TIOL-DDT 2800
04 03 2016
Friday
IN the context of changes in excise duty rates for precious metal jewellery and ready made garments/made up articles of textiles, in the recent budget, the Chairman CBEC, Mr. Najib Shah, in a D.O. Letter to the Chief Commissioners, said, "in the era of self assessment, our main role is to facilitate trade and industry."
He told the Chief Commissioners:
i. Registration/Centralized Registration once applied for shall be granted within two working days, as per the simplified registration procedure prescribed under Notification No. 35/2001-CE [NT].
ii. There should be no post registration verification of the registered premises. Relevant Notification No. 35/2001-CE [NT] has been suitably amended in this regard
iii. No stock declaration will be required to be made to the jurisdictional central excise authorities by jewellery manufacturers.
iv. To allay any possible apprehensions of the industry, the officers of the department should not visit the premises of these assesses for any routine purposes, like stock verification, verification of records, etc.
v. Officers should continue to facilitate export consignments of these goods, and ensure that under no circumstances the same are held up or delayed on account of the new levy.
vi. As per the Rule 12M of the Central Excise Rules, 2002, jeweller who gets his jewellery manufactured from any other person [like artisans etc.], will have to follow the procedures [such as taking registrations, paying duty and filing returns] and pay duty. In such cases, the levy will not be on the job worker [like artisans etc.)
He has emphasised that there should be no deviation from these instructions.In a welcome change, the Chairman addresses the Chief Commissioners as "Dear Colleague"
CBEC D.O. Chairman/CBEC/27/2016., Dated March 03, 2016
One Year too little to issue Show Cause Notice - CBEC Chief
ADDRESSING the ASSOCHAM yesterday the Chairman said that the Union Budget 2016-17 is aimed to bring the huge chunks of industry including area-based exemptions together with SSI, edible oil, textile sectors and others into the tax net in a most easy manner.
The Chairman added,
Out of the GDP Rs 110 lakh crores and manufacturing sector contributing about 17 per cent to it, we have huge chunks of industry which is out of the net;
Area-based exemptions, it is one lakh plus crore which is out of the net, SSI, edible oil, textile sector, these are huge chunks of industry;
If we are talking of GST, we are now talking of all these sectors having to move towards the tax net, how else are we going to have a GST;
The industry supports GST but very-very surprisingly, keeps expecting and wanting exemptions, the two do not go together, every time there is a break in the CENVAT chain, you have a problem, you have tax sticking on to some products, which the next man has to bear and there is no reason why you should bear it;
Therefore, this was the thinking really behind to slowly bring these sectors into tax net and these are essential steps in our opinion if we wish to move towards GST;
More than 10-12 per cent of the litigations were because of two specific rules in the CENVAT i.e. Rule 6 and Rule 7, that have now been completely revamped. We have tried to simplify them to the extent possible;
We are expecting a hit of more than Rs 1,000 crores only because of the CENVAT credit rule changes, in terms of simplification, we thought it is something essential, because the cost of litigation was much more than the revenue which we are otherwise getting;
All these simplified processes will add to ease of doing business and reduce transaction costs.
The focus right through the budget has been on simplification, on ensuring that the taxpayer gets better value for money, gets better services from us and has lesser interaction with us;
Our analysis showed us that one year was too little for us (to issue Show Cause Notices) simply because balance sheets for the financial year are invariably filed by the September 30 of the following year, so by the time the audit gets done and department gets to know something which we have to collect or not collect, the one year period gets over, to cover that up the departmental officers are invariably going in for the extended period of five years, which was happening across the board.
The TARC recommendations - Implementation by CBDT & CBEC - Status
IN his 2013 Budget Speech, the Finance Minister announced - "An emerging economy must have a tax system that reflects best global practices. I propose to set up a Tax Administration Reform Commission to review the application of tax policies and tax laws and submit periodic reports that can be implemented to strengthen the capacity of our tax system."
Accordingly the Tax Administration Reform Commission (TARC) was constituted in August 2013 under the Chairmanship of Dr.Parthasarathi Shome. The Commission submitted its fourth and final report to the Finance Minister on 20th February 2015.
DDT covered the TARC reports and associated news in the following editions: DDT 2177, 2265, 2376, 2488, 2493, 2495, 2498, 2500, 2544, 2546, 2564, 2618 & 2785.
It is learnt that both the Revenue Boards viz. CBDT & CBEC have accepted and implemented the recommendations of the TARC to a fairly large extent. Some of these gems are displayed below.
