We are RIGHT - says Government
THE Government is not prepared to accept the CAG and PAC view. In a clarification, the Finance Ministry says,
Government of India has been of the view that non reflection of interest on refund separately as expenditure in the Annual financial statement laid before both the houses of the Parliament did not violate any constitutional provision. It may also be clarified that the practice of not seeking specific appropriation for interest on refund as expenditure and treating it as reduction from gross tax revenue, has been consistently followed since the Income Tax Act came into force in 1961, with an exception in Budget Estimate (BE) for F.Y. 2001-2002, where estimated interest was separately shown as expenditure. However, in the Revised Estimate (RE) for the same year (as presented in the Budget for F.Y. 2002-2003), the interest was reduced to nil. No Budget Estimate (BE) for such interest was given in the Budgets for F.Y. 2002-2003 onwards. The learned Attorney General for India in his opinion dated 6.5.2013 also affirmed that refund on excess tax is not an expenditure under Article 112(1) of the Constitution and such outgo cannot be considered with other operational expenses.
The Report of PAC dated 31.1.2014 was laid in Parliament on 6.2.2014 and the recommendations and observations of the Committee will receive due consideration and responded to within 6 months of the presentation, as per the requirement of the Committee.
Does it mean that just because the Government has been consistently and continuously committing a mistake, the mistake becomes the law? Government promises to respond within six months - the present Government has a maximum life of 75 days - who is going to respond?
Please also see
1. Interest on Refunds - Not Properly Accounted - CAG in DDT 1850 - 04.05.2012.
2. Interest on Refunds of Income Tax/Customs/Excise/Service Tax - unauthorised and unconstitutional? in DDT 2266 - 06.01.2014