In the process of resolving tax disputes, the Central Government plays a critical role in ensuring that any modifications or provisions related to the Dispute Resolution Scheme are transparent, effective, and in compliance with the law. Section 245MA(5) of the Income Tax Act, 1961 provides an important mechanism to ensure that any notifications issued by the government regarding the Dispute Resolution Scheme are properly reviewed and subject to parliamentary oversight.

In this blog, we will discuss how the Central Government ensures that notifications related to dispute resolution are reviewed under Section 245MA(5), and why this provision is essential for maintaining accountability and transparency in the tax system.

Understanding Section 245MA(5)

Section 245MA(5) of the Income Tax Act requires that notifications issued by the Central Government under Section 245MA(3) and 245MA(4), which deal with the Dispute Resolution Scheme, be laid before each House of Parliament. This ensures that such notifications are subject to review by the Legislature, adding an important layer of oversight.

The main purpose of this provision is to guarantee that any changes or exemptions introduced in the Dispute Resolution Scheme are thoroughly examined and can be challenged or debated in Parliament, if necessary. This mechanism helps to maintain the transparency and fairness of the tax dispute resolution process.

Why Is Parliamentary Review Important?

1. Ensuring Accountability:
   • The requirement that notifications be laid before Parliament ensures that the Central Government is accountable for its actions in implementing the Dispute Resolution Scheme. Parliament has the right to scrutinize the provisions and raise any concerns if the changes or modifications do not align with the intended purpose of the tax law.
   • This review ensures that the Dispute Resolution Scheme remains fair, transparent, and in line with the broader principles of justice and equity.
2. Ensuring Transparency:
   • The review process under Section 245MA(5) promotes transparency by making sure that notifications issued by the Central Government are not only available to the public but also scrutinized by elected representatives. This helps ensure that no changes or provisions are introduced that could unfairly disadvantage taxpayers or create loopholes in the system.
   • By laying the notifications before Parliament, the government is compelled to make the details of the Dispute Resolution Scheme publicly accessible, allowing stakeholders to understand and respond to any new modifications or exemptions.
3. Preventing Arbitrary Changes:
   • The requirement for parliamentary review prevents arbitrary or sudden changes in the Dispute Resolution Scheme. If the Central Government were able to modify or introduce provisions without such oversight, it could lead to unpredictability in the dispute resolution process, potentially leaving taxpayers in uncertain situations.
   • By placing notifications under Parliamentary review, this process ensures that the changes are carefully evaluated, debated, and, if necessary, challenged before they come into effect.
4. Promoting Fairness:
   • The parliamentary review process promotes fairness by providing an avenue for public and legislative scrutiny. If any modification or exemption seems unfair or disproportionately impacts certain taxpayers, members of Parliament can raise objections or suggest amendments to ensure that the Dispute Resolution Scheme serves its purpose effectively and justly.
   • The oversight role also ensures that the Dispute Resolution Scheme remains accessible to all taxpayers and is not skewed to favor any particular group.

How Does the Central Government Lay Notifications Before Parliament?

1. Notification Issuance:
   • After the Central Government issues a notification under Section 245MA(3) or 245MA(4) regarding the Dispute Resolution Scheme, the notification must be formally laid before each House of Parliament. This typically happens soon after the notification is issued in the Official Gazette.
2. Review and Debate in Parliament:
   • Once the notification is laid before Parliament, it is subject to review by members of the Lok Sabha (the House of the People) and the Rajya Sabha (the Council of States). Parliamentary committees may also be involved in examining the notification if necessary.
   • Members of Parliament can debate the provisions and modifications introduced in the notification and raise questions about how they may impact the tax system or taxpayers.
3. Parliamentary Approval or Rejection:
   • While the Central Government has the authority to issue these notifications, the parliamentary review provides the legislature with an opportunity to approve or reject the notifications.
   • If a notification is found to be unsatisfactory or problematic, members of Parliament can express their concerns, propose amendments, or even reject the notification. In some cases, the notification may be sent back to the Central Government for further revision before it can be enacted.

What Happens If Parliament Rejects a Notification?

If Parliament rejects a notification laid under Section 245MA(5), the Central Government may be required to revise or withdraw the changes. This ensures that the Dispute Resolution Scheme remains aligned with public interest and maintains its credibility.

While the Central Government retains the power to issue these notifications, Parliament’s oversight guarantees that such power is exercised responsibly and with full consideration of its potential impact on taxpayers and the tax system.

Conclusion

Section 245MA(5) plays a crucial role in ensuring the accountability and transparency of the Dispute Resolution Scheme. By requiring that notifications issued by the Central Government be laid before Parliament, the provision ensures that the legislative body has an opportunity to scrutinize and review the modifications or exemptions to the tax dispute resolution process.

This parliamentary review mechanism promotes fairness, prevents arbitrary changes, and allows the Dispute Resolution Scheme to be subject to open debate. It ultimately ensures that the scheme remains just, effective, and in the best interest of taxpayers and the broader tax system.

For more information and related blogs, click here.

---

Additional Resources

Learn more about Tax Provisions on the official Income Tax India website.

Want to consult a professional? Contact us: 09463224996

For more information and related blogs, click here.