyback tax provision because the transaction was completed before the amendment that broadened the provision's definition; relying on precedents distinguishing capital reduction from buybacks, the Tribunal rejected the revenue's tax avoidance contention and emphasised that the transaction date governs applicability of the amended definition.
    Case LawsCustoms
    Show AI Summary
    Non transferability of CHA license: unauthorized sub letting triggered revocation, later reconsidered due to appellant hardship.
    A licensed CHA was found to have contravened CHALR by effectively transferring operational control to a Mumbai office through a Power of Attorney, breaching non transferability, CHA obligations to obtain authorisations and exercise due diligence, and supervision duties over employees; the firm was held accountable where the licence was used for financial gain.
    Case LawsIncome Tax
    Show AI Summary
    Incriminating material requirement: Section 153A assessments require material specific to the assessee, not unrelated third party statements.
    Assessments following search operations must be grounded on incriminating material specifically linked to the assessee; material or statements derived from separate or third party search proceedings cannot, alone, serve as incriminating material against an unrelated assessee. Absent assesseespecific incriminating material, additions and disallowances in such assessments lack justification and cannot properly form the basis of adverse tax adjustments.
    Case LawsIncome Tax
    Show AI Summary
    Admissibility of search statements: corroborative evidence required before additions in post-search tax assessments.
    Statements recorded under Section 132(4) have evidentiary value but cannot alone justify additions under Section 153A; corroborative material discovered during the search is required, and taxpayers must be afforded the opportunity to cross-examine and rebut adverse statements before assessments under Section 153A are finalized.
    Case LawsIncome Tax
    Show AI Summary
    Rectification under Section 154: procedural lapses should not bar correction of apparent errors in tax returns.
    Interpretation of Section 154 treats misplacement of figures in an original return as a mistake apparent from the record, qualifying for statutory rectification; a revised return filed as a genuine corrective attempt may be recognised despite procedural lapses, and tax authorities should balance procedural compliance with the need to remedy apparent errors and assist taxpayers in claiming corrections.
    Case LawsIncome Tax
    Show AI Summary
    Classification of Mutual Fund Gains: affirmed as capital gains, clarifies tests distinguishing business income and scope of deemed dividends.
    Classification of gains from mutual fund redemptions turns on intent, transaction frequency, holding period, accounting treatment and the factual matrix to determine capital gains versus business income. Distinguishing genuine capital contributions from transactions that function as distributions is essential before treating receipts as deemed dividends; absent characteristics of a loan or advance against profits, capital infusions should not be recharacterised as dividends.
    Case LawsCustoms
    Show AI Summary
    Redemption under Customs Act: deemed payment recognized as exercising the redemption option despite pandemic-related delay.
    The judgment analyzes the redemption option under the Customs Act allowing fine payment in lieu of confiscation, focusing on the prescribed timeframe and on how actions by a petitioner while seized currency remains with the department can constitute exercise of that option. Considering pandemic-related disruption, the court applied purposive interpretation and concluded the department's refusal to accept a deemed payment was unjustified and that the petitioner's steps effectively availed the statutory redemption alternative.
    Case LawsCustoms
    Show AI Summary
    Duty to exercise due diligence: strict licensing compliance can justify administrative revocation and security forfeiture for brokers.
    The headnote focuses on the duty of diligence under the CBLR 2018, identifying failures to advise clients, to verify information, and to supervise employees as breaches that can attract administrative penalties against a customs broker's licence. It also confirms that regulatory action may be initiated at the broker's registered location regardless of where the underlying transactions occurred, and highlights the need for compliance programs, client advisory practices, and employee training.
    Case LawsCustoms
    Show AI Summary
    Mandatory pre-deposit requirement: payments made during investigation can be counted toward the appeal pre-deposit, protecting access to appeal.
    Interpretation of the pre-deposit requirement focuses on counting payments made during investigation toward the mandatory deposit for appellate admissibility; authorities must account for investigation-stage deposits when assessing compliance to avoid denying appeal rights on technical grounds and to give effect to substantive payment.
    Case LawsCentral Excise
    Show AI Summary
    Medicament classification confirmed for a homeopathic hair oil based on ingredients and ordinary perception under tariff law.
    Classification of a homeopathic hair oil as a medicament depends on the ingredients test and the common parlance test. The Tribunal treated AHAHO as a medicament because it contained recognised homeopathic constituents and was labelled under the homeopathic schedule; the Supreme Court affirmed that those medicinal ingredients and the product's perception as a homeopathic medicine outweigh cosmetic imagery and over the counter availability, and that tariff amendments did not change the classificatory result.
    Case LawsIBC
    Show AI Summary
    Resolution applicant eligibility under insolvency law can be disqualified by trust and company conflicts affecting CIRP participation.
