Legislative Change Required for Judicial Discipline

1. Rationalization of Duty Structure: There is a large disparity of rate of duty structure both for domestic and imported goods. The rate of Excise duty on goods falling under particular chapter Schedule to the Central Excise Tariff Act should be uniform with facility to avail re-imbursement of CENVAT credit by the manufacturers so that it will neutralize the cascading effects of tax. Similarly, the peak rate of Customs duty should be reorganized by considering rate of duty structure for domestic product as well as product imported for use as raw-materials, or final product. Accordingly, the levy of Anti-dumping duty or safe guard duty to be imposed on the specified imported goods in order to boost the domestic market products and encourage manufacture of like goods in India.

2. The legislative change for Judicial discipline: There are Board circulars informing that field officers and adjudicating officers are binding by the precedent judgment and higher appellate orders but it is often observed that field officers are not following the same precedent judgment or orders of the higher appellate authorities while deciding the similar issues and violating the judicial discipline in adjudication proceedings. Therefore, it is requested to the Government to bring suitable legislative amendment in the tax laws so that judicial discipline can be restored in the adjudication proceeding.

3. Single Excise Return: There are number of returns in Central Excise like ER4, ER5, ER6, ER7 etc, prescribed to be filed by an assesse. These returns are required to be submitted to the department periodically by the manufacturer on ACES. It is requested to minimize or arrange single return annually for all assessees so that quality information can be furnished to the department electronically.

4. The provision of pre-deposit: In the last Budget, new section is inserted to prescribe a mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed for filing appeal with the first stage and another 10% for filing appeal second stage appeal before the Tribunal under section 35F of the Central Excise Act, 129E of Customs Act and as applicable to Service Tax also. These new provisions result in great financial hardship for the assessee filing appeal against genuine issues or frivolous cases booked by the field formation for harassment or taking revenge against truthful assessee. So the provisions with regard to mandatory pre-deposit needs to be amended so that financial hardship of the truthful assessee can be compensated and frivolous cases can be controlled.

5. CENVAT Credit Refund: There is need of simple procedure of Refund of Excise duty under rule 5 of CENVAT Credit Rules, 2004 for the export of goods and services. The multiple Notifications were issued prescribing safeguard, conditions and limitations should be transparent, which may be converted into a single Notification and made applicable to manufacturers, assessee, exporters and service providers.

6. CENVAT Credit on Capital Goods : Rule 4 of Cenvat Credit Rules, 2004 read with sub-rule 2 (a) allow taking only 50% of credit on Capital goods in a given financial year and balance 50% credit in the subsequent financial year. The said restriction needs to be amended for taking credit 100% in the same financial year on the eve of moving towards (GST) comprehensive tax regime in the year 2016. Consequently, 100% Cenvat Credit facility gives relief to the manufacturers from financial crunch.

7. CENVAT Credit Time limit: The restriction of availing Cenvat Credit on input and input services within six months from the date of invoice or challan or other documents specified by insertion of third proviso to Rule 4(1) and sixth proviso of Rule 4 (7) of Cenvat Credit Rules effective from 1 st September 2014. This restriction is unreasonable and arbitrary provision so the Government should have a re-look this issue and restriction should be relaxed to the extent of one year for taking Cenvat Credit.

8. Service Tax threshold limit: The threshold limit of Service tax payment exemption needs to be enhanced from Rs.10 Lacs to Rs.25 Lacs and after crossing of turnover of Rs.24 Lacs, a service provider is required to take service tax registration instead of Rs.9 Lacs as at present.

9. Documents under Service Tax Rules: The recent amendment in Rule 9(1) of CENVAT Credit Rules, 2004 by the Central Government enables photo copy of RRs along with STTG Certificate as one the document for taking Cenvat Credit of Service Tax collected by Indian railways. Mere amendment of Cenvat Credit Rules, 2004 does not serve the problem of all service recipients of railways unless simultaneous amendment in rule 4A of Service Tax Rules, 1994 prescribing documents for Service Tax purpose, which needs to be amended to that extent. The C.B.E & C should bring amendment of rule 4A of Service Tax Rules, 1994 to enable RRs along with STTG certificate one of the document for Service Tax purpose.

10. Service Tax delayed payment Rate of interest: The rate of interest charged on delayed payment service tax has been enhanced w.e.f 1.10.2014 vide Notification No.12/2014-ST dated 11.7.2014. This has been done to encourage prompt payment of service tax by assessee but it seems very stringent one. Therefore, interest rate for the delayed payment of service tax is required to be re-looked by the Government.

11. Review of Service Tax Exemption Notifications: General Exemption Notification No.25/2012-ST dated 20.06.2012 needs further clarification, especially for the exemption to construction of single residential house for one family. Though the exemption is very clear but field formation are harassing builders and issuing show cause notices for payment of Service Tax on construction of Single house or for a smaller residential project. This needs further clarification so that individual as well as builders will get relief from harassment of the department officers.

12. SSI Units Exemption Limit: The slab of SSI exemption of duty free clearances (Nil Excise duty) turnover up to Rs.1.50 Crore to be enhanced to Rs.3.00 Crore. This will encourage small entrepreneurs to expand their business and consequently growth of domestic production of goods and discourage traders to import goods with high burden of Customs duty. Moreover, this existing slab of SSI exemption of Nil Excise duty has been continuing since long time needs to be enhanced.

13. SEZ Service Tax Refund Mechanism: Since the inception of SEZ Schemes in India, SEZ Unit or Developer of SEZ are experiencing tremendous problems to get Service Tax Refund for the specified taxable Services used in its authorized operation. Though the taxable services provided to SEZ Unit for its authorized operation of the developer exempted as provided under section 26(1) (e) of the SEZ Act, 2005 and Rule 31 of the SEZ Rules, 2006 but this exemption has been provided by way of Refund mechanism. The refund procedures have been prescribed through Notifications but these Notifications becomes ineffective due to wrong interpretation by the field formation. There are series of Notification / circulars have been issued by the Government with regard to Service Tax Refund mechanism for SEZ units but the said refund mechanism failed to provide proper solution to the SEZ units to get Service Tax Refund. Hence, it is requested to reconsider Service Tax Refund mechanism and bring amendment in SEZ Act and SEZ Rules to give direct upfront exemption of Service Tax.

14. SEZ Customs Duty Refund: The Customs duty refund arises on account of passing of final assessment order of Bill of Entry by the Specified officer of SEZ. Since there is no provision of Refund of Excess Customs duty in SEZ Act / SEZ Rules so SEZ Units are facing problem to get Refund of Excess Customs duty from the department of Revenue or department of Commerce. It is requested to the Government should consider this lacuna in SEZ Act, enact proper mechanism of refund claims of excess Customs duty and make provisions in SEZ Act / SEZ Rules, like provisions laid down under Section 11B of Central Excise Act,1944 and Section 27 of Customs Act ,1962 for Refund of Excess duty paid by the assessee.

15. Simplification of Service Tax Laws: The complexity and confusion in Negative Service Tax Regime effective from 1 st July 2012 and change in legal provisions, Mega exemptions, Declared Services, Reverse Charge Mechanism, Point of Taxation Rules & Place of provision of Services Rules, etc all these needs further clarification with revised Service Tax guide by the Tax Research Unit of C.B.E & C.
In the present scenario of Tax complexity in the Country, it is the key responsibility of Tax research Unit of the Government to examine all the issues with reference to the practical difficulties being faced by the manufacturers, assessee, traders, exporters, importers and service providers in tax laws. Accordingly, Government should bring various amendments in tax laws in the budget, 2015-16 for smooth tax administration in the economy. The forthcoming budget is very important as proposal for implementation of GST in April 2016 has been declared by the present Government. The GST aims to subsume various indirect taxes at the Central as well as State level. The Government is also looking at the GST as a path to improving of smooth tax administration with maximum revenue collection and bringing down the incidence of multiple taxes. We should look forward for GST era in India.

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