TIOL-DDT 334 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT
334</font><br>
31 03 2006<br>
Friday</b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>The
year comes to a close – so does the Tamasha</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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!”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">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.<br>
<br>
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.<br>
<br>
For a summary of the day’s proceedings in the offices today, see our breaking
news.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>SEZs
allowed to sell worn clothing in DTA</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
The import policy is amended to allow Units in the Special Economic zone to
sell worn clothing in the Domestic Tariff Area to the extent of 15% of the cif
value of imports made in the previous year<br>
<br>
<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=45&filename=notification/dgft/2005/dgft05not056.htm">DGFT
NOTIFICATION NO. 56 (RE-2005)/2004-09, Dated: March 30, 2006</a><br>
</font></p>
<P align=center><B><IMG height=62 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_txt.jpg" width=375></B></P>
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<TD><IMG height=67 hspace=5 src="http://www.taxindiaonline.com/RC2/image/ddt/gnl_word.jpg" width=67 align=absMiddle vspace=5><B><I> In
re - in the matter of</I></B></TD>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
legal term used to indicate that a judicial proceeding may not have formally
designated adverse parties or is otherwise uncontested. The term is commonly
used in case citations of probate proceedings. In taxation matters it is generally
used for citations of orders passed by Commissioner (Appeals), Revision Authority
etc,.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Comments
on Greek and Latin</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
senior officer writes in on yesterday’s phrase <i>in rem</i>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To
add to your explanation....</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Not
only lawsuits, in rem also qualifies taxes. Taxes on property/goods are in rem
taxes in contrats to taxes on persons. Excise, customs, sales tax, house tax
etc. are all in rem taxes; Income tax, corporation tax, professional tax are
not.<br>
Your column is indeed enjoyable.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">
<b>Wrong must not win by technicalities.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><i>(Aeschylus,
The Eumenides, 485 BC)</i></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6666">Until
Monday with more DDT</font></b></font></p>
<p align="justify"><font color="#FF6666"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice Weekend.</font></b></font></p>
<p align="justify"><font color="#FF6666"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail
your comments to</font></b></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
<a href="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p>
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