A new Bill to provide for amalgamation of the two advance ruling authorities for the indirect taxes and the direct taxes has been mooted and is now under the active consideration of the Parliament.
The Statement of Objects and Reasons (November 30, 2007) says that these authorities did not have sufficient work to justify separate authorities with separate establishments. A decision was, therefore, taken to constitute a common authority for advance rulings for performing the functions of these authorities. It has, therefore, been proposed to have a new Act Authority for Advance Ruling on Central Taxes Act, 2007.
I have gone through the Bill carefully and find that there will be absolutely the same number of members in the new authority as they are now in the two existing authorities. Now there is one chairman who is common for both authorities. The Member Judicial also is common. Then there is one Member Technical for the indirect taxes and one Member Technical for the direct taxes. The total number is four. After the new Act also, the total number will be four. The only difference is that the new Act will regularise the administrative arrangement of common chairman and member. For this nominal purpose, it is futile to make a new Act when the real purpose is not served at all.
While the problem of inadequate work has been rightly diagnosed by the Government, the remedy proposed is no remedy at all. The truth is that there is not enough work for these Authorities. At present, there are just about twenty cases pending between the two Authorities. But the solution is not the merger of the authorities but giving them some more work.
This is how the extra work needs to be given to them to serve greater public interest: Large Taxpayer Units All cases relating to LTU should be given to the authorities. It is an avowed principle to give extra-quick facilities to the taxpayers operating under LTU. Quick adjudication, appeal, etc. cannot be provided if the existence system continues.
Moreover there are several remedies available at present which makes things delayed by the very nature of it. So, if the taxpayers under LTU are given the option of approaching the advance ruling authorities for a decision, things will be decided once and for all and there will be no procedural harassment to them.
Public Undertakings Public Undertakings now go to the Commissioner of Appeal, tribunal and courts, etc. Some cases need permission from the Cabinet Secretariat but the procedure is not fair because on similar issues private parties go to court.
Moreover the Cabinet Secretariat is not a technical body. So, the facility of approaching Advance Authority (which is judicially and technically competent), should be given to Public Undertakings. Then there will be quick justice.
Indian Public Limited Companies Indian companies do not get the same justice which NRI and Joint Ventures are getting. So, they have to go through the whole system of appeal at a lower level, tribunal level and to the Courts.
However, all people cannot be given the same facility as the number will be too much. Therefore, if only private companies, which are public limited companies, are allowed this option, the cases will be of substantial amount and not too much in number.
The conclusion is that the work should be increased for the authorities in a way that makes the authorities more effective. Merging the two authorities is an exercise in futility as the number of members will remain the same and the work will also remain the same.