FEBRUARY 25, 2011

A few time-tested tips for FM from Vox Populi

By Gita

DON’T Tax Houses: Roti (Bread), Kapda (Cloth) aur Makan (house) are the three basic requirements of a person and therefore these should not be taxed. Service Tax on construction of houses should be withdrawn. Purchase of house is already beyond the reach of poor class and middle class family. On the contrary there are persons having multiple houses. Some sort of heavy tax should be imposed on a person having more than one flat. This will also solve the housing problem to some extent. Transaction in property also generates lot of black money. As on date the amount of payment of black money is to the extent of 80 to 95%. A person not having black money cannot buy a house today. Budget should also provide some measures to tackle black money. None of the budgets in the past have provided measures to tackle black money. The Inflation is due to availability of black money in huge amount. Inflation cannot be controlled by increasing CRR or Repo rate. It can only be controlled by controlling black money. One of the measures to control black money is to withdraw the high denomination (500 & 1000) currency notes.

By Dubey B P

TAX on Film Stars: In respect of film producers, actors, taxes must be collected as and when film yields good result after release of the film; otherwise the profits earned will be reinvested by the producers, actors in another film production, if it yields good result it is ok, if their investment gives bad result, no taxes will be collected in respect of profits earned.

Whenever the persons purchase or sell any immovable/movable assets then and there itself tax must be deducted/collected at some flat rate i.e at 15-20%. In respect of immovable properties registrations, the persons selling and buying must submit Incometax clearance certificate, then only taxes must be collected effectively. For obtaining a contract the contractor must produce tax clearance certificate or tax must be deducted and remitted to the central govt account at the stage of allotting contracts itself only.

In respect of beverage companies, distilleries, wine shops retail & wholesale tax must be deducted/collected at maximum rates i.e. it must be not less than 25%. People who are involved in white collaroffences, without showing any mercy the properties acquired by them illegally must be takenover by the government and proper justice must be done to the losers.

Salaried people must be given some kind of relaxation i.e. introduction of standard deduction, tax relief on complete HRA allowance received, other allowances received at least to the employees who are drawing gross salary of Rs.10 lakhs per annum. Because genuine tax payers in India are only salaried employees.

By Deva Srikanth

INPUT Duty higher than on Final Products: At present on some goods the rate of duty on the final products is 4% and the rate of duty is 10% on inputs. In view of this there will be a balance in the CENVAT account always and this may lead the assessee for searching the ways for encashing un-utilized CENVAT credit; the government should make equal the eligible CENVAT credit rate equal to the rate of duty on final product, so that inputs and final products are equally taxed.This can happen only when sealing of rate of input stage tax to the rate of tax on final product equal. Further in ER1 there should be a table before duties payable columns all the details of cumulative tax payable

By PGK&CO Chartered Accountants

OUTSOURCE Registration : Service tax registration has been made electronic. Once the electronic registration is done, the assessee is required to submit the papers to the range office. The range officer is required to verify the papers and release the registration within 7 days. This routine process is similar to an income tax PAN allotment process. It is suggested that the process of service tax registration should also be outsourced to these PAN agencies to reduce the burden of range offices and also help in quicker release of registration.

By B GIRIDHARAN

NOTIFY Eligible Services : Regarding the eligibility of service tax credit need to be incorporated in the Rule itself or else the items which are not eligible clearly notified.

There is no clarity for the following services are eligible are not.

1) Canteen service

2) Gardening service

3) Housekeeping service

4) Guest house services

5) Welfare related services

By Arbind Aggarwal

IT is your greatness that you give chance to people to give suggestions. The moot point is that you your self give so much suggestions to the Govt.

I always wish for litigation to go down and expect the FM to direct the CBEC to fine tune the existing rules in line with the courts judgements and logic to minimize the litigation.

