TIOL-DDT 2739
07 12 2015
Monday

THE Committee headed by the Chief Economic Adviser Dr. Arvind Subramanian on Possible Tax rates under GST has submitted its Report to the Finance Minister.

- On the RNR, the Committee's view is that the range should be between 15 percent and 15.5 percent (Centre and states combined) but with a preference for the lower end of that range.

- On structure, in line with growing international practice and with a view to facilitating compliance and administration, India should strive toward a one-rate structure as the medium-term goal.

- Meanwhile, the Committee recommends a two-rate structure. In order to ensure that the standard rate is kept close to the RNR, the maximum possible tax base should be taxed at the standard rate. The Committee would recommend that lower rates be kept around 12 per cent (Centre plus states) with standard rates varying between 17 and 18 per cent.

- It is now growing international practice to levy sin/demerit rates—in the form of excises outside the scope of the GST--on goods and services that create negative externalities for the economy.

- This historic opportunity of cleaning up the tax system is necessary in itself but also to support GST rates that facilitate rather than burden compliance.

- The GST also represents a historic opportunity to rationalize the tax system that is complicated in terms of rates and structures and has become an "Exemptions Raj,” rife with opportunities for selectivity and discretion. Tax policy cannot be overly burdened with achieving industrial, regional, and social policy goals; more targeted instruments should be found to meet such goals, for example, easing the costs of doing business, public investment, and direct benefit transfers, respectively; cesses should be reduced and sparingly used. Another problem with exemptions is that, by breaking up the value-added chain, they lead in practice to a multiplicity of rates that is unpredictable, obscured, and distortionary.

- The rationalization of exemptions is especially salient for the centre, where exemptions have proliferated. Indeed, revenue neutrality for the centre can only be achieved if the base for the centre is similar to that of the states (which have fewer exemptions - 90 products versus 300 for the center). If policy objectives have to be met, instruments other than tax exemptions such as direct transfers could be deployed.

- The Committee's recommendations on rates summarized in the table above are all national rates, comprising the sum of central and state GST rates. How these combined rates are allocated between the centre and states will be determined by the GST Council. This allocation must reflect the revenue requirements of the Centre and states so that revenues are protected. For example, a standard rate of 17% would lead to rates at the Centre and states of say 8 percent and 9 percent, respectively. The Committee considers that there are sound reasons not to provide for an administration-complicating "band” of rates, especially given the considerable flexibility and autonomy that states will preserve under the GST (including the ability to tax petroleum, alcohol, and other goods and services).

- Implementing the GST will lead to some uncharted waters, especially in relation to services taxation by the states. Preliminary analysis in this report indicates that there should not be large shifts in the tax base in moving to the GST, implying that overall compensation may not be large. Nevertheless, fair, transparent, and credible compensation will create the conditions for effective implementation by the states and for engendering trust between the Centre and states;

- The GST also represents a historic opportunity to Make in India by Making One India. Eliminating all taxes on inter-state trade (including the 1 percent additional duty) and replacing them by one GST will be critical to achieving this objective;

Will GST now get through Rajya Sabha? We will know in a few days.

Service Tax - Provisional Attachment of Property -Commissioner and Deputy Warned and Cost Imposed by High Court

AS per the Service Tax (Provisional Attachment of Property) Rules, 2008, a notice has to be issued by the Commissioner before provisional attachment of property and in the first instance immovable property is required to be provisionally attached and, in absence of immovable property, attachment of movable property could be done.

As per Board Circular No 103/2008:

1. the provision for attaching a property provisionally is of an extraordinary nature and should be resorted to in the utmost circumspection and with maximum care and caution.

2. The authorities should have a reasonable belief that the assessee may dispose of, or remove the property which would not be in the interest of the revenue and, therefore, a firm opinion should be formed that the interest of the revenue is required to be protected.

3. Once an opinion is formed, the proposal should forward it within one month of the issuance of the show cause notice but where proceedings under Section 73 or 73 (A) of the Act has already been initiated, only the Commissioner would have the power to attach the property.

