Today, On 10th July, Chief Justice Criticizes Income Tax, Supports Xerox, Emphasizing Trust in Courts for MNCs’ Job & Revenue Creation. The Supreme Court imposed a tax penalty for late filings, rejecting Xerox’s appeal regarding a 290-day delay. This decision emphasizes the importance of timely tax submissions.
New Delhi: The Supreme Court, On July 10, declined to hear an appeal by the income tax department against the Indian subsidiary of multinational giant Xerox, as the plea filed 290 days beyond the legally prescribed limit.
Chief Justice of India DY Chandrachud emphasized the importance of fairness in handling late-filed cases, particularly those involving revenue, stating,
“They (MNCs) invest in India, create jobs and revenue. They should be able to trust the courts in the country.”
He highlighted that delayed litigation by government departments negatively impacts India’s investment climate and the ease of doing business.
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The prescribed limitation period for filing appeals in the Supreme Court against high court judgments is a maximum of 60 days. Appeals filed beyond this period are subject to the court’s discretion. While the Supreme Court entertained delayed pleas in the past, such cases must provide a satisfactory reason for the delay.
As of July 2023, the finance ministry is involved in over 1.5 lakh court cases, making it the Union ministry with the highest number of ongoing litigations, predominantly related to taxes. Efforts to reduce pending tax disputes have been highlighted in various budgetary announcements.
In 2019, the finance ministry raised the threshold for filing appeals by the income tax department, the limit for appeals to the Income Tax Appellate Tribunal (ITAT) increased to Rs 50 lakh, for high courts to Rs 1 crore, and for special leave petitions (SLPs) and appeals to the Supreme Court to Rs 2 crore. Consequently, disputes involving amounts below these thresholds are not eligible for appeals by the department.
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Despite these measures, the income tax department continues to file numerous late cases. In January 2024, the Supreme Court expressed shock when the department filed an appeal that was four years overdue.
The case involved the taxation of Xerox’s marketing expenses for the 2008-09 assessment year, specifically whether these expenses constituted an international transaction. Both the Income Tax Appellate Tribunal (ITAT) and the Delhi High Court ruled against the income tax department, dismissing its contention.