Uncertainty in tax implications & aggressive revenue approach affecting new investments: ASSOCHAM

Need to simplify service tax registration & streamlining administration process

Apex industry body ASSOCHAM has expressed serious concerns over uncertainty in tax implications and an aggressive revenue approach adopted by tax administrators to meet unreasonable revenue targets in last 2-3 years which has only led to excessive litigation.

Since indirect taxes are transaction based taxes such environment is not conducive for economic growth and it is adversely affecting new investments, highlighted The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a communication addressed to Ms J.M. Shanti Sundharam, chairperson of the Central Board of Excise and Customs (CBEC).

Terming the current service tax registration process as 'painful' and 'time consuming,' ASSOCHAM has suggested simplifying the same. CBEC should consider out-sourcing this process on lines of PAN number issuance in case of income tax registration which is carried out smoothly and is completed within three days.

Highlighting the problem of overlapping roles and roving enquiries made by multiple wings of tax administration, ASSOCHAM has suggested the CBEC to streamline the administration process, reduce their numbers and clearly determine role of each wing to check that they do not exceed their scope which causes avoidable harassment to the taxpayers.

With a view to further reduce litigation and uncertainty for business and industry, ASSOCHAM has recommended that information required from tax payers for verification by the department should be incorporated in the return format itself and if it is not provided then only the allegation of concealment of information should be made.

On the issue of dispute resolution, the apex chamber has pointed out the need to have judicial mind-set of senior officers during quasi-judicial proceedings like adjudication and appeals and not revenue bias to meet unreasonable targets. The tax department will gain tax payers' confidence through a fair judicial approach in tax adjudication and appeal which would also reduce litigation and time cost for tax payers.

It has also been suggested that quasi-judicial function should be separated from tax administration and it should be carried out by officers who do not have to meet tax collection targets. Besides, there should be accountability of officers adjudicating disputed demand and they should follow judicial precedents.

The CBEC should also periodically review major pending disputes and issue clarification on common disputes to reduce further litigation.

Apart from this, ASSOCHAM has also suggested to increase the number of tribunal benches urgently owing to huge pendency of cases due to aforesaid reasons.

On the constitution of CBEC and its facilitative role, ASSOCHAM has recommended that the Board should consist of members having at least five years' service period left and its chairperson should be appointed for at least two years' term to play a meaningful leadership role to bring required changes.

Considering that changes in indirect taxes are frequent, ASSOCHAM has said that there is an urgent need for the CBEC to issue timely and balanced clarifications by way of circular on matters referred to them. For this purpose, the Government should open a dedicated wing in the Board with amply skilled and experienced personnel.

With the view to facilitate the tax payers, ASSOCHAM has suggested for the need to establish 'grievance redressal cell,' in large towns.

Besides, expeditious refund claims' settlement for service tax and duty draw back, monitoring of pending refund cases and inordinate delay on fictitious ground by higher level tax authorities are other key suggestions listed by ASSOCHAM in its letter to the CBEC chief.

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