4. if the power is frivolously exercised and attachment is made without any cogent reasons then appropriate disciplinary proceeding may be initiated against the officers.

But these are cumbersome legal inanities up with which many of our Commissioners cannot put and so a bright Commissioner and his deputy sprung into action and attached property without notice. A Show Cause Notice was issued on 20th October 2015 and even before the assessee could get it on 21st October, the bank accounts of the assessee were attached on 20th October itself.

The High Court found that; the bank accounts were attached in gross violation of Rule 3 of the Rules of 2008; the proposal submitted by the Deputy Commissioner, clearly indicated that first the property should be attached and thereafter notice should be issued. This proposal was approved by the Commissioner without any application of mind and without considering the provision of the Rules and the circular.

The High Court issued Notice to the Commissioner and Deputy to show cause as to why disciplinary proceeding should not be instituted against them in terms of paragraph 2 (iii) of the Circular. The High Court issued a warning to the Commissioner and Deputy Commissioner, apart from imposing a cost of Rs. 25,000. Who will pay this cost?

Board directed to issue Circular.: The Court directed a copy of the order to be sent to CBEC with specific instruction to issue a circular to all the officers ensuring that the powers under Rule 3 should be exercised with utmost care and caution and should not be exercised frivolously.

We bring you this order today. Please see Breaking News.

Tamil Nadu Floods - Revenue Reacts

INCOME Tax - Extension of time for deposit of tax deducted at source and tax collected at source:

CENTRAL Board of Direct Taxes has extended the due date [under section 200 (1) of the Act] for paying to the credit of the Central Government, tax deducted at source and the due date [under 206C (3)] for paying to the credit of the Central Government, tax collected at source, in respect of deductions or collections made during the month of November, 2015, from 7th of December, 2015 to 20th of December, 2015 in respect of deductors located in the State of Tamil Nadu.

CBDT Order under section 119 of the Income Tax Act in F.No. 385/26/2015-IT(B)., Dated: December 05, 2015

Central Excise; Service Tax - CBEC Follows Suit:

For all Central Excise and Service Tax assessees in the State of Tamil Nadu, the date for payment of Central Excise duty and Service Tax for the month of November 2015 is being extended to the 20th of December 2015 and the date of filing of the Central Excise return for the month of November 2015 is being extended to the 31st of December 2015. CBEC has not yet issued the notifications, but will issue them shortly.

The Revenue Secretary Hasmukh Adhia tweeted, "Because of calamity we are extending the last date of payment of central excise and service tax to 20th Dec 2015 in the State of Tamilnadu. Also we are extending the date for filing central excise monthly Return to 31st Dec. 2015 for Tamilnadu.

Adventure Sports for Babus

THE Department of Personnel and Training recognizes that welfare of employees is one of the prime tasks of personnel management and sports activities play an important role in improving their efficiency and morale, Participation by Central Government Employees in adventure sports and similar activities will give them a platform where they would learn lessons from nature and use the knowledge acquired for welfare of the society.

The Government has formulated a Scheme to encourage Central Government employees to take part in adventure sports. The Mission of the Scheme for promotion of adventure sports and similar activities is to encourage Central Government Employees working in the Ministries/Department of the Government of India to take part in these activities by giving financial assistance and other incentives.

Objectives:

(i) The Scheme would tackle the alarming situation of stress and impact of sedentary life on Government servants as highlighted in several studies conducted so far;

(ii) It would provide a creative outlet to Central Government Employees;

(iii) It would create and foster spirit of risk - taking, cooperative team work, capacity of readiness and vital response to challenging situations and of endurance;

(iv) Central Government Employees would be prepared for better Disaster Management; and

(v) Environmental awareness would be inculcated amongst the Central Government Employees.

