JULY 08, 2020

By Vijay Kumar

SOME newspapers carried a report, which went viral as everything does nowadays, that as part of the government's efforts to contain the costs of operations amid increasing revenue loss, the proposal to merge the direct and indirect tax boards is back on the table, with a massive downsizing of the cadre at all levels.

The Government was quick to clarify that:

- This news item is factually incorrect as the Government has no proposal to merge the two Boards created under the Central Boards of Revenue Act, 1963.

- It has been published without due verification of facts from the competent authorities of Ministry of Finance and only creates a policy distraction when the Ministry is amidst implementation of a large number of taxpayers' friendly reforms like transition from manual assessment based on territorial jurisdiction to a completely randomized electronic faceless assessment, electronic verification or transactions and faceless appeals.

- It is evident that this misleading article has been published with no due diligence of even checking official records placed in the public domain or checking the latest status with relevant competent authorities in the Ministry of Finance.

- It not only reflects poorly on the quality of journalism but also shows a complete disregard for due diligence.

- If such an unverified story is given a front-page lead story position, it should be a concern for all news reading public.

- This news item is completely rejected as baseless and unverified.

Rather strong denial by the Government. In any case, the government is not about amalgamation, merger and reducing staff strength. Government is all about creating jobs and more jobs. If you ask them to reduce the strength, they will come up with means to increase it. Take GST; we have about

- 6 Members of the Board at the Apex scale of Rs. 2,25,000 per month

- 14 Principal Chief Commissioners who are also in the Apex scale.

- 41 Chief Commissioners

- 99 Principal Commissioners

- 336 Commissioners

- 931 Additional/ Joint Commissioners

- 4165 Assistant/ Deputy Commissioners

- 15526 Superintendents

- 20638 Inspectors

Totally there are about 85,000 CBIC officers running the GST and Customs administration in the Country. There must be many more State GST officers also running parallel to see that wheels of GST are moving in perfect harmony.

What do you think all these people do? I am absolutely sure that they are all patriotic employees willing to do a reasonably fair job, especially now that they are paid well. But it beats, what the hell would they do, when the entire GST is supposed to be technology driven and that technology has miserably failed. You go to any CGST office, you will find the officers are terribly busy, with no clue as to what exactly they are doing and why.

Why do we need so many Central and State GST officers to run the GST, when a computer can as well do it? In a recent webinar by us, it was suggested that the core competence of the State and Central GST officers was totally different. Somebody suggested that there should be a joint service or an All India GST Service. But the moot point is, whenever reforms take place, the first priority is protection of the vested interests of the employees. The Government can strongly argue that ITC is not the vested right of the taxpayer, but the job in the tax department is the vested right of the employee and cannot ever be compromised.

So, we will have all the Boards, all the Commissioners, State and Central and all the officers. They are not going anywhere. The computer is not going to replace the competent officers.

Do they all type?

Remember the scene in "Yes Minister", where the Secretary tries to tell the minister about the personnel in the ministry. He says, "Well briefly, Sir, I am the Permanent Under Secretary of State, known as the Permanent Secretary. Woolley here is your Principal Private Secretary; I too have a Principal Private Secretary and he is the Principal Private Secretary to the Permanent Secretary. Directly responsible to me are 10 Deputy Secretaries, 87 Under Secretaries and 219 Assistant Secretaries. Directly responsible to the Principal Private Secretary are plain Private Secretaries, and the Prime Minister will be appointing 2 Parliamentary Under Secretaries and you will be appointing your own Parliamentary Private Secretary."

And the minister asks "Do they all type?"

Taxes are necessary, not tax officers

Some four years ago, I wrote in my Daily Column TIOL-DDT 2913 ,

Can we have more taxation and less taxmen? It is estimated that 92% of the taxes just flow into the treasury not because of the tax officers, but in spite of them. It is for collecting that 8% that we have so many raids, summonses, inspections, audits, arrests, show cause notices, prosecutions, orders, appeals and more appeals.

Can we think of a tax system with a bare minimum of tax officers who are often an impediment to business and at best are a nuisance?

When we are talking of a new revolution in taxation in the country with the probable launch of GST, shouldn't we also think of an administration with few officers and more taxes? When there is so much talk on subsuming of several taxes, should we also not talk of subsuming various levels and shades of officers into one GST service?

It would also be a good idea to hand over GST to a totally new department which has absolutely no experience of collecting taxes - the Department of Official Languages may be a good choice - that is one department where the officers don't throw their weight around.

At present, a Central Excise and Service Tax assessee has to bear the burden of officers at the level of Inspectors, Superintendents, Assistant Commissioners, Deputy Commissioners, Joint Commissioners, Additional Commissioners, Commissioners, Principal Commissioners, Chief Commissioners and Principal Chief Commissioners at the field level, with no clue as to what all these Commissioners are doing and the hierarchy about which the babus are very fussy. If you call a Deputy Commissioner an Assistant Commissioner, you have had it. One day you find the Division is headed by an AC and the next day you meet somebody else who says he is a DC. You meet a Principal Commissioner who says that he is also a Chief Commissioner and you meet another Principal Commissioner who says he is also a Commissioner. And all of them believe that they are engaged in the noble act of collecting taxes. You pay tax and they take the credit.

There is also the Audit wing of the Department as well as the CAG who make their seasonal unwelcome visits to your premises and ensure loss of peace for the next decade. There are more unwelcome visitors from the Preventive wings from the Commissionerate and the Director General, Central Excise Intelligence. You are expected to work to the satisfaction of all these officers. They can disturb you; they can destroy you. They can visit you at their pleasure, they can summon you and make you wait in their offices for hours and days together. They can ask you for any number of records including copies of your registration, returns and other documents which are already with them. They can take away your records and computers and never bother to return them even after their investigations are over. They can freeze your bank accounts, attach your properties and even arrest you. They can coerce you into giving statements in which they will make you write that the statement is given out of your own free will after you were hit by a bout of conscience. And the courts will say, the statement is evidence, while the departmental officers would say it is un-rebuttable proof. All these for the 8% of the total tax collection.

Will GST change the situation? Will the Central GST Offices sync with the State GST Offices? As of now in a State you have about 10 Commissioners/Principal Commissioners of Central Excise/Service Tax with a Chief Commissioner/Principal Chief Commissioner and the State VAT department is headed by a one single Commissioner. Maybe the Centre should also follow the State Model and there should be only one Commissioner for one State. Maybe One Commissioner for both CGST and SGST. Let it be 'One State, One Tax, One Commissioner.' In fact, there should be equal number of posts in each grade in the CGST and the SGST and preferably, they should sit in the same office.

If the GSTN is really going to be all that IT efficient that it is hoped to be, perhaps 98% of the taxes will be collected without interference by the officers. Then you really don't need this army to collect the 2%.

Taxpayers may not really mind paying the taxes; what really worries them is complicated compliance and offensive officers.

Let us have more taxes, not more taxmen.

Until next week