CA Sandeep Kanoi
BJP in its election manifesto has said that UPA Government has unleashed ‘Tax terrorism’ and ‘uncertainty’ which resulted in negative investment climate, dented the image of the country and created anxiety in business class.
While analysing the Budget 2014 of the BJP Led government we have found that BJP government has further continued tax terrorism and introduced some of the provisions which are draconian and against the natural justice and by no means anything lesser than tax terrorism. Two such Provisions are as follows :-
1. Power of Survey U/s. 133A to Check TDS Compliance
Further, it is also proposed to amend section 133A to provide that an income-tax authority may for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions of Chapter XVII-B or Chapter XVII-BB, as the case may be, enter any office, or a place where business or profession is carried on, within the limits of the area assigned to him, or any such place in respect of which he is authorised for the purposes of this section by such income-tax authority who is assigned the area within which such place is situated where books of account or documents are kept. The income-tax authority may for this purpose enter an office, or a place where business or profession is carried on after sunrise and before sunset.
2. Mandatory fixed pre-deposit of 7.5% to 10% of the duty demanded or penalty imposed or both for filing appeal.
Customs- Section 129E is being substituted with a new section to prescribe a mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both for filing appeal with the Commissioner (Appeals) or the Tribunal at the first stage and 10% of the duty demanded or penalty imposed or both for filing second stage appeal before the Tribunal. The amount of pre-deposit payable would be subject to a ceiling of Rs. 10 crores.
Excise- Section 35F is being substituted with a new section to prescribe a mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both for filing appeal with the Commissioner (Appeals) or the Tribunal at the first stage and 10% of the duty demanded or penalty imposed or both for filing second stage appeal before the Tribunal. The amount of pre-deposit payable would be subject to a ceiling of Rs. 10 crores.
Service Tax- Vide section 83, Section 35F of the Central Excise Act is already applicable to service tax. Section 35F of the Central Excise Act is now being substituted with a new section which prescribes a mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both, for filing appeal before the Commissioner (Appeals) or the Tribunal at the first stage and 10% of the duty demanded or penalty imposed or both, for filing the second stage appeal before the Tribunal. The amount of pre-deposit payable would be subject to a ceiling of Rs.10 Crore. All pending appeals/stay applications would be governed by the statutory provisions prevailing at the time of filing such stay applications/appeals. When the amended section 35F in the Central Excise Act comes into force, it would, mutatis mutandis, apply to service tax by virtue of section 83 of the Finance Act, 1994.
Proposed Chart of Pre-deposit in respect of Appeal for Service Tax, Excise and Custom is as follows :-
| Appellate Authority | Percentage of duty Demanded or penalty imposed or both * | |
| Appeal before the Commissioner( Appeal) or the Tribunal at First stage | 7.5% | |
| Appeal before Tribunal at second stage | 10% | |
| *subject to a ceiling of Rs. 10 crores. | ||
So here government has prescribed condition of pre-deposit of Taxes and Penalty for filing of appeal which seems to violates the Rules of Law and is against the Natural justice.
3. Imposition of Interest at the Rate of 24% on Delayed Service tax Payment
One more provision which I would like to add here is Imposition of Interest upto 24% for delay in payment of Service Tax. Sometimes delay may happen due to genuine reasons like non-receipt of payment from service receiver or loss in business etc. Imposition of Interest @ 24% is 3 times of what taxpayer normally gets on his deposits with Government or Bank and 4 times of what government gives on Income Tax Refunds. Interest Rate on Bank Deposit in currently rages between 8 to 9% and Rate of Interest on Income Tax Refund is 6%.
Vide Notification No 12/2014-ST dated 11.7.2014, rate of interest to be charged on delayed payment of service tax has been enhanced w.e.f. 1.10.2014. Rates to be charged by department w.e.f. 01.10.2014 are as follows –
| Sl.No. | Period of delay | Rate of simple interest |
| (1) | (2) | (3) |
| Up to six months | 18 per cent. | |
| More than six months and up to one year | 18 per cent. for the first six months of delay and 24 per cent. for the delay beyond six months. | |
| More than one year | 18 per cent. for the first six months of delay; 24 per cent. for the period beyond six months up to one year and 30 per cent. for any delay beyond one year. |
4. Time limit on Claiming CENVAT Credit – Now there is a restriction introduced under the CCR that credit of the duty paid in inputs or input services should be availed with 6 months from the date of relevant document specified in Rule 9(1) of the CCR. Read- Time limit on Claiming CENVAT Credit: Major Implication
5.
We may soon see such rates for delayed payments under other Acts too.
Yes Mr.Manchanda,This is also Tax Terrorism.Such Instances will increase day by day as Government is in badly need of Resources as Hon.FM had stated in Budget.Tax authorities will prolong appeals and at the same time officers will terrorize tax payers to pay up dues which in fact is paper liability created by Department illegitimately without any substance.Department knows that they will have to pay only 6% interest (if I am not wrong) while tax payers cost of funds may not be less than 15% pa.If outcome of appeals take 5 years and even if comes in favour of tax payers, after 5 years, department will have to pay only 260000/- while Tax payers would have got 400000/- on deposit of Rs.200000/-.so there is net loss of Rs.140000/- plus legal costs and harassment.I request platform like Tax Guru to expose such Laws spreading public awareness so things may improve.
In one case assessing officer wrongly calculated income-tax payable as 4 lacs and the assessee filed appeal before the appellate authority within one month. After the appeal was filed, the AO insisted 50% of tax which the assessee was forced to deposit which was deposited about more than 2 years ago. The irony is that the appeal has not come up for hearing till date (perhaps the department knows that amount will have to be refunded with interest). Nobody can dare to ask tax-man why appeal is not being heard.