++ Reversal of input service credit on clearance of “inputs as such”, deptt. issuing notices

++ Mandatory sealing of consignments by excise officials for export to Nepal and Bhutan

++ Export of goods by merchant exporter - Acceptance of Bond and issue of CT-1, there is still confusion who will accept the bond and who will issue the CT-1 certificate, recently one LTU refused to issue CT-1, saying that the CT-1 have to be issued by the jurisdictional authorities of the manufacturer only.

++ Export of bought out goods after packing etc. - Authorities refusing the input stage rebate under Notification No. 21/2004-CE, saying packing is not processing as required in the Notification.

++ The export procedures needs a complete re-look and a complete new clear cut Master Notification/clarification is required to cover procedures/documentation/rebates/refunds etc. The filing of declarations, verification of input/output norms etc should be done away with. Why intimation of export to the deptt. ) in case of self sealing)??

++ CENVAT credit on services like - Canteen, Garden maintenance, etc. - credit should be related to the business of manufacturing

++ The facility of Cenvat Credit transfer should be allowed to all as is being allowed in LTU. There may be some mechanism to check misuse.

++ There should be a clear policy regarding export benefits - minimum documentation and processing time. Submit proof of payment of input tax and rebate/refund should be granted.

++ CAG audit of excise and service tax assessees - is it needed??

By Ravindran

BOARD has advised that in the case of a show cause notice issued pursuant to an admitted audit objection, the adjudicating authority should not immediately decide the case in favor of the assessee even if the facts and position of law confirm that the notice was unsustainable, but instead refer the matter to the Commissioner (PAC) to contest the audit objection with revised recommendation and that till such time the CAG takes a decision on such recommendation the case should be transferred to “call book”. Similar advice is issued in respect of cases where the Appellate Authority had decided against orders confirming the show cause notice issued pursuant to an admitted audit objection, even while filing further appeals.

It is the order of the day today that frivolous notices are issued on audit points, which are raised only for statistical purposes. It is also clearly known fact to all concerned that no adjudicating authority ever drops proceedings in a show cause notice, much less when the notice was issued pursuant to an admitted audit objection. There are cases where an adjudicating authority confirms even show cause notices issued on audit objections which are contested and settled! In most cases, the process of adjudication is rather a ritual an assessee is going through as he is fully conscious that justice-rendering takes place beyond the boundaries of the department. There are very few officers who apply themselves to the facts of each case and the position of law and dare to take decision on merits, even if they are to go against revenue.

There is plethora of decisions that investigation should precede issuance of notice and any notice issued merely on the basis of audit objections is not maintainable in law. But in practice, this legal dictum is not at all adhered to. There are glaring omissions on facts and figures committed by the Audit team and notices are issued based on such incorrect facts and figures. Litigations are forced upon assesses on non-existing facts. The adjudication proceedings are no more processes to resolve disputes, in the perception of tax-paying community. These proceedings merely multiply disputes. It is time that justice delivery system is totally delinked from the clutches of hierarchical heaviness and audit ascendancy.

Lack of precise laws, attitude of the greedy government to garner revenue by hook or crook (defective law or by retrospective validation), absence of transparency and inordinate delays in decision making, are one of the major factors contributing to high corruption level in the country. Grieving assessees, who are generally in the state of doubt on compliance of the ambiguous laws, continue to live only on hope of better tomorrow.

Let the Legislators limit their job to making lucid, people- friendly legislations consistent with changing times and the Executives exert themselves only with their task of administration and facilitation. They should rather refrain from encroaching upon the domain of Judiciary. In tax related matters too, let lower level judicial officers, who are independent of the departments concerned, be appointed to function necessarily as a team, to resolve disputes arising out of levy, collection, classification, assessment, including procedural infractions. The power to punish an assessee should never remain with the executive, but should be left to the judicial officer alone. The growing litigations, despite its positive impact of employment generation in the field of advocacy, are serious impediments to overall economic growth of our nation. Will the Budget, 2011 focus on this aspect too, as change in justice delivery system on tax matters, had become a need long before?