CBEC happy with its initiatives to facilitate trade and encourage non-adversarial tax administration
By TIOL News Service
NEW DELHI, NOV 08, 2014: IN the Budget 2014 the Finance Minister had announced certain initiatives to facilitate trade and cut trade transaction costs. It is the endeavor of the Indirect Tax administration to facilitate the trade and industry in discharging their tax dues, and simplify procedures for ease of doing business. Some of these initiatives as well as the subsequent actions are as follows:
++ 24x7 Customs clearances: By 31.12.2014, 24x7 facility for specified export and import goods shall be available at 17 airports and 18 sea ports in respect of following categories of imports and exports:
o Facilitated Bills of Entry where no examination and assessment is required;
o Factory stuffed export containers and export consignment covered by Free Shipping Bills;
o Export of all goods (in addition to factory stuffed export containers and export consignment covered by Free Shipping Bills). This facility was earlier introduced at Chennai, Bangalore, Mumbai and Delhi.
++ Indian Customs Single Window Project: The Indian Customs Single Window Project was announced in the Budget 2014. The aim of this project is to provide a common platform to trade to meet the requirements of all regulatory agencies (including Animal Quarantine, Plant Quarantine, Drug Controller, Textile Committee etc.) involved in Exim trade through message exchange. Single Window Scheme essentially is a network of cooperating facilities bound by a set of agreed interface specifications in which trade has seamless access to regulatory services delivered through electronic means. This scheme will reduce the cost of doing business, by integrating regulatory requirements on one common platform and reduce duplicity. Other initiatives to facilitate trade which are already in operation are Authorised Economic Operator scheme, ACP scheme, Self-Assessment in Customs, Risk Management System for assessment for Imports & Exports. All these initiatives are designed to facilitate trade enhance transparency and reduce compliance costs to taxpayers.
++ Simplification : In order to reduce the compliance costs, it has been decided by CBEC that an assessee registered with both Central Excise and Service Tax authorities will be visited by only one team of Audit officers to verify their records for compliance.
++ World Ranking : World Bank's biennial report titled Logistics Performance Index (LPI) compiles an inter-se ranking of 160 countries based upon a survey of International freight forwarders and companies engaged in international logistics. This publication, though not as widely quoted as the Doing Business Report, ranks India at 54. The LPI report states that compared with other countries in their comparable income groups, India is an over-performing non-high-income economy alongside Malaysia, South Africa, China, Thailand, and Vietnam. The Logistics Performance Ranking of countries includes customs operations, efficiency in international shipments, Logistics competence, infrastructure quality etc. Another similar ranking is published by the World Economic Forum, titled Global Competitiveness Report 2014-15 in which it ranks 144 countries based upon a perception survey across 12 pillars. The overall competitiveness ranking accorded to India is 71. This report also ranks countries in terms of the burden of Customs procedures. India has been ranked at 75 out of 144 countries surveyed.
++ Interface with Trade and Industry : Trade representations on issues which are prone to protracted litigation are being addressed in a systematic manner and where necessary circulars and instructions are being issued to obviate the problems of the trade by reducing litigation. Where administrative intervention is considered necessary, directions are being given to the Chief Commissioners to address the problems of the trade.
++ The Field formations have been advised to promptly acknowledge and process the representations/communications received from the taxpayers and have regular interaction with the assessees to mitigate their problems & apprehensions. It is hoped that measures initiated by CBEC will foster a more transparent and non-adversarial tax administration.
Why not consider the persons handling tax with the assessees as partners for tax collection instead of adversaries?
Use of IT network, interlinking the ACES, ICEGATE and other EDI systems etc is unavoidable to achieve true facilitation of trade and encourage non-adversarial tax administration.
Stop treating the registered tax payers as adversaries and focus on the risk analysis based on intelligent inputs.
More simplification is need of the hour – audacity of will and hope
• Registration must be automatic – why physical verification of premises is required when address proofs (electricity bill, telephone bill, AADHAAR), identity proofs (PAN, VAT registration), location MAP, etc are provided in the application itself and copies could be uploaded on ACES itself. All these proofs can be verified online through respective data bases. If registered person is not paying tax or not filing return then the range staff can visit the premises. Assessee should be allowed to add additional premises to the existing registration (that too online by filing requisite proofs) for storage of inputs or finished goods to facilitate expansion.
• EA 2000 Audit – mechanical audits should be dispensed with and the same should be done on actual risk review by the audit staff. Threshold limit were fixed 15 years ago should be revised and should not be a sole basis to initiate audit. Documents which are already available with the department (ACES) should not be asked on each audit.
For example:
1. Monthly/Annual Returns along with Balance Sheet
2. Registration Certificates
3. Revenue figures, Cenvat taken and utilised, exports, notifications availed etc
4. Tax payment details i.e. challans
Actually most of the information/data is available with the department all time and rest can be consolidated for comparison or ACES should be equipped to generate MIS to analysis the figures. In fact assessees may be asked to upload their sales/purchase/Cenvat data on ACES at the time of filing of returns and the same data base can be used to cross verification. Some copies of invoices (high value) also could be uploaded. This is being done by the State VAT web portals.