    The judgment finds that valuation disclosures and newspaper publication of Form G met CIRP regulatory requirements despite website upload issues; materially revised resolution plans must be placed before the Committee of Creditors or are procedurally irregular; commercial wisdom of the CoC governs differential treatment of creditors subject to legal compliance; promoter settlement offers and Section 12-A applications require demonstrable CoC consideration; and resolution applicant eligibility is governed by Trusts Act and Companies Act conflicts, not by assumed disqualifications absent specific disqualification orders.
    Case LawsPMLA
    Show AI Summary
    Section 45 PMLA bail standard: stringent satisfaction required on non guilt and low risk of reoffence before granting bail.
    Interpretation of Section 45 PMLA requires a stringent bail standard: courts must be satisfied on reasonable grounds that the accused is not guilty and is unlikely to commit an offence while on bail. An Enforcement Directorate investigation under the PMLA is distinct from predicate offence inquiries, so completion of predicate investigations does not substitute for the specific assessment required under the PMLA; courts must therefore evaluate the seriousness of allegations and the stage and character of the ED probe when considering bail.
    Case LawsIncome Tax
    Show AI Summary
    Reopening assessments under Section 147 requires proper review when Section 150(2) waiver is contested, not clarification.
    Reopening of assessments under Section 147 concerns whether the Assessing Officer has a reason to believe that income has escaped assessment and is subject to procedural safeguards including issuance of a statutory notice. Where prior assessments made in consequence of a search under provisions for search-based assessment were quashed, the question arises whether fresh proceedings may be initiated for income not arising from incriminating material found in the search and whether the limitation period can be waived under Section 150(2) to permit issuance of a notice for reassessment.
    Case LawsIncome Tax
    Show AI Summary
    Scope of assessment post-search: completed assessments permit additions only from incriminating material found during searches.
    The Supreme Court clarified that for assessments completed before a search, the Assessing Officer's power to reassess within the retrospective period is constrained: any additions in such completed assessments must be based on incriminating material discovered during the search, thereby limiting use of search powers to matters tied to the unearthed evidence and preventing expansion of assessments on unrelated material.
    Case LawsPMLA
    Show AI Summary
    Judicial oversight of criminal investigations must be cautious to avoid unwarranted de novo probes that disrupt investigative progress.
    The commentary critiques a High Court-ordered de novo investigation into recruitment corruption, treating such measures as extraordinary remedies that should not unsettle substantial prior investigative work. It stresses judicial discipline and adherence to precedent, warns against collusion and political interference in inquiries, recognises expanded locus standi for third parties in complex cases, affirms confidentiality of confession material with limited exceptions, and outlines the Enforcement Directorate's powers in probing and recovering proceeds of money laundering.
    Case LawsIncome Tax
    Show AI Summary
    Specificity in penalty notices: requirement to identify exact charge prevents defective proceedings and safeguards procedural fairness.
    Applicability of penalty for concealment or furnishing inaccurate particulars requires the assessing officer to specify the exact limb under which proceedings are initiated; absence of that specificity renders the penalty notice defective, undermines procedural fairness, and justifies setting aside the penalty, thereby obliging tax authorities to adhere to precise notice requirements when invoking penal provisions.
    Case LawsIBC
    Show AI Summary
    Inherent jurisdiction to recall judgments affirms tribunals can correct proceedings tainted by procedural vitiation or jurisdictional defect.
    The tribunal recognised its inherent jurisdiction to recall judgments distinct from review, holding that recall is available where procedural vitiation, fraud, lack of jurisdiction or failure of natural justice renders a proceeding a nullity. Drawing on the tribunal rules analogue to residual civil-procedure power and higher-court authority, the tribunal treated recall as an incidental order to prevent abuse of process and to correct proceedings affected by jurisdictional defect or gross procedural lapse.
    Case LawsGST
    Show AI Summary
    Detention and release under Section 129: proper tax invoice and e way bill establish owner status and permit release.
    Where goods intercepted in transit show a proper tax invoice and a valid e way bill identifying the consignor/consignee, those documents establish ownership for purposes of Section 129 and direct application of the release provision applicable when the owner comes forward; documentary compliance thus determines which release regime applies where GST registration discrepancies are alleged.
    Case LawsGST
    Show AI Summary
    Detention of goods under GST: enforcement must assess consignee genuineness and documentary compliance before imposing penalties.
    Detention of goods in transit was contested where authorities suspected the consignee's genuineness despite production of a tax invoice and an E way bill; the Court directed that enforcement action distinguish between penalty provisions and alternative statutory mechanisms, require strict procedural fairness, assess documentary evidence and consignee identity, and remit the matter for fresh administrative consideration accordingly.

