WHAT IS QUALITY SCRUTINY?
Immediately after the Board Circular was issued we received these comments from a concerned Netizen, Ravipriya.
The CBEC has through Circular No. 887/05/2009- CX dated 11th May, 2009 has done more harm than good to the officers of the department and to the trade in the matter of "Scrutiny of ER1, ER2 and ER3 returns of manufacturers and returns submitted by Dealers."
In the above circular, it has been observed thus: “It would be the responsibility of the jurisdictional Joint/Additional Commissioner to decide on the number of returns to be taken up for detailed scrutiny by the Ranges keeping in mind the availability of administrative resources which can deliver quality scrutiny.” What is the import of this? Is the CBEC not demoralizing its own cadre? Does the CBEC admit to existence of administrative resources which cannot deliver quality scrutiny? If so, who was at fault? Will this also not lead to corrupt practice of “pick and choose” posting of staff?
In the Central Excise department, the executive staff plays a pivotal role in the revenue collection, of which assessment is one aspect. Among the executive staff, the Inspectors were the back-bone, once upon a time. This cadre, thanks perhaps to the inordinate delay in promotions to Superintendent's cadre and regular recruitment through Staff Selection Commission, had the essential characters of “Executives” in terms of experience and youth till, a decade before and started losing the said character slowly.
The cumulative effect of the following developments not only spoiled the “right-mix,” but also brought down the morale of the “Executives” over the years:-
(1) Complete ban on recruitment of Inspectors as was being done in earlier years, despite geometric progression in revenue;
(2) Frequent changes in laws; rules; procedures; formats etc.
(3) Introduction of self-assessment, in the name of “reposing more trust” on assessees;
(4) Notification of about 6 to 8 new taxable services and widening existing services, without clear definition of services and ambiguity in related laws;
(5) Reducing the Range Offices to a level of “Daily statistical data collection centres”;
(6) Illogical cadre restructuring done and consequent re-shaping of the department with disproportionate organs such as swollen head, flabby body, thin limbs etc.;
(7) Lack of training to staff about the change in law, procedures and information-technology;
(8) Lack of strategy, planning, development to check every growing pendency in litigation;
(9) Failure to espouse faith in alternate dispute redressal system and process, (not increasing the infrastructure, numbers of CESTATs in the country and diluting the Settlement Commissions' powers to name a few);
(10) Failure to check corrupt practices, in all administrative and revenue matters.
From the assessees' point of view there is no respite from harassment, notices and adverse orders.
CBEC should first conduct a quality scrutiny of its functions.
Let us only hope that one day, the diminishing faith of the assessees is halted and hope of pleasant tax administration emerges.
Hope On, my friend!
Mandatory penalty – Dharmendra Textile case did not stipulate that for every demand, penalty is an automatic consequence – If the non-payment of duty was attributable to fraud, collusion etc, Penalty is mandatory, payment of duty before or after SCN does not make any difference. – Supreme Court
The Dharmendra Textile - case is being liberally interpreted on a large scale.
In a case decided on 12.5.2009, the Supreme Court observed, “In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discretion in the matter.”
Recently, explaining Dharmendra, the ITAT Pune Bench observed in 2009-TIOL-278-ITAT-PUNE, “Therefore, Hon'ble Supreme Court's observations to the effect that a penalty is to provide remedy for loss of revenue cannot be construed to mean that a penalty can be imposed as an automatic consequence for addition to returned income.”
Well, judicial minds think alike and this is exactly what the Supreme Court also clarified.
The Supreme Court observed that it is clear that penalty under section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section.
We bring you this important Supreme Court Judgement today.
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