By Shivanand Pandit
Describing the staggering pendency as a “major problem” afflicting courts and tribunals, Chief Justice of India B. R. Gavai recently highlighted that disputes amounting to an astounding ₹6.85 lakh crore are still awaiting resolution before the Income Tax Appellate Tribunal (ITAT). Commending the Tribunal for its significant progress in reducing the number of pending cases from 85,000 to 24,000 in the past five years, he nonetheless expressed concern that matters involving a sum equivalent to more than 2% of India’s GDP remain unresolved. Justice Gavai stressed the urgency of undertaking comprehensive reforms and modernisation measures within the ITAT to bolster its credibility, transparency, and efficiency.
The Chief Justice underscored the need for transparent appointment processes, well-structured tenures that allow members to gain specialised expertise, and a strong focus on consistency and accountability in decision-making. He identified conflicting rulings as a pressing issue, cautioning that inconsistency in judgments undermines legal certainty and public trust in the institution. Justice Gavai urged the introduction of systematic induction and continuous education programmes to refine adjudicatory competence and minimise divergences in interpretations.
Emphasising the importance of institutional strengthening, he advocated the establishment of mechanisms such as special benches and internal references to promptly address conflicting decisions. He further called for a stable and efficient administrative framework, including a dedicated secretariat, adequate registry staff, and improved control over infrastructure and staffing, to ensure the uninterrupted functioning of judicial processes. According to the CJI, such multi-dimensional reforms are indispensable for transforming the ITAT into a more robust, transparent, and efficient adjudicatory body capable of meeting the demands of modern tax administration.
Endless Tax Wars
When the Karnataka High Court finally disposed of a tax case involving Texas Instruments in 2020, the American chipmaker had already waited a long time — precisely 3,403 days — for the verdict. The ruling, which favoured the company, took almost a decade to arrive, but such delays are far from uncommon in India. According to an analysis of more than 320,000 tax disputes filed between 2000 and 2021 across 23 of 25 high courts, as many as 14,858 cases took between 10 and 15 years to conclude, while another 1,890 cases dragged on for over 15 years.
These inordinate delays stem from an overburdened judiciary, unrealistic revenue targets that fuel indiscriminate departmental litigation, and a glaring absence of case prioritisation. To break this cycle and expedite dispute resolution, sweeping systemic reforms are essential — mandating more frequent hearings, curbing adjournments, enforcing strict timelines for every stage, limiting oral arguments, and compelling greater accountability and cooperation from all parties involved.
Among the various tax categories, income tax disputes constitute the largest share of cases that take over a decade to resolve — such as the Texas Instruments case — followed by matters related to sales tax, trade tax, and excise duty. Income tax cases tend to be more complex and therefore take longer to adjudicate. Moreover, the absence of a Goods and Services Tax Appellate Tribunal (GSTAT) has pushed many indirect tax matters to high courts, forcing tax benches to juggle both direct and indirect tax disputes. With the GSTAT set to commence hearings in a phased manner, it is expected to ease the burden on overworked courts and lead to a marked improvement in case disposal and pendency rates.
Even after the introduction of the GST in 2017, legacy indirect tax cases such as those involving sales tax and excise duty have continued to occupy judicial bandwidth. Defunct taxes have also lingered in litigation — for instance, the wealth tax was abolished in 2016–17, yet related cases were still being resolved as late as 2022. Similarly, estate duty disputes continued in courts even in 2018, over three decades after its abolition in 1985.
Between 2009 and 2019, the median time for case disposal increased sharply — by over 90% for income tax cases and by an astonishing 200–400% for sales, trade tax, and excise duty matters. This escalation likely reflects the growing complexity of tax issues during the decade, spurred by retrospective amendments, transfer pricing disputes, and constitutional challenges requiring deeper judicial examination. The persistence of pre-GST tax disputes, despite higher monetary thresholds for filing appeals, has further stretched court timelines. The government has raised these thresholds to ₹60 lakh for the Income Tax Appellate Tribunal, ₹2 crore for high courts, and ₹5 crore for the Supreme Court in an effort to curb unnecessary litigation. While grouping similar cases for disposal may seem efficient, it often results in further delays due to variations in facts or the unavailability of multiple advocates. A more effective approach would be to decide a “lead” case first and allow related cases to follow its precedent. Repeated adjournments remain one of the biggest contributors to India’s lengthy litigation cycles. However, with the adoption of mandatory e-filing, real-time case tracking dashboards, and strict time-bound disposal norms, high court pendency could be reduced significantly — without compromising fairness or due process.
Persistent delays in tax litigation represent one of India’s most deep-rooted structural challenges—one that erodes revenue collection, dampens business confidence, and strains the credibility of the legal system. The magnitude of this issue is staggering, and the numbers only hint at the larger malaise within India’s tax dispute mechanism. Many high courts continue to operate without specialised tax benches, while frequent judicial transfers and chronic vacancies exacerbate the backlog, causing hearings to drag on for years. Even reform initiatives designed to modernise the system—such as the faceless appeal mechanism launched in 2020—have encountered considerable implementation difficulties and procedural bottlenecks.
The consequences of these prolonged delays ripple across the entire economy. Small and medium-sized enterprises suffer the most, as extended legal battles deplete their financial and managerial resources, hinder business operations, and make it harder to obtain credit. For global investors, the spectre of never-ending tax investigations and litigation creates uncertainty and acts as a deterrent to investing in India—despite its position as the world’s fastest-growing major economy. The efficiency of dispute resolution, therefore, is as important as the fairness of the process. When trillions of rupees remain tied up in unresolved cases, the issue transcends judicial inefficiency and becomes a pressing economic concern.
Progress demands Reform — Now
Addressing this challenge calls for a comprehensive mix of institutional strengthening and procedural reform. To start with, high courts must establish more dedicated tax and commercial benches staffed with judges who possess specialised knowledge in taxation and commercial law. Yet, this must be accompanied by a broader enhancement of judicial capacity—otherwise, diverting limited personnel to tax cases may inadvertently slow progress in other critical areas of law. Simultaneously, the government should focus on simplifying and rationalising the dispute-resolution architecture below the level of the high courts, ensuring that cases are resolved at the earliest possible stage. Strengthening tax tribunals with adequate infrastructure, manpower, and technical expertise is vital to prevent routine cases from escalating unnecessarily. The system should also institutionalise a time-bound framework for clearing decade-old cases, ensuring that justice is not perpetually deferred.
A substantial portion of tax litigation originates from the revenue department’s aggressive assessment and enforcement practices, often driven by unrealistic collection targets. This adversarial approach breeds avoidable disputes. With the introduction of the revamped Income-tax Act from the next financial year, there is an opportunity to foster greater transparency and reduce friction between taxpayers and authorities. However, the success of this reform will hinge largely on how tax officers interpret and apply the law in practice.
The goal is not to offer undue leniency to tax evaders but to protect honest taxpayers from being trapped in a cycle of endless litigation. If the mounting backlog remains unaddressed, it could steadily erode investor trust and impede India’s aspirations of being a reliable, rule-based economy. Therefore, clearing existing tax disputes and preventing their future accumulation is not merely a question of judicial efficiency—it is an economic imperative essential for sustaining India’s growth momentum and reinforcing its image as a fair and predictable investment destination.
