Dispute Resolution in Tax Departments
25 02 2015
Wednesday
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India stands out in the statistics on disputes as having far too many compared to other tax administrations and urgent action needs to be taken on this front.
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Disputes accumulate in India due to the very structure and process of the appeal mechanism that tends to increase disputes from both taxpayer and tax administration sources.
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The root cause for increase in disputes is the complexity of tax legislation. Laws should be written in simple language for taxpayers to understand.
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Taxpayers should be informed about their tax liability in advance. It seems that although many laws themselves are compact in nature, delegated legislation in respect of such laws is elaborate. There is an urgent need to rationalise this and a Standard Operating Procedure SOP is a step in the right direction.
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Retrospective amendment should be avoided as a principle
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There is a need for change in the mind set of tax officers and auditors.
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Dedicated High Court /Supreme Court benches for tax cases are required for unclogging the system.
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Training of officers is absolutely necessary and, therefore, should form a significant component of their career. Training is needed for changing the attitude of officers.
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To minimise the potential for disputes, clear and lucid clarifications on contentious issues should be issued regularly, and they should be binding on the tax department.
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You may mistake these to be suggestions from the Trade or consultants. They are actually the views of the Departmental officers of CBEC and CBDT elicited in the feedback sessions by the Tax Administration Reform Commission (TARC).
Time Limit for Adjudication
THE TARC had observed,
"While the respective tax statutes provide timelines for disposal of cases, in the case of indirect taxes, this is often qualified by the words "where it is possible to do so". This qualification in effect nullifies the prescription of time limits for decision. If the intent of the tax statutes is to be fulfilled, the qualification should be removed and a realistic but mandatory time limit should be prescribed. The law must also prescribe the consequences of not adhering to the time limits and the officers should be made accountable for lapses. If not decided in time, it should be deemed to have been decided in favour of the taxpayer."
Income tax field officers were open to the idea but thought that the time lines should be set in such a way that they are normally achievable. The overall view within both the departments, however, was that the onus of delays in resolving of disputes beyond a reasonable period of time cannot be laid exclusively on the departments alone. The CBEC was apprehensive, citing reasons such as non-cooperation by the taxpayer which is beyond the control of the adjudicating authority. It further felt that the Ministry's present instructions to decide a case within 3 months of personal hearing were good enough on this issue. Some income tax field officers felt that, instead of setting general time lines for disposal, the reasons for non-disposal of cases within a reasonable period of time should be identified and addressed first. Some indicated it would encourage assessees to postpone submission until the very end and thereafter, the case would be automatically decided in his favour before any worthwhile enquiry could be made by the department for lack of time.
On the other hand, the TARC pointed out that experience reveals that departmental officers tend to postpone personal hearings, sometimes for frivolous reasons, to avoid passing adjudication orders within the prescribed time line. Officers also often get transferred after holding a personal hearing without backward accountability, which is a major lacuna in the Indian tax administration. Hence, the assessee has to undergo the entire process of appearing for a personal hearing again before the incumbent officer. These are systemic faults endemic to the department and need to be sorted out.
Incentives for DRs in Tribunals
ONE of the critical weaknesses highlighted by both industry as well as departmental officers is the inadequacy in the departmental representation of cases before tribunals and courts. While matters are handled by DRs in tribunals, they are handled by empanelled advocates and law officers in the high courts and the Supreme Court. Considering the importance of the task performed by the DRs, it is imperative to accord adequate functional support to them. Further, the DRs should be carefully selected and given sufficient incentives and necessary infrastructural support to perform their duties effectively. They should also be given specialized training before they are asked to appear for the department.
What will happen to TARC Report?
THE Government archives are full of bulky reports that have gathered layers of dust over decades, submitted by high power and high-level Committees and Commissions. The TARC has given a report with more than 1500 pages to the Finance Minister. Surely, the FM is not expected to read the whole report. Will the Revenue Secretary read it? The TARC had recommended abolition of his post! Will the Chairmen of the two Boards read it? They must be too busy and in any case will retire in a few months. Will the other officers in the Boards read it? They all have better things to do and in any case are too busy to have time to read a 1500 page report. Maybe the FM should appoint another Commission to study the recommendations of this commission.
