Typically, the tax dispute first arises before the tax authority, which acts in a quasi-judicial manner. It acts as both investigator and adjudicator. The powers of the first appellate body are co-extensive and coterminous to the primary tax authority. The second appellate forum is also a quasi-judicial one – the Income Tax Appellate Tribunal (ITAT), where the appeal is heard in a manner like that of a civil court. The next two appellate fora, the High Court and the Supreme Court, are formal civil courts that deal with only those matters that involve a substantial question of law.

Under indirect tax, the court of first instance for tax disputes is the Customs Excise and Service Tax Appellate Tribunal (the Tribunal). The Tribunal adjudicates disputes in relation to questions of law, questions of fact or both. Taxpayers can file an appeal before the Tribunal without any restriction; however, for the tax authorities, the CBIC prescribes monetary limits of tax demand, from time to time, exceeding which a case can be appealed before the Tribunal.

If either party to the appeal is not satisfied with the order of the Tribunal, then an appeal can be preferred before the jurisdictional High Court; however, such appeal can only be preferred if the issue involves a question of law – in other words, if an issue is related to a question of fact, then the order of the Tribunal is final. Further appeal against the order of the High Court can be preferred before the Supreme Court, the highest court in India. The order passed by the Supreme Court is final and binding upon both the parties and no further appeal can be preferred against the same.