• Proof of export – export is done through Customs and shipping bill can be verified by the department on line. ACES may be made interactive with EDI. There should be no need to file proof of export. Further what is the use of executing UT/Bond by the manufacturers as they are registered with the department and liable to pay duty if the goods are not exported? This can be done by amending the relevant rules 18/19 of CE Rules.
• Rebate on exports – rebate should be credited automatically to assessees bank, once the shipping is complete just like drawback. Even the export realization can be tracked online. The burden to prove has to be shifted from assessee to department to create an environment of partnership.
• Trader/dealer registration – single registration is sufficient for issuing cenvatable invoice irrespective of source of goods whether domestically procured or imported. Categorisation of first stage/second stage/importer etc should be removed. Any person registered with the department should be able to pass on the credit.
• Refund of Cenvat Credit by service exporters – can there be some slab system i.e. if the amount of refund is up to 5% of export turnover – automatic, 5 to 10 % - should be supported by documents, more than 10% - after verification by the department. If an assessee is exporting 500 Crores worth of services, then he should get refund of 25 Crores @ 5% (a certificate from CA could be required for more than 5% cases).
• Lok Adalats – Comprising Chief Commissioner, Commissioner Appeals, Trade representatives, Independent CA and advocate, should be held at least once in a month in each Commissionerate to decide cases not involving major legal issues. For example, Cenvat cases which are on the question whether credit available on a particular service (catering, CHA, insurance etc could be involving thousands of cases at various levels), availability of a specific notification, issues arising out of CERA audits.
• SVB – what is the purpose of creating this? Orders are deliberately kept pending, EDD is collected and then refunded after many rounds of documentations, tons of paper is again gathered without much revenue. When OSPCA is here, SVB is not relevant. Most of the companies are there for long and the modalities/pattern of transactions remains same over the years then why renewal each time? Further all these transactions are under detailed scrutiny under TP audit, assessment.
• SFIS – served from India is being interpreted as “promotion of Indian Brand” which is against the policy itself which is saying “services exported from Indian soil” not the “Brand”. MNC’s are setting shops to take benefit of low cost manpower, infrastructure and creating “service centers i.e. R & D, back offices, outsourcing etc” and country is receiving precious foreign exchange. Instead of promoting service exports, it is discouraged by such mis-interpretations.
• Negative list of Cenvat eligibility – name the specific services clearly
• Service Tax Return – when there is no classification in the act/rules now, then why tax payment and return is filed based on classification, may be income tax SARAL forms should guide us in this.
• Reverse Charge – Service Tax TDS is the answer (like WCT deduction under VAT, TDS/TCS in Income Tax). TDS @ 10% on all services where provider is registered which could be accounted for based on 26AS by the provider in his return. Special mechanism for non-registered could be made considering the threshold limit, may be a declaration from the provider. This declaration should also be uploaded on the ACES.
• Small service providers can be specified, like SSI based on the category of services etc. No threshold for specific services at all. Delink credit of input service credit from payment to service provider. Collection and credit – both should be invoice based just like TDS.
• Circulars – trade notices should be backed by circulars and must not go beyond the act/rules. Recent examples are trade notice by Mumbai Commissionerate for registration of importer where the content, conditions are way ahead of the rules. Since trade notices have limited jurisdiction only, therefore circulars must be issued. Second example is the trade notice issued for surrender of service tax registration. There are no provisions in the act/rule but the trade notice is putting too much conditions. Again no circular.
• In fact circulars should be issued based on the large number of SCN’s – categorizing the cases and issues involved for clarifying the intent of the law. This will reduce litigation.
• Structured interaction – Commissioner should be made accountable for evasion in his jurisdiction and in turn each ground level staff should be made accountable for such cases. This could be achieved by organizing “CAMP OFFICES” in the jurisdictional areas to interact with the public and to make the public aware of the laws/issues/penal actions. Here preventive, anti-evasion units should be used to gather information. Actually the culture of sitting in the offices has disconnected the government from the public. Officers should be available, visible, accessible, accountable, responsible at all levels and their presence should be felt as a guide, facilitator, collector etc. instead of tormentor. Facilitate the tax payers based on certain parameters on an annual basis in each Commissionerate.
CBEC should take cue from the CBDT to the extent online data collection and tax collection is concerned. These facilitations would result in saving of tons of precious paper and space in the offices which are clogged with the so called records.
Also take cue from the Lokayukta office in M.P., where many government servants are caught accumulating few crores of assets, irrespective of their status/level. May be this is the time to create internal Lokayukta system.
Some thing OUT OF THE BOX is required to connect both these nation builders.
Before parting - Swachh Bharat - protect earth and environment by minimising use of paper unnecessarly.
Arbind Aggarwal
Posted by Arbind Aggarwal
TIOL Tube Latest
TIOL Tube
Shri N K Singh, recipient of TIOL FISCAL HERITAGE AWARD 2023, delivering his acceptance speech at Fiscal Awards event held on April 6, 2024 at Taj Mahal Hotel, New Delhi.
