In the speech, he'd said the underlying themes of his proposals on both direct and indirect taxes were clarity in the laws, a stable regime, a non-adversarial administration, a fair mechanism for dispute resolution and an independent judiciary.
The Finance Bill, however, contains many strong measures to be made available to pressurise tax payers.
The proposals to amend the Customs Act, 1962, include making non-bailable as many as four types of offences punishable under Section 135 - evasion or attempted evasion of duty exceeding Rs 50 lakh, import of prohibited goods notified under Section 11, import or export of any goods not declared in accordance with the Act and the market price of which exceeds Rs 1 crore, and fraudulently availing of or attempting to avail of any drawback or exemption from duty provided under the Act, if the amount in question exceeds Rs 50 lakh.
As for excise, offences where the duty leviable exceeds Rs 50 lakh and is punishable under sub-section (1) of section 9 shall be cognizable and non-bailable.
Under the service tax laws, failure to pay any amount in excess of Rs 50 lakh collected to the credit of the central government beyond a period of six months shall be a cognizable offence.
Yes, service providers who collect tax but do not deposit the amount with the government must be sternly dealt with. However, certain matters such as availing Cenvat credit, drawback or exemption could be a matter of one's understanding of the law and the interpretation on the wording.
Some distinction must be made between cases where interpretational issues are involved and wilful evasion. Also, suitable guidelines must be issued to deter misuse of the provisions by officers and a mechanism to address the complaints of harassment and extortion under threats of arrest.
Another worrying proposal is to amend Section 11 of the Central Excise Act, 1944, and Section 142 of the Customs Act, 1962, along the lines of section 87 of the Finance Act, 1994, to empower the central excise and customs authorities to issue garnishee orders to banks and debtors of assessees and recover the dues at any time after issue of a showcause notice.
It is well known that whether duty is payable is far from settled at the showcause notice stage or even after the adjudication or appeal stages.
To be fair, Chidambaram has maintained the tax rates and has not made too many changes to disturb the tax regime.
He has also widened the scope of the advance ruling mechanism to cover resident public limited companies, applicants with proposals to start new lines of businesses and eligibility of Cenvat credit on input services for manufacturers of excisable goods.
However, some of the proposed changes somewhat dent his claims about encouraging a non-adversarial tax administration.
Email: tncr@sify.com