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CBDT Reply
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Recommendation
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Status
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| A Tax Council should be set up to develop a common tax policy, analysis and legislation for both direct and indirect taxes. |
A Tax Policy Council is constituted vide order dated 2.2.16. |
| Common Tax Policy and Analysis (TPA) unit. The existing TPL in CBDT and TRU in CBEC should be subsumed in the common TPA. |
Tax Policy and Research Unit is constituted vide order dated 2.2.16. |
| There should be a dedicated organisation for delivery of taxpayer services with customer focus for each of the Boards. |
A dedicated vertical for delivery and monitoring of Taxpayer Services has been set up in CBDT, its attached Directorates and at field offices. |
| Pre-filled tax returns should be provided to all individuals. |
The TARC recommendation regarding pre-filling tax returns has already being implemented in the most comprehensive manner as is feasible. This is an on-going process. |
| There should be a system for online tracking of dak/grievances/applications for refund etc. |
The mechanism for online tracking as suggested is already present in the Sevottam Software in use in Aayakar Seva Kendra (ASK Centre). |
| Continuous benchmarking of tax administration vis-à-vis TPS? |
The benchmarking of Tax Payer Services is an ongoing process. |
| There should be one Knowledge, Analysis and Intelligence (KAI) centre for both the Boards |
The CBDT has taken several steps to enhance its analytical capability under Project INSIGHT by setting up an integrated Data Warehousing and Business Intelligence (DW&BI) platform |
| Both the Departments should shift all the key operations to the digital platform |
In recognition of its e-Governance initiatives, the CBDT was conferred “Prime Minister's award for excellence in Public Administration ? for “Easy Tax Compliance through Quality Service? on 21st April, 2015. |
| A comprehensive performance management system needs to be set up for tax administrations by revisiting and reconstructing the RFD. |
CBDT develops a detailed annual action plan for its field formations and RFD for its attached directorates. |
| The performance appraisal process needs to be made more wholesome and reliable |
The current performance appraisal system is as per the guidelines of the Government.? |
| A formal mentorship programme may be set up, with carefully selected mentors. |
National Academy of Direct Taxes has set up a mentorship framework in the Income Tax Department, for the newly recruited Indian Revenue Service Officers. |
| Code of ethics needs to be developed |
The Conduct Rules for officers of Government of India prescribe a code of ethics to be followed by all organized services of the Government including the Income tax department. |
| The provisions of Rule 56(j) of the Fundamental Rules should be effectively utilised for weeding out officers who are inefficient or of doubtful integrity. The criterion for review should be changed to completion of 20 years of service. |
Instructions have been issued for review as prescribed under Rule 56 of Fundamental Rules. |
| No cognizance should be taken of anonymous complaint |
CBDT has issued specific guidance notes. |
| Retrospective amendment should be avoided as a principle. |
This has been stated by the Finance Minister. |
| Dispute management should be a functionally independent structure with adequate infrastructural support. |
The dispute management apparatus within the department is functionally independent. Necessary infrastructure has also been provided. |
| Appeals to high courts and the Supreme Court should only be on a substantial question of law. |
This is already a part of the statutory provisions. |
| Promote e-payment. |
Taxpayers can pay through net banking or through ATM. The main reason for non-acceptance of payment using credit card is the merchant charge levied by credit card companies which may not be acceptable to taxpayers. |
| Single return for IT and WT. |
Wealth tax has since been abolished. |
| The number of taxpayers should be considerably more than it is at present. |
Various Reports have indicated that the taxpayer base is commensurate with the current stage of development of the economy particularly considering that there is no income tax on agricultural income. |
| Taxpayers keep waiting for amnesty schemes |
There is no proposal for any tax amnesty. |
| Timely clarificatory circulars can substantially reduce disputes and litigation. |
This is an on-going process. |
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CBEC Reply
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TARC Recommendation
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Status
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| Disputes must get resolved in the times lines as mentioned in the respective enactments. The law should also prescribe the consequences of not adhering to the time lines, which would be that the case in question would lapse in favor of the taxpayer. |
The suggestion that cases should lapse for delay in adjudication cannot be accepted because in that case the parties will get the matters delayed in the course ?of adjudication to get benefit of this provision. [The Bombay High Court in the case of Lanvin Synthetics Pvt. Ltd. 2015-TIOL-1668-HC-MUM-Cus quashed a Show Cause Notice that was lying un-adjudicated for 17 years.] |
| An easier and simplified scheme should be introduced for service exporters. |
Circular No. 187/6/2015-ST dated 10.11.2015 lays down a scheme for speedy dispersal of pending refund claims of exporters of services under Rule 5 of the CENVAT Credit Rule, 2004. |
| Departmental manuals should be annually updated and put up on the website for easy downloading by both taxpayers and tax officers. |
Already such manuals have been developed and placed on the CBEC website. [Except, of course, that the Central Excise Manual of CBEC's Instructions- Supplementary Manual is eleven years old] |
DDT comments are indicated in Red.
