The year comes to a close – so does the Tamasha
The climax to the farce going on for the last few months in the name of meeting the revenue targets is to be enacted in a few hours from now. Tomorrow it is celebration time in all the Commissionerates and the Board. The elusive target is achieved and a final report is sent to the FM that he has all the money he wanted to collect. But does he really have that? How are targets achieved? By fraud, by deceit, by threat, by inducement, by arm twisting, by manipulation!. Every known trick in the trade is employed. Who are they trying to fool? Perhaps no other work force in the world and could so successfully fool its boss as the Indian Revenue Service does. The Target fever starts somewhere in September and by December, it reaches its peak. Very intelligent officers who have qualified through the toughest test in the world suddenly lose all their sense of proportion and they browbeat their subordinates into somehow collecting more revenue. Monthly, weekly and daily meetings are held where stupid macro economic concepts are discussed and strategy devised to collect more revenue. Meetings are held with the assessees when they are requested, cajoled and veiled threats are served along with regulation tea – all for revenue. But Revenue does not get generated in Commissionerates and conference halls. It essentially results from market and the best of the Revenue officers cannot create a market. Every Chief Commissioner and other officers down the line understands this very well, but refuse to admit it and happily carry on the farce year after year in the name of revenue – all because there is no child in the whole department who can shout, “The King has no clothes!”
The methods adopted to collect revenue are comical, criminal, beyond logic and totally against all accepted economic principles. Who are they fooling by freezing cenvat credit? A few years ago officers used to walk off with the RG 23 ( Modvat) account books of the assessees. How do you help the FM by collecting next year’s revenue this year? People go to ridiculous levels to collect duty on goods yet to be manufactured, which have led to some strange, comical and tragic results. See the three sample situations below – all of them are true – TRUE.
1. A PSU was persuaded by the department to pay duty in advance. It had no stocks of excisable goods on which it could pay the duty. So it was suggested that it could pay the duty on goods which were yet to be manufactured. They obliged and issued an invoice for goods yet to be manufactured. In fact the raw materials for this product were yet to be procured. But still they paid. They also had a vested interest. They also had a target and they could tell their ministry that production targets were met. Now this PSU finally manufactured the product six months later and cleared it a little later. The goods were promptly seized by the Road checking preventive unit of the department alleging that the goods were actually cleared in March and the same invoice was used again for double transportation. Every one in the department knew that the assessee had not cleared the goods in March and the poor assessee could not claim that the goods were not cleared in March, nor could it explain what they were doing for more than six months. The assessee escaped with a minor penalty.
2. A PSU was in the red as red can be. Local politicians and labour leaders persuaded the central government to give a grant to get the almost dead factory back to working. Once the grant came, the GM (Finance) insisted that an amount of Rs. 3 Crores has to be deposited in the bank for payment of excise duties. The wise manager had a lot of forethought. He was sure that the little grant would be blown up by the time goods were produced and then he would have no money to pay excise duty. So he got the money deposited by TR6 Challan and took credit in his PLA. The smug manager was waiting for his plant to produce goods as he had money to pay the excise duty. Enter our target crazy excise officers and they persuade him to make a debit entry in his PLA and raise an invoice. “Any way the goods are going to be produced in a couple of months and you are going to pay the excise duty. Pay it a little earlier”, they cajoled him and the poor manager obliged. The production never got through. They were not able to produce anything and the company went deeper into the red. They had no money for bare necessities. Then somebody remembered the Three Crores rupees kept in reserve for paying excise duty. Now that there was no need to pay excise duty, they thought they can cling on the last straw of the three Crores. But where were the three Crores? Eaten up by Central Excise? They could not claim refund as the invoice showed that goods were cleared? Every one knew that they had not even manufactured the goods which they had cleared!
3. And this happened just a few days ago. A multi national company has promised to pay Rs. 60 Crores in PLA during March. In the meantime a case of irregular cenvat credit is noticed. An officer is dispatched to serve the Show Cause Notice. In a reverse drive the assessee makes a veiled ‘submission’ that such a Show Cause Notice is not proper and don’t you remember the sixty Crores I promised? NO Chief Commissioner can afford to lose sixty crores in March. So the officer with the Show Cause Notice is directed to stop his monkey tricks and get back to his office, which he promptly does. In the interest of the great revenue cause let’s hope the assessee pays up that 60 crores today.
If this is the plight of the revenue collecting departments, the plight of the revenue spending departments is equally bad. They are required to spend all the money given to them in the last few days of the month and so off they go on their purchasing spree. All kinds of useless things are purchased at astronomical prices in March. Though the present FM has put in several restrictions to contain this March spending, March is really a maddening month in government and that is the reason why the day after this mad month is called, ALL FOOLS DAY.
For a summary of the day’s proceedings in the offices today, see our breaking news.