Why Deterrent Action?

By Vijay Kumar

ADDRESSING our post budget Seminar in April 2010, the then Chairman of the CBEC said,

There is one provision, deterrent action, on which Taxindiaonline's position is very strong, as they have written quite strongly but let me submit it in this forum. Why do we go for a provision like deterrent action? Try to understand, we are facilitating and liberalizing to bring down the rates so we expect the taxpayers also to pay tax. Without using the word draconian, this deterrent action is only against a minuscule percentage of trade and industry who are really bad boys. They are doing evasion of duties by fake invoices. They are taking input credit; they are clandestinely removing the goods. We don't invoke these for classification dispute or valuation dispute. This is not really a penal provision; this provision is to just teach them a lesson. Here there is small lacuna in Section 37 and it has been amended accordingly.