What Is This New Tax?

Now it may be that the board cannot distinguish between a non-sequitur and a genuine argument, and that all it is saying is that the duty will not be eligible for a drawback because it says so. But if it is seriously arguing that this 8 per cent duty is really a new kind of tax, then some alert member of Parliament ought to ask the finance minister: What is this new tax, and when did Parliament give him the permission to levy it? Where in the central list of taxes in the Constitution is it listed?

The answer is that, all too often, the central board of excise and customs (CBEC) is a law unto itself. Unfortunately, the nation pays heavily for the board's arbitrariness. It may be remembered how the board hounded exporters on allegations of misuse of Modvat credit last year; it even recovered millions from them. The board claimed that if an exporter had taken import duty credit, he was not entitled to Modvat credit. And why? For no reason except that the board said so. Actually, if an exporter has used both imported and domestic inputs, there is no reason why he should not get import duty credit on the former and excise duty credit on the latter. But that would have been too just, too rational; it would not have suited the CBEC. Indeed, as a sequel to this, the customs authorities are now hounding the same exporters with still greater penalties.

 

The country has a finance minister who has not only been commerce minister twice over, but who can understand law and exercise his mind. He is fired by an ambition to remove cobwebs and improve government practice. He has already announced a number of commissions, including one on income tax law. Far more urgent than a tariff commission is an independent body to look into the judicial correctness of the rules arbitrarily promulgated by the CBEC and its various circles. Excise duties are by far the most important tax in this country; their victims are more likely to pay them willingly if their faith in the basic justice of the tax system is restored.