Transparency in Budget Making - A Tale of Foreseeable Amendments
GONE are the days when the contents of the Budget were considered as top secret. The tax officials used to be constantly alert to assess the requisite changes and come out with tax proposals and statutory amendments in the Budget. Things have changed dramatically in the recent past and the balance of convenience has slowly but steadily tilted in favour of revenue due to Apex Court's benevolence for retrospective legislations and the Government's penchant for revenue friendly statutes.
A close look at the changes proposed in the Finance (No 2) Bill, 2009 makes an interesting revelation. Many of these changes, some prospective and some retrospective had their origin in disputes resolved at various judicial levels, obviously in assessees' favour and the amendments are on predicable lines. Just have a look at these instances:
Cause | Effect |
|---|---|
Commissioner Of Customs and Central Excise Vs M/S Hongo India (P) Ltd Held: High Court had no power to condone the delay under Section 35 H(1) of the CE Act, 1944 | Sections 35G and 35H have been proposed to be amended retrospectively so as to empower High Courts to condone delay in the filing of appeals, applications as well as the memorandum of cross objections where it is satisfied that there was sufficient cause for delay. |
M/S Crane Betel Nut Powder Works Vs Commissioner Of Customs & Central Excise, Tirupathi And Another Held: Process of making Betel Nut powder and adding menthol, sweetening agent etc does not amount to manufacture | First schedule to the Central Excise Tariff Act has been amended by inserting Note 6 in Chapter 21 so as to declare the process of adding or mixing certain ingredients to betel nut as amounting to manufacture with immediate effect. |
M/S Copier Force India Ltd And Others Vs Commissioner Of Customs (Imports), Chennai Held: Though the officers of various ranks in the DGCEI were invested with powers of the officers of customs of comparable rank, under Notification No.31/2000- Cus. (NT) dated 9.5.2000 the CBEC had not assigned territories in which these officers would exercise the powers of the officer of customs. | Validation clause has been taken in the Finance (No.2) Bill, 2009 to validate appointment of officers of customs under sub-section (1) of section 4 read with sub-section (1) of section 5 of Customs Act, 1962 and specifying their jurisdiction vide notification No.27/2009-Customs (N.T.) dated 17.3.2009 and to validate action taken by such officer of customs on and from 9th May, 2000 as if their area of jurisdiction as specified in the said notification was in force at all material times (Clause 91 of the Finance (No.2) bill, 2009). |
Som Distilleries Pvt Ltd & Ors Vs UOI & Ors Held: packaging and bottling of liquor come within the ambit and sweep of manufacture within the meaning of clause (f) of Section 2 of the Central Excise Act, 1944 – not | The definition of Business auxiliary service under Section 65 (19) is proposed to be amended so as to provide that only those processes which result in the manufacture of excisable goods as defined in the Central Excise Act are excluded from the purview of Business auxiliary service, resulting in bringing into tax net the process of manufacture of goods such as alcoholic beverages. |
CCE & Cus , Vadodara -I Vs M/S New Look Cosmetic Laser Center 2008-TIOL-2021-CESTAT- AHM Held: Cosmetic Surgery to remove unwanted hair is not taxable as Beauty Parlour Service | A new sub-clause (zzzzk) is proposed to be inserted in Section 65 (105) to tax the services in relation to cosmetic surgery or plastic surgery. |
Confusion prevailing on the words “omission and repeal” – Omission of Section 3A leading to many disputes. No recovery can be made under Section 3A of the Central Excise Act, 1944 which was rescinded on 12.5.2001 - Mitra Steel & Alloys Pvt. Ltd vs. CCE , Raigad Karnataka Ginning & Pressing Factory vs. CCE , Thane - , Commissioner Of Central Excise, Mumbai-V Vs Khanna Dyeing & Printing Works Surana Metals & Steels (I) Ltd. Vs. CCE , Chennai - This was a decision in favour of Revenue, but is under appeal in High Court–so Government could not take the risk. | Notification Nos. 33/97-CE (NT) dated 01.08.1997, 44/97-CE (NT) dated 30.08.1997 and 7/98-CE (NT) dated 10.03.1998, which relate to erstwhile compounded levy scheme for steel induction furnace units and re-rolling mills, are proposed to be amended with retrospective effect from the date of issue of the respective notifications so as to regularise fixation of rates of duty under these notifications. |
M/S Century Laminating Co Ltd Vs Commissioner Of Customs, Kandla Prima facie no provisions exist for recovery of Safeguard duty. | Sections 8B, 8C and 9 of the Customs Tariff Act, 1975 have been proposed to be amended retrospectively to insert machinery provisions. |
Now, you don't have to be smart and super intelligent to guess what Finance Bill 2010 will look like and what the Ministry will propose in the coming budget, which is only eight months away. All you have to do is keep track of the recent judicial pronouncements which have far reaching consequences on revenue and come out with your predictions (Hints …Renting of immovable property service, Work Contract service etc).