Litigation is all about the convincing the authorities about the compliance of law on facts of each case. This begins with clear understanding of the facts and clear understanding of the relevant provisions of the applicable laws. Normally, the most litigation is on account of possible different interpretations of the law. In other words, the ambiguities in the provisions of law results into litigation. In some cases, the discretionary powers given in the law to the revenue authorities also leads to dispute. For interpretation of the provisions of law, the settled legal precedents play a major role. However, on a given issue, the legal precedents may be available in favour of the assessee as well as against the assessee. Sometimes, same issue may be decided differently by different legal forum. Therefore, the fact of ‘convincing’ the authorities is important in the litigation.
Reading:
Before, starting the reply to any show cause notice or preparing appeals, the show cause notice (‘SCN’) or in Order in Original or Order in Appeal (‘Orders’) should be read fully, including the documents relied upon by the authorities. It is very important that the demand or the values computed by the authorities need to be confirmed for its correctness by the assessee. This is because, in many cases, there shall be error in this computation itself.
After reading the SCN or Orders carefully, it is important to pinpoint the non-compliance alleged in the SCN or concluded in the Orders and the relevant provisions of the Act and the Rules made thereunder. Further, the basis which has lead to the said allegation or conclusion should also to be understood clearly. Generally, there should not be any allegation in the SCN or conclusion in the Orders without any basis.
Thus, there will be a gist of alleged non-compliances of relevant provisions of law and the actions or inactions of the assessee which has lead to such alleged non-compliances.
The relevance of the legal supports or the legal precedents adduced by the authorities to the issues on hand should be verified.
There may be a situation where facts in the SCN and Orders is correct, but the provisions of law applied is incorrect or facts itself is held to be incorrect or even legal supports or precedents relied upon are distinguishable in the given facts and circumstances.
Once the alleged contraventions, the relevant provisions, the legal supports and legal precedents relied thereon in the SCN or the Orders are understood, the counter arguments are to be framed up.
Facts of the Case:
For replying any show cause notice or for filing any appeal, it is important to understand the facts of the case very clearly. The facts to be stated in the reply or appeal in a crisp and clear manner. All the relevant facts pertaining to issue on hand should be stated chronologically. While stating the facts the reference to the provisions of law or case laws are to be avoided. It should not also have any conclusion on the compliance of law.
It should be a pure statement of facts, bonafide action of the assessee. The statement of fact should clearly bring out sequence of actions which have lead to issue of show cause notice or appeal. The statement of facts should not be too long but to be focused on the given issues so that after reading, the authorities should know the reasons which has lead to dispute.
The facts should fully cover the basis on which allegations are made in the SCN or conclusions arrived in the Orders.
Grounds of Appeal:
In case of appeal, the grounds of appeal are to be submitted. For having an understanding at glance, it is better if grounds with brief in one or two sentences are mentioned in this part. The detailed submission is to be in the next part. In the grounds of appeal part, all the grounds whether it is on question of law or on question of facts are to be stated including on interest and penalty, if any. It should be noted that no new grounds on fact can be raised at appeal level unless the appellate authority allows the same. It is also to be seen whether the conclusions in the order are within the scope of the SCN.
Detailed Submission:
In the detailed submissions, for each ground, under the respective grounds of appeals, the relevant provision of law is to be discussed first. What the assessee is expected to do under the relevant law is to be clearly brought out. In many cases, to interpret the provisions of law, the legal precedents and legal supports like clarifications issued through Circulars, FAQs would be available. Even the finance minister’s speech while passing the bill, preambles may be useful to interpret the intention of the law makers. After the discussion on the requirements of legal compliance, the facts of the assessee in compliance of the relevant law is to be explained. All the documents in support of the facts need to be referred to and the same shall be annexed as attachment. There should not be anything to be left out which is helpful in establishing the compliance.
Many times, the technical literature, opinion from experts, trade parlance shall add to the submissions. The documentary evidences, samples, pictures may also be useful to substantiate the claim.
To support the claim of compliance, the decided case laws are very useful. Before referring to any case law, it is important read the case law completely. Based on the synopsis of the case law, the reliance should not be placed. The points to be considered while relying on particular case law are (i) the legal forum (ii) similar facts and circumstances (iii) current status of the case and (iv) status of the provision of law during relevant period in the case law. It is also important to know the case laws against, so that proper argument can be prepared to distinguish the same. The binding nature of the caselaw is also to be considered before relying upon. The relevant portion of the reasoning and conclusions in the case laws must be reproduced and copy of such case laws are to be attached as exhibits. It is important that the discussion under each ground is not overlapping and it gives the reader a direction towards conclusion with clarity. At the end of the submission for each ground, conclusion should be given.
Prayer:
After the detailed submissions for each ground, prayer seeking the relevant relief should be made.
General:
The language should be simple and unambiguous. It should not be too lengthy submission, so that focus should not get lost. Number of case laws relied upon also should not be too much. All the documents relied upon must be annexed as exhibits. In case of delay in replying to SCN or filing of appeals, condonation of delay is to be submitted stating appropriate reason for delay and prayer for condonation. The other formalities such as indexing, page numbering, line space, paper size in making the paper book is to be strictly adhered to.
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