Some of the recommendations of the TARC are eminently worth implementing - the problem is that the powers that be know the solutions - only they do not have the will to see them through.
Biggest Seizure of Gold in Ahmedabad - By Police
THE Special Operation Group of the Ahmedabad Crime Branch Police celebrated Central Excise Day yesterday by seizing 60 kgs of gold valued at over 16 crores of rupees. This is stated to be the largest single seizure of gold in the country. The gold was seized from three passengers who arrived at the Ahmedabad airport from Dubai. The passengers cleared through Customs and Security without a hitch but were caught by the police outside the airport. The police also arrested three persons who came to the airport to give a hearty welcome to the gold smugglers.
Is it so easy to walk out of the airport with so much gold?
The FM should think of changing the duty structure on import of gold, so as to make smuggling not so profitable.
Are Playing Cards Sports Goods?
YES, says the Supreme Court.
As per Central Excise Notification No. 02/2011-CE, dt.01.03.2011, there is a concessional rate of duty for Sports goods other than articles and equipments for general physical exercise.
Now, the question is whether ‘playing cards' are eligible for the above exemption.
The arguments of the learned Counsel for the cards in a case before the Tribunal were:
1. Bridge tournaments were sponsored by the Sports Authority of India and the Government had financed holding of such competitions.
2. Trophies were also awarded to the winners of Bridge tournaments out of Government funds.
3. Referring to the definitions of Games and Sports in several dictionaries, these terms were inter-changeable and did not limit themselves to sports or games involving strenuous physical activity but also covered parlour games and games requiring exercise of intellect.
4. Tribunal had earlier held that rubber playing balls could not be excluded from the description 'sports goods'.
Revenue maintained that the term 'sports goods' should cover only those articles which involved physical activity and would not cover articles of amusement such as playing cards.
Recently in 2014-TIOL-1274-CESTAT-AHM, the CESTAT held that ‘playing cards' are eligible for the exemption.
Revenue was not game - they took the matter in appeal to the Supreme Court. The Apex Court last week dismissed the Revenue Appeal observing, "Having gone through the records of the case, we are of considered opinion that the appeals, being devoid of any merit, are liable to be dismissed and, are dismissed accordingly."
Indirect Tax Ombudsman at Mumbai - Anyone interested?
THE Revenue Department wants to fill up a vacancy of the post of Indirect Taxes Ombudsman at Mumbai. Chief Commissioners and above are eligible.
This post has been lying vacant for more than a year now; obviously there are no takers.
CBEC Letter F.No.A.35017/08/2013-Ad.II, Dated: February 23 2015
Central Excise Day - people fail to pay tax because they are unaware of rules - Mammooty
SUPER star Mammooty was the Chief Guest for the Central Excise Day celebrations at Kochi.
He said that most people fail to pay tax because they are unaware of the rules. People would pay tax voluntarily if proper awareness was created among them.
Commissioner Reshma Lakhani is also seen in the picture.
Justice Raja Sekhara Reddy of the Telangana & AP High Court was the Chief Guest at Hyderabad. He advised the excisemen to be fair to the honest assessee and nurture the goose that lays golden eggs.
Year of Taxpayer Services: This has been declared as the ‘year of taxpayer services'. We received two mails which mentioned that and stated:
1. The bank account of a Municipality (under Chennai III) has been attached for recovery, despite the fact that more than 7.5 % of the demand was paid by them and the appeal is pending before Commissioner (Appeals).
2. In Tuticorin customs, payment of duty by using scrips is not allowed and parties are coerced to pay duty in cash.
At the end of the Day, they are Revenue Officers.
Until Tomorrow with more DDT
Have a nice day.
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