FM asks CBDT, CBEC to wrap up AGTs by April

FM asks CBDT, CBEC to wrap up AGTs by April; set up panel for litigation management and common risk management institution

By TIOL News Service

MUMBAI, SEPT 02, 2010: WHILE addressing the large gathering of revenue officials at a revenue review meeting here yesterday, the Union Finance Minister, Mr Pranab Mukherjee, once again hammered home the point to both the Revenue Boards to improve the human resource management to meet the rising expectations of the officers and the staff. He said that though there has been some improvement pertaining to Departmental Promotion Committee (DPCs) for the staff and officers, but still it is not satisfactory. It should be ensured that DPCs are held well in advance to keep the employees motivated and eager to perform their responsibility in the service of the Nation.

''I would like to see that a model time frame for conducting the DPC is developed and followed strictly. Both the Departments should aim to become a model employer, which provides equal opportunities and equity in true sense. I have noticed that transfer orders of the officers are issued in mid of the year, which affects not only the officer, but also the Department. The officer has to shift his family and children in the mid of the academic session, which causes avoidable mental stress. Similarly, by shifting of the officers in the mid of the year from one charge to the other charge, the continuity and time available is reduced considerably. This adversely affects achieving the targeted revenue. This can be avoided by ensuring that all the annual general transfers are carried out by both the Boards by the 2nd week of April. The regional orders by the respective Chief Commissioners should be completed by the end of April of every financial year. This will reinforce the confidence of the employees in our system and we can demonstrate by action that we actually care for our employees. I am confident that both the Board can calibrate their long term human resource policies to achieve the above objectives,'' he emphasised.

The FM also said that the Cadre Restructuring for CBDT was done in the year 2001 and for the CBEC in the year 2002, which is to be reviewed after every five years and is overdue. He emphasised that this needs to be expedited and completed in a time bound manner. There is also a need to develop a system to make it as a continuous process and not as an event to meet the legitimate expectations of the Officers and staff.

For litigation management the FM asked both the Revenue Boards to constitute Standing Committee at the level of Chief Commissioners to have a systematic bottom to top approach. Expressing concern over Central Excise and Customs duty arrears in the zone, Mr Mukherjee asked the officers to give special emphasis in taking some serious steps for collection of arrears of revenue. The Finance Minister urged the revenue department to create a formal Risk Management institution to improve the voluntary tax compliance in India. There is a need to create a formal Risk Management institution to handle the critical component of tax governance on a real-time basis. Both the departments can collaborate on the issue of risk management to further improve the voluntary tax compliance in India.

The FM said that litigation management is an area of concern which both Departments need to look into to create an atmosphere of trust and mutually beneficial relationship with tax payers as well as revenue officials. Departments are filing appeals in a routine manner without careful thought and examination. ''I have noticed that some of the appeals filed have been dismissed by the courts on account of gross delays. For this I have constituted a Standing Committee in both the Boards. This Committee will identify systematic causes for service litigation and litigation with tax payers and will prepare a road map for reducing the existing litigation and to avoid litigation in future. This Committee has been constituted at the Board level. I will encourage both the Boards to constitute a similar Standing Committee at the level of Chief Commissioners to have a systematic bottom to top approach for litigation management. This would lead to manageable number of cases before the Courts, which can be defended efficiently and will enhance the success rate in litigation,'' he stressed.

Mr Mukherjee asked the officers to give equal importance in collection of arrears of revenue. ''I find that in this Zone an amount of around 3,088 crores is locked up in respect of Central Excise arrears, and an amount of around 1,740 crores in respect of Customs duty arrears. We are now in the beginning of 6th month of the Financial Year. It is high time that we give special emphasis in taking some serious steps for collection of arrears of revenue,'' he added.

Another area where the situation is rather alarming is pendency of adjudication. The FM said that the delay in adjudication ultimately results in delay in collection of revenue due to the Government. In Mumbai Zone alone, an amount of around Rs 2,192 crores of Central Excise duty, an amount of around Rs 1,931 crores of Customs duty, and an amount around Rs 3,800 crores of Service Tax are locked up in the pending adjudication cases.

While reviewing the revenue collections trend, the FM expressed his happiness with the trend. He said that ''I find that for the period of four months i.e. from April to July in this financial year, the Customs revenue collection in three Mumbai Zones has registered an average growth of 79.5 percent compared to the collection during the corresponding period of last financial year. In Central Excise also there has been buoyancy, though the growth has been slightly less as compared to Customs. I find that the two Central Excise Zones in Mumbai have an average growth of 55.65 percent compared to the collections during the corresponding period of last financial year. This trend of revenue realization would not only need to be maintained but also to be improved during the coming months so that if there is any shortfall in other area, collections from this Zone can help us in filling the gap.''

The manufacturing sector in the country is looking up and this has contributed in not only increased Central Excise duty but also increase in the imports of capital goods, machinery and other raw-materials which has in turn resulted in increase in Customs revenue collection. In Service Tax, however, Mr Mukherjee said that the growth is much less. It is only about 8 percent. This defies logic as to why the growth of Service Tax should be so small. It is an acknowledged fact that the service sector in the country is also growing substantially. He asked the officers concerned with the Service Tax collection to ponder over this, and find ways and means to increase the Service Tax collections.

On the direct tax side, the net corporate tax has shown a growth 20.9% and personal income tax a growth 8.51% with overall growth for direct taxes at 15.75% as on 31st July 2010. The overall direct taxes growth is satisfactory. But the collection of direct taxes from Mumbai is below the national average, Mr Mukherjede said, adding that the achievement of direct tax collection largely depends upon collection from Mumbai. Therefore, revenue collection should be monitored effectively and special efforts should be made to achieve not only the budgeted target but also to exceed it.

The major area of concern on the direct tax side is the revenue locked up in appeal. Rs 28,046 crores is blocked in appeal before CIT (Appeal) and Rs 10,010 crores before ITAT.

The FM observed that for Mumbai, there has been an increase in advance tax, for the financial year 2010-11 by 22% in comparison to the same period of the previous year. The tax deducted at source for the current financial year has shown a decline by almost 2% in comparison to the corresponding period of the previous year. The trend in TDS collection, which is a major source of revenue to the government exchequer should be analysed to ensure that taxes due from TDS are collected, he added.

Source: Taxindiaonline.com