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Publish Date: 15 Jul, 2014
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GOVERNMENT HEADING TOWARDS E-COLLECTION OF TAXES

GOVERNMENT HEADING TOWARDS E-COLLECTION OF TAXES

An article by:
CA Pradeep Jain,
CA Neetu Sukhwani &
Kushal Shah
 

Introduction:- The Hon’ble Finance Minister, Mr. Arun Jaitley in his budget speech delivered on 10th July, 2014 had expressed his desire to create an e-biz platform that is aimed to create a business and investor friendly ecosystem in India by making all business and investment related clearances and compliances available on a 24X7 single portal, with an integrated payment gateway. It was stated by him that all Central Government Departments and Ministries will integrate their services with e-biz platform on priority basis by 31st December, 2014. With a view to implement and effect the said technological change, amendments have been made in the recent budget 2014-15 by making payment of excise duties and service taxes mandatory through internet banking. However, discretion has also been given to the Assistant/Deputy Commissioners to allow payment of taxes via any other mode in exceptional circumstances on reasons to be recorded in writing. This article is an attempt to analyse the above change introduced by the government.

History:-
The government followed the practice of collecting the taxes manually through challans. However, with the technological advancement, the method of collection of taxes also changed and gradually, the government resorted to facilitate tax collections electronically. This may be better observed if we look at the series of amendments being made from time to time as follows:-
The proviso to Rule 6(2) as regards electronic payment of service tax was first introduced by the Service Tax (Fourth Amendment ) Rules, 2006 with effect from 01.10.2006 which read as follows:-

The assessees shall  deposit the service  tax liable to be paid by him with the bank designed by the Central Board of Excise and Customs for this purpose in Form TR-6 or in any other manner prescribed by the Central Board of Excise and Customs:

“Provided that the assessee, who has paid service tax of rupees fifty lakhs or above in the preceding financial year or has already paid service tax of rupees fifty lakhs in the current financial year, shall deposit the service tax liable to be paid by him electronically through internet banking.”

Thereafter, this limit was reduced by the Service Tax (Amendment Rules), 2010, w.e.f. 01.04.2010 vide Notification no. 01/2010-ST dated 19.02.2010 wherein the proviso was substituted as follows:-

 “Provided that where an assessee has paid a total service tax of rupees ten lakh or more including the amount paid by utilisation of CENVAT credit, in the preceding financial year, he shall deposit the service tax liable to be paid by him electronically, through internet banking.”

Subsequently, this limit was further reduced w.e.f. 01.01.2014 vide Notification no. 16/2013-ST dated 22.11.2013 to Rs. One Lakhs.  

Similarly, amendments have been also effected in the Central Excise Rules, 2002 and the same are summarized as follows:-
 
The third proviso to Rule 8 regarding manner of payment of excise duty was inserted w.e.f. 01.04.2007 by Notification no. 08/2007-CE (N.T.) dated 01.03.2007 which provided that an assessee who has paid total duty of Rs. Ten lakhs or more including the amount of duty paid by utilisation of cenvat credit in the preceding financial year, shall thereafter, deposit the duty electronically through internet banking.
 
The limit specified in the proviso was substituted from Rs. 10 Lakhs to Rs. 1 Lakhs w.e.f. 01.01.2014 vide Notification no. 15/2013-C.E. (N.T.) dated 22.11.2013.
 
Amendment vide Notification no. 09/2014-ST w.e.f  1st October,2014 :-

In rule 6 of the said rules, for sub-rule (2), the following sub-rule shall be substituted with effect from the 1st  October, 2014, namely:-

“ (2) Every assessee shall electronically pay the service tax payable by him, through internet banking:
Provided that the Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction, may for reasons to be recorded in writing, allow the assessee to deposit the service tax by any mode other than internet banking.”
 
Simultaneously, similar amendments have been made in the Central Excise Rules, 2002 vide Notification no. 19/2014-C.E. (N.T.) dated 11.07.2014 wherein it has been stated as follows:-
 
After sub rule (1A) of Rule 8, the following sub-rule shall be inserted w.e.f. 01.10.2014, namely:-
 
(1B) Every assessee shall electronically pay duty through internet banking:
 
Provided that the Assistant Commissioner or the Deputy Commissioner of Central Excise, for reasons to be recorded in writing, allow the assessee payment of duty by any mode other than internet banking.”
 
Implication of Amendment:-
 
With effect from 01.10.2014, every assessee will be required to pay excise duty and service tax payable by him electronically through internet banking and there is no other option available except in certain peculiar circumstances. Therefore, with the technological advancement, the government has also adopted advanced means of revenue collection. However, realising the fact that still there are villages in the country that are not equipped with sufficient internet facilities, a proviso has also been added wherein the powers have been given to the Assistant Commissioner or the Deputy Commissioner to allow the assessees for reasons recorded in writing to deposit excise duty or service tax by any mode other than internet banking. But, the facility of making payment of excise duty or service tax by any other mode is not available to every assessee and it is dependent on the desire and discretion of the revenue officers. Moreover, the reasons for allowing payment to be made by other mode are also not mentioned which may lead to controversies and unnecessary litigation. All that we can hope is that in the desire to collect taxes electronically, the government does not harass the small assessees who are unable or incapable to pay taxes electronically due to lack of adequate facilities because even in the present times there are certain remote areas in the country that are not even connected with uninterrupted electricity.  
 
 

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PRADEEP JAIN, F.C.A.

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