DoPT Office Memorandum No.125/1/2015-16-CCSCSB., Dated: December 04 2015

Summons thru email

NEXT time you get a mail from the Income Tax Department, it could be a notice or summons. The Principal Director General of Income-tax(Systems) or the Director General of Income-tax(Systems) shall specify the procedure, formats and standards for ensuring secure transmission of electronic communication and shall also be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to such communication.

The Income Tax Rules are amended.

CBDT Notification No. 89/2015., Dated: December 02, 2015

CBEC Wants to send off Truant Officers

CBEC wants Chief Commissioners to take action against officers who are unauthorisedly absent for a period of more than 5 years. The Department of Personnel and Training, vide GSR 261(E) dated 29.03.2012 provides that a Government servant who remains absent from duty for a continuous period exceeding five years other than on foreign service, with or without leave, shall be deemed to have resigned from the Government service, provided that a reasonable opportunity to explain the reasons for such absence shall be given to that Government servant before this provision is invoked.

All the Chief Commissioners/Directors General are directed to ensure that letters are issued to all such officers who are unauthorisedly absent for a period of more than five years at their last known addresses immediately with the request to report for duty within a period of 15 days from the date of issue of the letter, failing which action will be taken against them as per prevailing rules. If they neither respond nor report for duty, a last opportunity should be given by publishing a public notice in the local newspapers.

CBEC No.C.50/74/2015-Ad.IIDated: December 02, 2015

E-Service Book

THE Service Book of a Government servant is a document to record all the events in his/her entire service period and career recording each and every administrative action of the Government servant right from the stage of his recruitment till his retirement to reflect the history of service of a Government employee. As per SR 198 & 199 such a Service Book is to be maintained for a Government servant from the date of his/her first appointment and is required to be kept in the custody of the Head of Office in which he is serving and transferred with him from office to office.

Government has decided to switch over to electronic format for maintenance of Service Book. The e-Service Book module is presently available under the e-Office Mission Mode Project. The data entered in e- service book is available to the employees to enable them to cross-check and report any discrepancies. The Controller General of Accounts (CGA) was requested to accept e-service book as a legal tender. The CGA has agreed to accept the e-service book as legal tender for all purposes and accordingly issued instructions to all Controllers of Accounts.

DoPT Office Memorandum No.21011/15/2010-Estt(AL)., Dated: November 30 2015

Anti Dumping Duty

GOVERNMENT has imposed Anti Dumping Duty on the following:

Melamine Tableware and Kitchenware products: "Melamine Tableware and Kitchenware products" falling under headings 3924 or 3926 of the First Schedule to the Customs Tariff Act originating in, or exported from the People's Republic of China, Thailand and Vietnam, and imported into India.

Notification No. 55/2015-Customs (ADD), Dated: December 4, 2015

Phthalic Anhydride: Phthalic Anhydride falling under heading2917 35 00 of the First Schedule to the Customs Tariff Act originating in, or exported from Japan and Russia, and imported into India.

Notification No. 56/2015-Customs (ADD), Dated: December 4, 2015

Plastic processing or injection moulding machines: plastic processing or injection moulding machines also known as injection presses used for processing or moulding of plastic materials, having clamping force not less than 40 tonnes and not more than 1000 tonnes falling under heading 8477 10 00 of the First Schedule to the Customs Tariff Act originating in, or exported from People's Republic of China, and imported into India.

Notification No. 57/2015-Customs (ADD), Dated: December 4, 2015

Service Tax Supdts Demand One Crore Bribe - Lands Up in Gaol

IT is reported that two Superintendents of Service Tax in Mumbai were arrested by CBI for demanding a bribe of one crore rupees, while accepting the first instalment of ten lakh rupees. The CBI recovered cash of Rs. 10.5 lakhs from the residence of one of the Superintendents.

How many Pay Commissions can compensate this kind of bribe? But then what can substitute a few years in jail, humiliation for the entire family and clan and torture for the rest of life? Is it really worth?

Until Tomorrow with more DDT

Have a nice day.

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