Selection of Special Public Prosecutors (SPPs) for handling CBEC cases
IN order to streamline the process for selection of SPPs for handling CBEC cases before the Subordinate Courts/Courts of Session and High Court, the Board has come out with the following procedure effective from 01.03.2016 -
The concerned Chief Commissioner will assess the number of SPPs required for prosecution/criminal cases of CBEC in his Zone. While deciding the number of SPPs in the Zone, the requirement of cases of the DGRI/DGCEI will also be taken into consideration. In case there is more than one Chief Commissioner in a Zone, the Chief Commissioner of Customs, will be the nodal authority. In case there is more than one Chief Commissioner of Customs in a Zone, the Chief Commissioner of Customs-Zone-1 will be the nodal authority. This vacancy position will then be circulated to all the Commissioners.
The first paragraph itself is a telling story of how a simple administrative function of appointment of SPP can manifest itself into a hydra headed jurisdictional superiority issue. The second paragraph entailing the ‘procedure for engagement' aggravates this modality of appointment by constituting a Committee to assess the applicants' expertise in handling criminal/prosecution matters and their suitability to represent the cases of the Department before the various judicial fora. A performance review is also envisaged at the end of the financial year.
The concerned Chief Commissioner/Commissioner is more concerned about success of the Revenue cases before the Courts for he does not want to hear the oft repeated remark - the case has no legs to stand!
CBEC Instruction Dated: February 29, 2016
Customs - New Exchange Rates from Today
CBEC has notified new exchange rates for Imported Goods and for Export Goods with effect from today. The USD is 68.00 Rupees for imports and 66.95 Rupees for exports.
Notification No. 36/2016-Cus (NT)., Dated: March 03, 2016
Structured Infrastructure Cess
THE following is the content of Paragraph 153 of the Finance Minister's speech while presenting the Budget on 29.02.2016 -
153. The pollution and traffic situation in Indian cities is a matter of concern. I propose to levy an infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs.
Clause 159 of the Finance Bill, 2016 read with the Eleventh Schedule provides for imposition of Infrastructure Cess on all goods falling under heading 8703 of the CETA, 1985 at the rate of 4% and this comes into immediate effect on account of the declaration made under the Provisional Collection of Taxes Act, 1931.
The JS (TRU-I) letter F.No. 334/8/2016-TRU dated 29.02.2016 mentions -
4) Infrastructure Cess is being levied on motor vehicles, of heading 8703, as under:
b) Petrol/LPG/CNG driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1200cc - 1%
c) Diesel driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1500cc - 2.5%
d) Other higher engine capacity motor vehicles and SUVs and bigger sedans - 4%.
Three wheeled vehicles, Electrically operated vehicles, Hybrid vehicles, Hydrogen vehicles based on fuel cell technology, Motor vehicles which after clearance have been registered for use solely as taxi, Cars for physically handicapped persons and Motor vehicles cleared as ambulances or registered for use solely as ambulance will be exempt from this Cess.
No credit of this Cess will be available, and credit of no other duty can be utilized for payment of this Infrastructure Cess.
[Please note serial no. (a) has gone missing - MS word to blame!]
Be that as it may, in terms of section 5A(1) of CEA, 1944 read with sub-clause (3) of clause 159 of the Finance Bill, 2016, Notification 1/2016-Infrastructure Cess was issued on 1st March 2016 and the same has prescribed Nil rate as well as rates of 1%, 2.5% to goods falling under heading 87.03 subject to satisfying some conditions against certain entries.
Goods of heading 87.03 not covered within the ambit of any of the ten entries to the notification would attract 4% Infrastructure Cess and these would be diesel driven vehicles of engine capacity exceeding 1500 cc.
Until Monday with more DDT
Have a nice weekend.
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