Compliance and administrative costs of tax litigation

The compliance cost for the taxpayer and the administrative cost for tax authorities in pursuing this litigation is calculated in terms of money and the time spent. For taxpayers, this cost includes legal counsel and consulting fees, administrative costs for following up and tracking appeals, and the managerial time spent on dealing with tax authorities and appellate channels in pursuing these appeals. For tax authorities, there are costs incurred on payments to tax counsels, deployment of senior tax department officers to represent it before the tax tribunals, and payments to senior counsels for taking up cases in high courts or the Supreme Court. These costs also include the cost of time and effort spent on briefing these counsel, and documenting, preserving, and tracking case records over the years of litigation, as well as office space occupied for maintaining relevant records, etc. It also eats away the time that tax authorities can spend on other functions, such as taxpayer services.