Beware - More Facilitation Coming - CENVAT Invoice Verification
ADDRESSING the Chief Commissioners yesterday, the Chairperson said that CBEC had approved a major project for CENVAT Credit verification at invoice level, which will help in plugging revenue leakage through misuse of credit facility. Madam, CENVAT Credit is not a facility - it is a right granted by the statute. You have introduced this to avoid the cascading effect of taxation to ensure that the prices of goods and services are not abnormally high which would make them unaffordable and so nobody would buy them and then you will not get your revenue. Section 3(1)(a) of your Central Excise Act states, “There shall be collected ….A duty of excise to be called the Central Value Added Tax (CENVAT)”. Your duty itself is called CENVAT. But unfortunately, right from the day that MODVAT was introduced, there was a feeling among the departmental officers that they are showering some unjust enrichment on the wily businessmen of this country and all efforts are made to somehow deny the credit on some pretext or other. If there is misuse, certainly punish the guilty, but please don't make life miserable for every assessee on the assumption that the credit facility is misused.
It is heard that the Board is about to embark upon a great adventure of allowing credit only after it is verified that the input manufacturer or the input service provider has paid the duty/tax. This will involve verification of millions of invoices and as duty/tax is not paid on each invoice, how on earth are you going to verify whether duty is paid on each invoice? Will you ask for a certificate from the Superintendent of origin? You could have done this efficiently if you could have properly used your ACES and other software games on which you sunk thousands of crores of the poor taxpayers' money. What are you doing with ACES? You have 20 lakhs returns pending scrutiny, you don't process refund claims through ACES, you don't issue Show Cause Notices through ACES, and you don't accept replies to SCNs by mails though you insist on a soft copy at the time of adjudication. You don't deliver your orders online and YOU DON'T VERIFY CENVAT CREDIT through any software. You can devise something like the Income TAX TDS 26AS for CENVAT Credit and as soon as an input or service supplier pays/or issues invoice, the eligible CENVAT CREDIT should get updated in the accounts of the manufacturer/service provider. Without a proper electronic system in place, if you attempt verification of invoices, you can have another cadre review and have two Assistant Commissioners for each factory, but you will not get more revenue.
Netizens may remember that once upon a time there was something called "Annexure-D" verification and we all know what happened to it - more facilitation and more avenues for corruption!