THE INDIAN REPORTING SERVICE (IRS) IS IN ACTION; GOES ON RETURN-PRESCRIBING SPREE!
By TIOL Research Team WHENEVER the CBEC wants to prove that it is active and working, the first thing it does is to write a letter to the Chief Commissioners about very ordinary things and asking for a report. There are occasions when several members shoot off several letters and all asking for reports. Since the shelf life of most of the Members is only a few months, these letters are generally ignored in the field and some statistical reports are furnished and the whole reporting episode ends with either the retirement of the Member concerned or a reshuffle in their charge. But reporting as such will not stop. The new Member will ask for a new report and the saga continues. This report is dead; long live reporting – After all they have reduced the Indian Revenue Service into the Indian Reporting Service.
If harassing the filed, and asking them for bogus reports are not considered enough, the next favourite pastime in the Board is to give clarifications, usually on settled issues, upsetting the apple cart. Board clarifications have almost always proved very costly for the Government in appellate stages. At least Two thousand Crores of rupees were lost because of a Board Circulars as pointed out in a recent article in TIOL. If letters and clarifications also do not impress, the Board comes up with rules and notifications usually to make life miserable for the assessees. The recent prescription of annual and monthly returns is a classic example.
It beats logic as to why the Board wants so much information and what is going to be done with the mountain of information collected. It is high time the CAG or the Finance Minister conducts an audit of the Board to find out what has been done with all the information that the Board has collected, say in the last five years. If an urgent audit is conducted it will be proved that nothing, absolutely nothing has been done with the information collected. If the Board is asked to report what has been done they are sure to ask the Chief Commissioner and down the line.
The latest missive from the Board is prescription of a monthly and annual cenvat credit return for the assessees paying more than a Crore of Rupees as duty in PLA in a year. If you remember some years ago – fifty years to be precise – the Government embarked on a massive simplification process for excise accounting and returns. The process is unending and still going strong. Of late the Government has been publicising the fact that statutory records are done away with and a simple return has been prescribed. But these are too good to last.
Before proceeding further it will be worthwhile to note the number and kinds of returns that an assessee is required to file. As of date these are the returns. | Sl No | Name of the Return & periodicity | Rule | Details | | 1 | ER-1, Monthly | Rule 12 of CER and Rule 9(7) of the CCR | Monthly return of production, clearance, cenvat credit etc | | 2 | ER-2, Monthly | Rule 17 of CER and Rule 9(7) of the CCR | Monthly return for EoUs | | 3 | ER-3, quarterly | Rule 12 of CER and Rule 9(7) of the CCR | Quarterly return for SSI units | | 4 | ER-4, Annual | Rule 12(2) (a) of the Central Excise Rules | Annual Financial Statement | | 5 | ER-5, Annual | Rule 9A of Cenvat Credit Rules, 2004 | Annual return of principal input | | 6 | ER-6 | Rule 9A of Cenvat Credit Rules, 2004 | Monthly return of receipt and consumption of inputs |
The annual returns recently prescribed are to be filed immediately. The Annual Financial Statement ER-4 is to be filed by the end of November and the ER-5 is to be filed by December-end. It is almost impossible for any assessee to compile and furnish the information by these dates. Blissfully many of the field formations are unaware of these changes brought in by the Board and filing the Annual Financial Statement by November end is a joke.
The question remains – What is the Board up to? What are they going to do with all this information? And in this electronic age why this information cannot be obtained by e-mail straight to the Board ? These returns are going to lie in the Range offices, never to be seen by anybody. Why is the Board so keen to waste precious paper? In the US, they have a law against irresponsible collection of information. And the law is called , “Paperwork Reduction Act of 1995”. Under this Act, no federal agency can collect information unless it gets a clearance from the Administrator of Information and Regulatory Affairs. It is time we also have some such law to prevent indiscriminate and useless collection of data which will only eat up precious space in our congested offices and which cause undue hardship to our manufacturers who are expected to arrange their affairs in such a way that they are able to furnish all the information that somebody in the Board wants. If they are also able to manufacture after submitting all these returns, it will be considered whether they can be asked to furnish some more returns.
What is the Board really up to? Does it want to sabotage simplification by these backdoor returns which are almost impossible to fill up. Why not bring in all those old forms and returns instead of a sporadic return whenever the Board is in mood? The ER-4 return was prescribed on 1.11.2004 and the ER5 and ER6 on 25.11.2004. On the 1st of November,. the Board did not know about the proposed new returns which came on 25th! Why Can’t the ER4 and ER5 be merged into one report.
And can the Board offer the services of its officers to help the assessees to fill up the forms? None will be able to. Before asking the assessees to furnish this kind of information, since the Board is any way fond of asking for reports, it is suggested that the Board may ask all the Commissionerates to submit a report on the paper consumed in the offices during the last one year. The report may be on the following lines.
1. Amount of paper purchased
2. Amount of paper available
3. Total
4. Amount of paper used for
i. sending reports to Board
ii. sending reports to others
iii issue of Show Cause Notice
iv Issue of adjudication orders in favour of Government
v. Issue of Adjudication orders against Government. ( Explanation to be submitted if more than four sheets are used)
vi. Filing appeals
vii. Etc, etc…..
viii.Others
5. Closing balance;
6. Difference un-accounted
7. action taken for unaccounted paper and estimated quantity of paper required for initiating action.
8. Comments of the Chief Commissioner with a report on how much of paper was caused to be spent by him.
You think it’s a ridiculous and impossible report? So are most of the reports and returns prescribed.
As if new returns are not enough to make life miserable in the field, it is understood that Mr Nigam, CBEC Member, has shot off a detailed letter to the field telling the officers how to make life miserable for them and the assessees. The letter is so long running into more than twenty pages that nobody even wants to read it. But it will go down to the Ranges and assessees and thousands of tons of paper are going to be wasted before Mr. Nigam retires and another Member takes over and asks for a fresh report.
What happens if an assessee cannot furnish these complicated returns by the due date? For not furnishing a return prescribed under the Central Excise Rules there can be a penalty of Rs Five Thousand Rupees and for not furnishing a return under the Cenvat Credit Rules there is no penalty. Though TIOL will never suggest to the assessees to pay up the penalty instead of submitting the complicated return, the Editor of a famous excise journal told us recently that such a suggestion will be a favour to the Board as some money will be collected instead of useless paper which is never going to be used!.
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