Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: cpt :: ACCOUNTING STANDARD :: empanelment :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: TDS :: VAT RATES :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4%
 
 
News Headlines »
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016
 New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits
 Pay 50% tax on unaccounted deposits, or 85% if caught, says Modi government
 Deadline to pay property tax in old currency extended
 Cabinet clears amendments to Income Tax Act
 Have you got interest on your income tax refund?
 New income tax rules to curb unaccounted cash

Disquieting quietus
November, 11th 2006

The amendments made to the Central Excise and Customs laws in 1991 to end what was perceived by some quarters, including by the government of the day, to be undue enrichment of manufacturers was as peremptory if not as dramatic as the Emergency declared some 16 years earlier. The dilemma in brief was which one is a lesser evil allowing manufacturers to pocket the excise refunds given the fact that excise being an indirect tax, the tax burden would in any case have been passed down the distribution line ultimately to the hapless customers, or retaining the excess in the government treasury itself.

In the end, however, the Government plumped for what initially appeared to be a good via-media ordaining refunds to be credited to consumer welfare fund. It is true that in vast majority of cases giving refund to the manufacturer of an indirect tax whose burden is ultimately shouldered by the customer amounted to undue enrichment of the manufacturer.

Problems galore

Strictly speaking, the refund should have gone to the amorphous customer. Ideal as this regime would have been, it admittedly is fraught with difficulties bordering on impossibilities. For example, it would be idle to expect a customer who has bought a tube of toothpaste to preserve the cash memo and make an application with the excise department to pursue a trivial amount in recovering which he may have to spend several times more. This, assuming the manufacturer winning the refund application is cajoled into making a successful public announcement of his victory directed mainly at his amorphous customers spread across the country. The government of the day thus decided that unless the manufacturer, wholesaler, retailer or consumer comes up with credible evidence that he was the one who was the victim of the excess tax, credit would be given to consumer welfare fund which has practically turned out to be a non-starter what with the corporate sector losing interest in pursuing refund applications faced as they are with the unappetising prospect of fighting for an altruistic cause.

In the event, in stopping unjust enrichment of the manufacturers, the Government has only ended up enriching itself what with the consumer welfare fund idea refusing to take off in a big way. But then the quantum of this enrichment in reverse, as it were, is defying precise quantification with the corporates losing appetite for making refund applications, as at the end of the day, even if they are won, the reward goes elsewhere.

Doubts over fairness

Though the Supreme Court has cast its imprimatur on the new regime ushered in 1991 in the Mafatlal Industries case, doubts have been raised about the innate fairness of the regime by the Kelkar and Parthasarathy Shome Committees. It may be possible to contend that with the rationalisation of classification and valuation, the scope for disputes has become fewer and far between. But a ham-handed law is not in keeping with the spirit of fairness. Manufacturers in the past have turned around and asked what about unjust impoverishment when there is an upward revision of excise which perforce has to be borne by the manufacturer because no customer who has purchased the goods by paying such less duty is going to offer his head on the chopping block. A regime, which was given the quietus alas, has come to cause a lot of disquiet!

S. Murlidharan
(The author is a Delhi-based chartered accountant.)

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
System Testing Solution Manual Software Testing Solutions Automation Software Testing Solutions System Workflow Testing System Manual Testing

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions