TOPIC – IN DEPTH DIVE INTO BUDGET PROVISIONS�, �SATURDAY, 27TH JULY 2024��BY NIRC OF ICAI�HOTEL, CROWN PLAZA, MUYUR VIHAR, NEW DELHI��
Presented By
J.K. MITTAL (Advocate)
Co-Chairman, National Council (Indirect Taxes), ASSOCHAM
LL.B.,F.C.A., F.C.S.
NEW DELHI
Ph: 011- 22447420, 011-22461071,72,76, 22056635
Email: jkmittalservicetax@gmail.com
Presented By
J.K. MITTAL (Advocate)
Co-Chairman, National Council (Indirect Taxes), ASSOCHAM
LL.B.,F.C.A., F.C.S.
NEW DELHI
Ph: 011- 22447420, 011-22461071,72,76
Email: jkmittalservicetax@gmail.com
Twitter @mittaldelhi
LinkedIn JK Mittal
Facebook Jai Mittal
Central Excise and Income Tax – Diverse views/ plan of Government
Speech of
Nirmala Sitharaman
Minister of Finance
July 23, 2024
Direct Taxes
Comprehensive Review of the Income-tax Act, 1961
GST and Income Tax – Diverse views/ plan of Government
Speech of
Nirmala Sitharaman
Minister of Finance
July 23, 2024
Direct Taxes
Simplification of Reassessment
GST and Income Tax – Diverse views/ plan of Government
Budget 2021-2022
Speech of
Nirmala Sitharaman
Minister of Finance
February 1, 2021
Direct Tax Proposals
Reduction in Time for Income Tax Proceedings
153. Honourable Speaker, presently, an assessment can be re-opened up to 6 years and in serious tax fraud cases for up to 10 years. As a result, taxpayers have to remain under uncertainty for a long time.
154. I therefore propose to reduce this time-limit for re-opening of assessment to 3 years from the present 6 years. In serious tax evasion cases too, only where there is evidence of concealment of income of `50 lakh or more in a year, can the assessment be re-opened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.
GST and Income Tax – Diverse views/ plan of Government
Speech of
Nirmala Sitharaman
Minister of Finance
July 23, 2024
Indirect Taxes
Finance Bill 2024 proposed a new provision 74A
Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to Financial Year 2024-25 onwards
(2) The proper officer shall issue the notice under subsection (1) within forty-two months [i.e. 3 ½ yers] from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within forty-two months from the date of erroneous refund.
(7) The proper officer shall issue the order under subsection (6) within twelve months from the date of issuance of notice specified in sub-section (2)
GST and Income Tax – Diverse views/ plan of Government
CGST – Existing provisions
73. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful misstatement or suppression of facts.—
(2) The proper officer shall issue the notice under sub-section (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order.
***
(10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.
Earlier maximum time period for passing order 3 years, from due date for furnishing annual return.
Proposal i.e. maximum time lime passing order 4 ½ years from the due date of annual return.
Earlier maximum time period for issuing SCN, 2 years 9 months, from due date for furnishing annual return.
Proposal i.e. maximum time lime for issuing SCN 3 ½ years from the due date of annual return.
GST and Income Tax – Diverse views/ plan of Government
CGST – Existing provisions
74. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts.—
(2) The proper officer shall issue the notice under sub-section (1) at least six months prior to the time limit specified in sub-section (10) for issuance of order..
***
(10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from the date of erroneous refund.
Earlier maximum time period for passing order 5 years, from due date for furnishing annual return.
Proposal i.e. maximum time lime passing order 4 ½ years from the due date of annual return.
Earlier maximum time period for issuing SCN, 4 years 6 months, from due date for furnishing annual return.
Proposal i.e. maximum time lime for issuing SCN 3 ½ years from the due date of annual return.
History of time limit for issuing show cause notices/ Orders
How one can justified, when time limit for issuing show cause notice for bonafide taxpayers year after year enhanced.
Under
Central Excise Act , 1944 -
Customs Act, 1962
Finance Act, 1994 (Service Tax)
Time limit for issuing show cause notices
Normal period (other than fraud, suppression, mis-statements)- 6months, One year, Two years, 30 months
Extended period - (for reasons of fraud, suppression, mis-statements)- 5 years .
Time limit for passing order
Normal period (other than fraud, suppression, mis-statements)- no time limit, 6months to one year
Extended period - (for reasons of fraud, suppression, mis-statements)- no time limit. One year to two years.
Proposal in Finance Bill 2024 – time lime aligned for both taxpayers bonafide as well as those indulged in fraud etc. for issuing show cause notice and passing orders.
Tax laws are being made more liberal for tax evaders and offenders
Reasons Government after government failed to curb tax evasion tendency
Liberal approach to tax evasion and time to time relief to past tax offences/ violations and evasions encourage tax violation of massive scale.
Heart goes out for tax violators indulge in frauds etc.
Permanent benefit to for tax violators and evaders
Proposal in Finance Bill, 2024
Section 74A
(9) The person chargeable with tax, where any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, may,––
Before SCN – Tax+ Interest + 15% penalty (same as earlier)
Within 60 days of SCN - Tax+ Interest + 25% penalty (earlier 30 days)
Within 60 days of adjudication order - Tax+ Interest + 50% penalty (earlier 30 days)
Tax laws are being made more liberal for tax evaders and offenders
Heart goes out for tax violators indulge in frauds etc.
Trend right indicates so since year 2003 onwords
Earlier
Service Tax, there was penalty of 200% leviable under section 76 and 78 of the Act.
Central Excise Penalty was 100% under section 11AC of the Act.
Tax laws are being made more liberal for tax evaders and offenders
Voluntary Disclosure of Income Scheme (VDIS) like scheme has become become regular features in Tax laws in India
Proposal in Finance Bill, 2024
Section 128A - Waiver of interest or penalty or both relating to demands raised under section 73, for certain tax periods.
For pending dispute under section 73 Notices for the period 1st July 2017 to 31st March 2024 (except of refund matter)
Pay on or before the date to be notified by the Government - Ful tax (Waived Interest and Penalty)
Power of summons – most abused, no solutions
Proposal in Finance Bill, 2024
Section 70 of CGST Act, - the following sub-section shall be inserted, namely: ––.
“(1A) All persons summoned under sub-section (1) shall be bound to attend, either in person or by an authorised representative, as such officer may direct, and the person so appearing shall state the truth during examination or make statements or produce such documents and other things as may be required.”.
This was existed under sub-section (2) of section 14 of the Central Excise Act, 1944 – Power to Summons
Power of summons – most abused, no solutions
See trend in past- Govermment clarification never put in law
The Board through Circular No. 65/88-CX.6, dated 06-09-1988 any person is to be summoned, he should ordinarily be summoned on a working day and during normal working hours.
The Board through instruction F. No. 137/39/2007-CX-4, dated 26-2-2007 has taken a serious note on the issuance of summons by the superintendent or the senior intelligence officer in a routine manner under harsh and legal language which causes unnecessary mental stress and embarrassment and instills fear in the minds of the receiver. The Board has appreciated that this is a source of harassment and even leads to unethical practice. In view of the same, the Board has issued the instructions for compliance. The summons should be issued after obtaining prior written permission from an officer not below the rank of Assistant Commissioner with reasons for issuance of summons to be recorded in writing
The Board has issued further instruction F. No. 207/07/2014-CX-6, dated 20-01-2015 and clarified that “As per Section 14 of Central Excise Act, 1944, summons can be used in an inquiry for recording statements or for collecting evidence/ documents.” “ It is emphasized that the use of summons be made only as a last resort when it is absolutely required.” In the said instruction again guidelines issued in the earlier instruction dated 26.02.2007 is reiterated. “Further, senior management officials such as CEO, CFO, General Managers of a large company or a PSU should not generally be issued summons at the first instance. They should be summoned only when there are indications in the investigation of their involvement in the decision making process which led to loss of revenue.”
Power of summons – most abused, no solutions
See trend in past- Govermment clarification never put in law
The Board through Instruction No. 03/2022-23 (GST-Investigation), dated 17.08.2022 has admitted that “It has been brought to the notice of the Board that in certain instances, summons under Section 70 of the Central Goods and Services Tax Act, 2017 ('the CGST Act have been issued by the field formations to the top senior officials of the companies in a routine manner to call for material evidence/ documents. Besides, summons have also been issued to call for statutory records viz. GSTR-3B, GSTR-1 etc., which are available online in the GST portal.” The said Instruction has also admitted that “Previously in respect of legacy laws, the Board has sensitized the officers regarding use of power of issuance of summons diligently. However, the Board finds it necessary to issue fresh guidelines under CGST.”
The Board through Circular No.128/47/2019-GST, dated 23.12.2019- “4…Accordingly, the Board directs that all field formations shall use the standardized authorisation for search, summons, inspection notice, arrest memo and provisional release order (the formats are attached). These formats shall be used by all the formations w.e.f. 01.01.2020.”
DGGI instruction F.No.DGGI/17/2023-INV-O/o Pr DG-DGGI-HQ-DELHI-Part(1)/ Dated 08.02.2024- “8…Further, if a taxpayer has utilized ITC towards payment of GST on its outward supplies, it is not acceptable to seek via summons/letter aspects such as - 'please clarify whether ITC availed and utilized was proper."
9. Addressing letter/summons with context or content akin to a fishing inquiry is not acceptable.
THANKS TO ALL