    TMI Notes

    Back

    All TMI Notes

    Showing Results for :
    Reset Filters
      No Records Found

      TMI Notes

      Back

      All TMI Notes

      whatsappJoin Channel
      Showing Results for : Reset Filters

      Introduction of concept of mediation and Advance Ruling System for Residents to reduce tax litigation and more clarity

      15 September, 2020

      Contents
      Plus +
      Summary
      Note

      Note

      -

      Bookmark

      Print

      Print

      2020 (9) TMI 496 - Supreme Court

      While decided an issue pertaining to AY 1976-77, honorable Supreme Court has wrote two postscript with the following note:

      We have been persuaded to write two postscripts on account of the backbreaking dockets which are ever increasing and as a move towards a trust between the Tax Department and the assessee, and we hope that both the aspects meet consideration at an appropriate level. [Para 21]

       

      Postscript 1:

      1. The Indian legal system is reeling under a docket explosion.

      The Government and public authorities are active contributories to this deluge. To top it, a number of litigations arise inter se the Government and its bodies and, thus, the only question, as stated in the beginning, is which pocket of the Government will be benefitted?

      2. The aforesaid position resulted in a judicial innovation with the Supreme Court passing orders in Oil and Natural Gas Commission & Anr. v. Collector of Central Excise [1991 (10) TMI 58 - Supreme Court] requiring that such cases must be referred to a Committee to be appointed by the Government to facilitate a resolution of such disputes and that no case should be filed without the approval of this Committee. This system was a failure as is apparent from the facts of the present case, where the SLP filed by the appellant-Corporation was initially dismissed with liberty to revive the same in case the High Powered Committee granted such a permission which was so granted in a meeting held on 14.08.2009. The said Committee discussed the legal ramifications, and in some way opined in favour of the appellant-Corporation, as is apparent from the discussion aforesaid. But the ball was again lobbed back into the Court to adjudicate the said issue rather than a resolution being reached. The result was only the revival of the appeal, and the consequent decision which has seen the light of the day only now.

      3. The aforesaid failure of the system resulted in the Supreme Court recalling its orders in the ONGC cases vide Electronics Corporation of India v. Union of India. [2011 (2) TMI 3 - Supreme Court].

      4. The Central Government and the State authorities have been repeatedly emphasising that they have evolved a litigation policy. Our experience is that it is observed more in breach. The approach is one of bringing everything to the highest level before this Court, so that there is no responsibility in the decision-making process – an unfortunate situation which creates unnecessary burden on the judicial system. This aspect has also been commented upon in a judgment of this Court in Union of India & Ors. v. Pirthwi Singh & Ors., [2018 (4) TMI 1586 - Supreme Court]   albeit between the Government and the private parties, where the question of law had been settled and yet the appeal was filed only to invite a dismissal. The object appears to be that a certificate for dismissal is obtained from the highest court so that a quietus could be put to the matter in the Government Departments. Undoubtedly, this is complete wastage of judicial time and in various orders of this Court it has been categorized as “certificate cases”, i.e., the purpose of which is only to obtain this certificate of dismissal.

