FEBRUARY 18, 2020

By Dr G Gokul Kishore

IN this series, mostly a particular issue is taken up for discussion. At times, multiple issues compete for analysis. In this 73rd part, two issues are highlighted but the challenge is to supply a common title. Having explained the reason behind the title for the present article, let us proceed.

Taxpayers' Charter - Is it required?

In this year's Budget, it has been announced that Taxpayers' Charter will be framed and implemented. This is part of direct tax proposals. However, one may expect a similar charter being brought in GST law as well. For the past two decades, almost every government department has adopted Citizens' Charter declaring the rights and obligations of both the parties viz., the department and the citizens. More than 600 such charters have been issued as per official data. All these charters seek to ensure standards of service, timely delivery of services, grievance redressal, fairness in dealings and professionalism. In Central Excise, Citizens' Charter frozen in photo frames used to adorn the walls of many Commissionerates. The charter of CBIC as available on the portal promises to convey decision on matters relating to declarations and assessment within 15 working days of their receipt. Age-wise pendency of show cause notices will show the extent to which such commitment is practised.

As per FM's Budget Speech, the proposed charter will be codified i.e. made part of Income Tax Act. This means it will be binding on the officers unlike the citizens' charter. Similar charters in United States, UK and Australia are being cited in media. The Taxpayers' Bill of Rights in U.S. is treated as part of the law but the rights are generally expressed as a mission statement operationalized through relevant usual statutory provisions. For example, the "right to pay no more than the correct amount of tax" is implemented through issuance of notice and right to challenge the same as provided in the statute. Therefore, if India incorporates such rights in Income Tax Act but implementation is left to routine provisions, the proposed charter becomes no more than a citizens' charter finding place in the law. They may be in the nature Directive Principles of State Policy (DPSP) of the Constitution of India. DPSP, by themselves, are not judiciable but only guide the State in framing law in accordance with the policy and objectives expressed therein.

If assessments are not high-pitched, if extended period of limitation is not invoked for interpretational issues and if refunds are granted without delay or seeking plethora of documents, there will not be a need for taxpayers' charter. The law provides all the rights and limitation therefor. Lack of commitment and rent-seeking behaviour in certain quarters hamper implementation to the extent that taxpayers hardly think they have any right vis-à-vis the tax department. The highhanded approach during investigations, search, detention, seizure and threat to confiscate, not returning seized documents - these need to change. Having lofty statements in good English which are distributed across the nation and flashed on portals will hardly mean anything for the taxpayer and his business, if things do not change on the ground.

Amendment to GST law takes more than one year

GST Council in its 31 st meeting in December, 2018 recommended amendment to Section 50 of CGST Act to provide for interest on delayed payment of tax only on the net tax liability i.e. after adjusting the ITC available for discharging tax liability of that particular month. At present, interest is considered as payable on gross tax liability without adjusting credit. ITC remains in the ledger of taxpayer and no amount gets appropriated to government account till the time the taxpayer debits it for tax payment. The system should have been designed by providing for debiting credit ledger first and then calculate interest on tax payable by using cash ledger. By clubbing tax payment and return filing and by not allowing taxpayers to debit credit ledger before calculating interest for delayed payment of tax, there was certainly an anomaly to be rectified.

Section 50 of CGST Act was amended last year through Finance (No. 2) Act, 2019. It could not be brought into force as apparently (as per CBIC's tweets) a few States have not yet amended SGST Act. The recommendation of GST Council made in 2018 and amendment in Central law made in 2019 have to wait for one more year to be implemented. It is certainly not a taxpayer-friendly dispensation if law-making in GST regime takes almost two years. It is not known why the route adopted by issuing removal of difficulty order is not used for such purpose when the amendment process is a work in progress. ROD orders are being issued for extending due dates for various returns and other purposes and such orders literally amend the parent statute. It may be argued that there is no difficulty in implementing a provision and, therefore, ROD order cannot be issued in the present instance. If genuine grievance of trade and industry needs to be addressed, such technicalities cannot come in the way.

Taking pride in cooperative federalism and consensus approach may not mean much if benevolent provisions are not translated into implementable provision without much delay. Let us hope this amendment is taken as a guide to reform the process so that disputes on whether amendment is retrospective or otherwise, whether the amended provision will be applicable when CGST Act has been amended but not notified since SGST Act has not been amended, are minimised.

[To be continued...]

[The author is an Advocate. The views expressed are strictly personal.]

See Part 72 .