JANUARY 23, 2018

By a Netizen

1. Golden handshake scheme for settlement of pending disputes from show cause notice stage to Tribunal

Non-payment of Service Tax can be due to the result of an ignorance, mistake or due to an interpretation of law. Government must offer an opportunity of settling the dispute of service tax at various stages of litigation by a settlement scheme whereby the tax payable admitted by the assessee is paid without any penalty and interest. This will help the assessee to clear the past dues and Government will get immediate revenue. There were such schemes in the past for settlement of Central Excise duty without interest and penalty.

2 . GST from SSI/MSME units

The business of small and medium scale industries sector was badly affected with the introduction of GST as most of them remained unregistered and the registered customers avoided the un-registered dealers due to the reverse charge mechanism imposed by virtue of section 9(4) of the CGST Act, which has been presently suspended by a notification till 31.03.2018.

To boost up the business of Small and Medium sector Government must introduce reduced rate of GST (say 5%) so that those who are having less than 20 lakh turnover are also attracted to register for GST. Due to the low rate of tax applicable to the Small and Medium sector, their business will boost up and it will have tremendous impact on the Indian economy. In the past, in 1986 when Modvat was introduced Rule 57B of the Central Excise Rules and Notification 175/86-CE dated 01.03.86 provided for additional notional credit subject to the maximum of the Tariff rate for purchases from SSI sector. Fixing a similar lower rate of GST,where the turnover limit is below the exemption limit would be much better than resorting to section 9(4) reverse charge liability in the case of unregistered dealers.

3. Issue of show cause demand notice by Central Excise and Service Tax Department.

A service tax registered assesse maintaining books of accounts, paying service tax and filing returns are served with demand show cause notices by the Central Excise Department under section 73 of the Finance Act 1994. Service tax regime is over and GST has been introduced with effect from 01.07.2017. But for the past period, show cause notices are issued demanding service tax for the past five years from the date of show cause notices. In such cases apart from the tax demanded for the five years, penalty equal to the tax is also demanded.

If a show cause is issued it has to be adjudicated by the departmental officer who can be a Superintendent, Assistant Commissioner, Deputy Commissioner, Joint Commissioner, Addl. Commissioner or Commissioner of Central Excise. In the departmental adjudication/appeal procedure, personal hearing is granted to the assessee, but the tendency is to ignore all the arguments put forward by the assesse and confirm the demand. Very rarely judicious decisions are coming out. The issue that is brought to notice is that the assesse very rarely gets a relief before the case reaches Tribunal (CESTAT). This takes around 7 to 10 years.

Why the assessee is not getting any relief from the departmental officers and getting relief from Tribunal or other judicial forums. Lack of accountability, fear of his order being reviewed by Commissioner etc. etc. This procedure of departmental adjudication which does not give any relief to the taxpayer has to be changed or modified in such a way that the relief that can be given by the Tribunal must be available from the departmental officers also. Procedure has to be streamlined by administrative orders. The present system of departmental adjudication in Central Excise and Service tax can be modified by creating a Bench where the departmental officer must present the case, the tax payer's representative to defend the case and the adjudicating authority to decide the case impartially. Where the amount involved is more than one crore, two Commissioners can decide the case. Independence of the adjudicating / departmental appellate authority must not be questioned if by a judicious order the demand is dropped. If such a change is made in the adjudication and appellate procedures within the department, it will see marked improvement in the present system.