      5. The 126th Law Commission of India Report titled ‘Government and Public Sector Undertaking Litigation Policy and Strategies’ debated the Government versus Government matters which weighed heavily on the time of the Courts as well as the public exchequer. This was as far back as in 1988. It was only in the year 2010 that the National Litigation Policy (for short ‘NLP’) was formulated with the aim of reducing litigation and making the Government an efficient and responsible litigant. Five (5) years later it reportedly saw a revision to increase its efficacy, but it has hardly made an impact. In the year 2018, the Central Government gave its approval towards strengthening the resolution of commercial disputes of Central Public Sector Enterprises (for short ‘CPSEs’)/ Port Trusts inter se, as well as between CPSEs and other Government Departments/Organisations. The aim was and is to put in place a mechanism within the Government for promoting a speedy resolution of disputes of this  kind, however it excluded disputes relating to Railways, Income Tax, Customs and Excise Departments. It has now been made applicable to all disputes other than those related to taxation matters. This was pursuant an order passed in The Commissioner of Income Tax (Exemptions) v. National Interest Exchange of India -SLP (C) Diary No. 35567 of 2019 [2020 (3) TMI 1250 - SC ORDER] by a bench of which one of us (Sanjay Kishan Kaul, J.) was a part.

      6. Insofar as non-taxation matters are concerned, the Administrative Mechanism for Resolution of CPSEs Disputes was conceptualised to replace the Permanent Machinery of Arbitration and to promote equity through collective efforts to resolve disputes. It has a two-tiered structure.

      7. At the first level, commercial disputes will be referred to the Committee comprising Secretaries of the Administrative Ministries/Departments to which the disputing parties belong and the Secretary, Department of Legal Affairs. In case the two disputing parties belong to the same Ministry/Department, the Committee will comprise Secretary of Administrative Ministry/Department concerned; the Secretary, Department of Legal Affairs and the Secretary, Department of Public Enterprises. If a dispute is between a CPSE and a State Government Department/Organisation, the Committee will comprise of the Secretary of the Ministry Department of the Union to which the CPSE belongs, the Secretary, Department of Legal Affairs and the Chief Secretary of the State concerned. Such disputes are ideally to be resolved at the first level itself within a time schedule of three (3) months, and in the eventuality of them remaining unresolved, the same may be referred to the Cabinet Secretary at the second level, whose decision will be final and binding on all concerned.

      8. We are of the opinion that one of the main impediments to such a resolution, plainly speaking, is that the bureaucrats are reluctant to accept responsibility of taking such decisions, apprehending that at some future date their decision may be called into question and they may face consequences post retirement. In order to make the system function effectively, it may be appropriate to have a Committee of legal experts presided by a retired Judge to give their imprimatur to  the settlement so that such apprehensions do not come in the way of arriving at a settlement. It is our pious hope that a serious thought would be given to the aspect of dispute resolution amicably, more so in the post-COVID period.

      9. In most countries, mediation has proved to be an efficacious remedy and here we are talking about mediation inter se the Government authorities or Government departments. India is now a signatory to the Singapore Convention on Mediation and we understand that a serious thought is being given to bring forth a comprehensive legislation to institutionalise mediation, in furtherance of this function to which India has committed itself.

      Postscript 2:

      10. We now turn to the issue of matters pertaining to CPSEs and Government authorities insofar as taxation matters are concerned,  because they are consistently sought to be carved out as a separate category of cases. One of the largest areas of litigation for the Government is taxation matters. The petition rate of the tax department before the Supreme Court is at 87%. - See ‘Economic Survey 2017-19 – Volume 1’ by the Department of Economic Affairs, Ministry of Finance, Government of India So, the question is can something be done about it?

      11. In our opinion, a vibrant system of Advance Ruling can go a long way in reducing taxation litigation. This is not only true of these kinds of disputes but even disputes between the taxation department and private persons, who are more than willing to comply with the law of the land but find some ambiguity. Instead of first filing a return and then facing consequences from the Department because of a different perception which the Department may have, an Advance Ruling System can facilitate not only such a resolution, but also avoid the tiers of litigation which such cases go through as in the present case. In fact, before further discussing this Advance Ruling System, we can unhesitatingly say that, at least, for CPSEs and Government authorities, there would be no question of taking this matter further once an Advance Ruling is delivered, and even in case of private persons, the scope of any further challenge is completely narrowed down.

