FEBRUARY 23, 2015

By Samir Kumar Sinha

DIRECT TAX:

Remove all exemptions for Income Tax except for following exemptions:

» Housing loan with no limit for principal and interest amount;

» All retirement benefits;

» Maturity amount of PF, LIC and UTI.

Proposed Income Tax Slab(For all categories of person):

Similarly, Income Tax Slab for corporate or other category may be considered.

Impose 0.1% Expenditure Tax on all billing transactions more than Rs.10,000/-.

INDIRECT TAX:

» Provision for New Customs Act, Central Excise Act and Service Tax Act. Consequently, Manuals, Rules, Regulations, Notifications, Circulars and Instructions made under the old Acts are also required to be rewritten. It is to be noted that laws framed during the British Rule and particularly issued prior to 26th January 1950 and still in force even after completion of 65 years of Indian constitution are required to be rewritten in the present scenario. At present there are plethora of Rules, Regulations, Notifications, Circulars and Instructions creating confusion and litigation for the trade, revenue department and courts. Kindly refer the observation of the Hon'ble Supreme Court in the case of Amco Batteries Ltd. Versus Collector of Central Excise, Bangalore [2003-TIOL-50-SC-CX] which is reproduced here:

"It is apparent that in taxation matters, amendments, clarifications, exemption notifications or their withdrawal play an important role in increasing litigation. Repeatedly, it is stated that law and procedure thereunder is required to be streamlined and simplified, yet clarifications, amendments and notifications are issued creating confusion and leaving judges and lawyers to search for their exact meaning. In such a state of affairs, in some cases, it is difficult to draw inference of fraud, willful concealment or suppression of facts so as to attract penal consequences."

» Reorganise Central Board of Excise and Customs (CBEC). Name of the CBEC would be required to be changed after introduction of Goods and Service Tax (GST);

» No duty benefit for goods imported under Export Promotion Schemes such as DEEC, DFIA, DEPB, EOU, EPCG etc as the duty rate has been considerably reduced since the last 30 years;

» Rescind Circular No. 58/97-Cus dated 06.11.1997 and amend Section 87 of the Customs Act, 1962 in order to have exemption from payment of customs duty on imported stores/bunkers such as fuels, consumables etc. to be consumed on coastal going vessel. All these stores are consumables for shipping service provider and used for operating the shipping vessels. Since these stores are meant for use on the vessel and not for sale, levy of duty on such stores is not justified. Kindly refer case laws Collector of Customs & Central Excise Versus South East Asia Shipping Co Ltd [1989 (43) ELT 479(Tri)] read with the decision of the Hon'ble Supreme Court [1996 (82) ELTA155(SC)]. Also, filing of Bill of Entry as per the Circular No. 58/97-Cus dated 06.11.1997 for payment of duty on ship stores is against the provisions of Section 46 of the Customs Act, 1962 read with Section 30 of the Customs Act, 1962 and the Import Manifest(Vessels) Regulations, 1971. To safeguard the revenue, conversion charges may be recovered on the basis of Gross Register Tonnage (GRT) of the vessel or the voyage period of the vessel for conversion from foreign run to coastal run;

» Modify Circular No. 16/2012-Cus dated 13.06.2012 since S. No. 462 and entries relating thereto of Notification No.12/2012-Cus dated 17.03.2012 alongwith the condition number 82 and entries relating thereto has been omitted vide Notification No.12/2013-Cus dated 01.03.2013;

» If any notification provides exemption from Basic Customs Duty as well as Excise Duty(CVD), it must also provide exemption from any other duty or cess levied under the Finance Act or any other Act;

» There should be no bar of unjust enrichment in the case of refund of duty or any amount. Any provision appearing or trying to bar refund of illegally collected tax is violative of Article 265 of the Constitution and must be struck down. As per the Article 265 of the Constitution, "no tax shall be levied or collected except by authority of law";

» Simplify the duty structure on Motor Spirit(Petrol) and High Speed Diesel with uniform Excise Duty(CVD) on petrol and diesel irrespective of its brand. Kindly refer the judgement of the Hon'ble Tribunal of Delhi in the case of Hindustan Petroleum Corporation Ltd Versus Commissioner of Central Excise, Delhi & Rohtak -2008-TIOL-2668-CESTAT-DEL wherein it has been held that that the Motor Spirit (MS) and High Speed Diesel (HSD) after being blended with small quantity of Multi Function Additives(MFA) remain MS and HSD only, conforming to ISI specifications IS:2796-2000 and IS:1460-2000 respectively. There is no separate ISI specification for branded MS or branded HSD and both branded as well as unbranded MS/HSD have to conform to the same ISI specifications. Similarly, there is no change in their use. Just because blending improves their quality and after blending they are sold under different brand names, they do not become products different from unblended MS/HSD, with different characteristics and usages. Their characteristics remain the same, as they both have to conform to the ISI specification for unblended MS/HSD and their usage also remain the same. The blending only improves the quality of the MS/HSD resulting in better value addition, without changing the basic characteristics and usages of the products. The reduction in excise duty on branded petrol and diesel would not impact government revenues as current sale of branded fuels is meagre but it would help in conservation as these fuels provide improved engine performance to yield savings in consumption;

» Exemption from levy of Additional Duty of Customs @ Rs.2.00 per litre on High Speed Diesel (HSD) imported by EOU. As such, Circular F. No. 305/148/2004-FTT dated 11.10.2004 is required to be withdrawn retrospectively. As specified in para 6.2(b) of Foreign Trade Policy 2009-2014, an EOU may import, without payment of duty, all types of goods provided they are not prohibited items of import in the ITC(HS). Kindly refer case law Reliance Industries Ltd Versus Commissioner of Customs(Exports), Nhava Sheva - 2013-TIOL-1120-CESTAT-AHM wherein it has been inter alia held in para 18 of the said judgement that "The provisions of Foreign Trade Policy shall prevail over the Notification of the Customs authorities as the customs authorities do not have any power to curtail the import unless such curtailment is warranted by the import policy.";

» Drawback must be sanctioned after submission of Bank Realization Certificate;

» Where there is provision of conditional refund of duty or tax after its payment(for example refund of SAD or Service Tax), such notifications may be amended in order to exempt the goods/ services from duty or tax directly;

» Reduce service tax from 12% to 5%;

» Remove Education Cess and Secondary & Higher Education Cess.