      12. It is as far back as in 1971 that a report was submitted by the Direct Taxes Enquiry Committee under the Chairmanship of Dr. K.N. Wanchoo, recognising the need for providing Advance Ruling System, particularly in cases involving foreign collaboration. The aim was to give advance rulings to taxpayers or prospective taxpayers, which would then considerably reduce the Revenue’s workload and decrease the number of disputes. This finally resulted in a scheme of Advance Ruling being brought into effect in 1993, with the introduction of a new Chapter in the Income Tax Act, 1961 (hereinafter referred to as the ‘IT Act’). A quasi-judicial tribunal was established as the Authority for Advance Rulings (for short ‘AAR’) to provide certainty and avoid litigation related to taxation of transactions involving non- residents. The scope of the transactions on which an advance ruling can be sought from the AAR has gradually increased to now include both residents and non-residents, who can seek the same for issues having a substantial tax impact. Chapter XIX-B of the IT Act deals with advance rulings and it has been defined in Section 245N(a) of the  IT Act. These rulings are binding both on the Income Tax Department and the applicant, and while there is no statutory right to appeal, the Supreme Court has held in Columbia Sportswear Company v. Director of Income Tax Bangalore [2012 (8) TMI 105 - Supreme Court]  that a challenge an advance ruling first lies before the High Court, and subsequently before the Supreme Court. The advance ruling may be reversed in the event a substantial question of general public importance arises or a similar question is already pending before the Supreme Court for adjudication.

      13. The ground level situation is that this methodology has proved to be illusionary because there is an increasing number of applications pending before the AAR due to its low disposal rate and contrary to the expectation that a ruling would be given in six (6) months (as per Section 245R(6) of the IT Act), the average time taken is stated to be reaching around four (4) years!- See Deloitte Report on Advance Rulings in India: Delivering Greater Tax Certainty (Deloitte Tax Policy Paper 5, 2019)  There is obviously lack of adequate numbers of presiding officers to deal with the volume of cases. Interestingly, the primary reason for this is the large number of vacancies and delayed appointments of Members to the AAR. ibid In view of the time taken, the very purpose of AAR is defeated, resulting in the mechanism being used infrequently as is evident from the ever- increasing tax related litigation.

      14. We may notice a significant development in Section 245N of the IT Act. It was through Notification No.11456 dated 3.8.2000 that public sector companies were added to the definition of ‘applicant’, and in 2014, it was made applicable to a resident who had undertaken one or more transactions of the value of ₹ 100 crore or more.

      15. Insofar as a resident is concerned, the limit is so high that it cannot provide any solace to any individual, and we do believe that it is time to reconsider and reduce the ceiling limit, more so in terms of the recent announcement stated to be in furtherance of a tax friendly face-less regime!

      16. We may refer to the international scenario where there has been an incremental shift towards mature tax regimes adopting advance ruling mechanisms. The increase in global trade puts the rulings system at the centre-stage of a robust international tax cooperation regime. The Organisation for Economic Cooperation and Development (for short ‘OECD’) lists advance rulings as one of the indicators to assess trade facilitation policies, making it an aspirational international best practice standard. For example, Australia and New Zealand have a robust system of advance rulings wherein the decisions (which are public rulings affecting a large number of taxpayers) are given teeth by being made binding on the revenue authorities. New Zealand has gone a step further and innovated “status rulings” under which a taxpayer can apply to the Commissioner for a ruling on how a change in the law impacts an existing ruling.

      17. In the United States, there is a mechanism for the Treasury to authorise guidance in the form of revenue rulings, procedures and notices. The mechanism again, has been bolstered by subsequent practice and interpretations of the United States courts, where rulings have indicated that taxpayers may be penalised if they act inconsistently with legal interpretations set out in the revenue rulings, procedures or notices.

      18. Tax transparency has been a hallmark trait of the Swedish legal system. Swedish law requires public disclosure of ex ante tax administration such as advance rulings. Both the taxpayer as well as the Swedish Tax Agency can request an advance tax ruling, these rulings are published without information identifying the taxpayer that requested them. The Skatterättsnämnden, or the Council for Advance Tax Rulings is the Swedish Government agency which is vested with this power. The advance ruling system has played a crucial role in Sweden’s position as a country with one of the highest tax compliance rates in the world.

      19. The aim of any properly framed advance ruling system ought to be a dialogue between taxpayers and revenue authorities to fulfil the mutually beneficial purpose for taxpayers and revenue authorities of bolstering tax compliance and boosting tax morale. This mechanism should not become another stage in the litigation process.

      20. We, thus, consider it appropriate to recommend to the Central Government to consider the efficacy of the advance tax ruling system and make it more comprehensive as a tool for settlement of disputes rather than battling it through different tiers, whether private or public sectors are involved. A council for Advance Tax Ruling based on the Swedish model and the New Zealand system may be a possible way forward.

       


      Full Text:

      2020 (9) TMI 496 - Supreme Court

      Topics

      ActsIncome Tax