A OPEN REQUEST LETTER TO HON'BLE FINANCE MINISTER OF INDIA

AN OPEN REQUEST LETTER TO THE HON’BLE FINANCE MINISTER OF INDIA

From

S. Gokarnesan, Advocate, Chennai

Respected Sir

I write this letter to your good-self on behalf of the Trade and Industry.

First of All, I sincerely convey my thanks to the present Government for having taken various forward steps and measures to make INDIA – EASE OF DOING BUSINESS.

However, I am of the view that the following issue, which   seems to be against the above policy of ‘Ease of Doing Business’. To make it specific,   I wish to bring the following to the kind attention of your good-self  Sir.

Issue:- Adjudication Power of Central Excise and Service Tax officers - Monetary Limits revised

1. Vide Circular No. 1049/37/2016-CX., dated 29-9-2016 (F.No. 267/40/2016-CX. 8), the Government has revised the monetary limit to the Central Excise / Service Tax Officers in Adjudication process on litigations.

2. It is reliably learnt that consequent to introduction of proposed GST in July 2017, the Ministry wants to speed up and complete the Adjudication in all pending show cause notices on central excise and service tax matters with a time frame of 31.3.2017 and to enable for smooth transmission to GST.  The revised powers are tabled below:

3. Consequent to the increase in monetary limit to Officers below the Rank of Commissioners, files relating to cases pending with Commissioners have been transferred to the Lower Adjudicating Authorities with a specific instructions to complete the adjudication before 31.3.2017.

4. This letter emphasis the burden on the Assessees consequent to the above administrative changes with a lone motive of ‘speed up the adjudication on pending show cause notices’ without considering the difficulties to be faced by the Assessees by and large.

5. For example, prior to this revision,  show cause notices with a proposed demand of excise duty / service tax ranging between ₹ 50 lakhs to ₹ 2 crores are pending with the Commissioner for Adjudication. After this revised limit, these cases are to be adjudicated by Joint / Additional Commissioners.  Due to pressure from the Board to complete the process, most of the demand will be confirmed by these Officers.

6. On the point of Assessee, if the Order is passed by Commissioner confirming the demand,  Assessees have to prefer appeal before Hon’ble CESTAT with a mandatory pre-deposit of 7.5% of the total demand of duty / service tax paid.

7. Because of this revised monetary limit, the Assessees have to undergo two layer of appeals in as much as the case is adjudicated by the Officer below the rank of Commissioners.

• First Appeal with Commissioner (Appeals) on payment of mandatory pre-deposit of 7.5% of the total demand confirmed, within 60 days from the date of receipt of order. The Commissioner (Appeals), due to pile up of appeals similar to this, will take minimum one year to two years to hear the case and to pass the Appellate Order.

• If Commissioner (Appeals) also confirms the demand, the next Appeal lies with Hon’ble CESTAT within 90 days from the date of receipt of Order.  Here, the Assessees have to pay another 2.5% of the demand confirmed in addition to 7.5% already deposited with Commissioner (Appeals) to fulfill the mandatory requirement of 10% pre deposit. Unfortunately, there are conflict decisions of Hon’ble Tribunals on the quantum of pre-deposit. (i.e. whether the appellant is liable to pay 10% of the total demand in addition to 7.5% already paid with Commissioner (Appeals) or only 2.5% after taking into account the 7.5% already paid).  If 10% is insisted, then the Assessees have left with no option except to pay 17.5% in total as pre deposit, which is against the provisions of CE Act.

• In CESTAT, lots of cases are pending for disposal due to various administrative or other reasons.  Once the Appeal is filed, it will take minimum Five years to Ten years to get justice in CESTAT.

• On the other hand, had the case is adjudicated by Commissioner itself, then there is a considerable savings on time for Assessees since appeal lies directly with CESTAT .

• Altogether, the Assessees have to wait patiently for minimum 5 years to maximum 10 years right from the date of Adjudication completed by the Officers (below the Rank of Commissioner) till the Appeal disposed by CESTAT.

8. In order  not to put the Assessees in a difficult situation, I request the Hon’ble Finance Minister to consider the above and to make changes in the Central Excise Act / Finance Act (service tax) to enable the Trade and Industry to do ‘Ease of Busines’

1. Remove the statutory requirement of Appeal before Commissioner (Appeals) to avoid delay in disposal of such appeal by Commissioner (Appeals) in respect of Orders passed by Officers below the rank of Commissioner.

2. Provision to be made for a Direct Appeal to CESTAT against all Orders passed either by the Officers below the Rank of Commissioners or by the Commissioner (Adjudication) with a mandatory pre-deposit of 7.5% of the total demand.  In other words, the First Appeal itself with CESTAT only.

3. In CESTAT Administrations, request to create more Benches and also Post sufficient Members to handle the enormous appeals expected to be filed and also to clear the pending appeals.

If the above request is considered and implemented, it is a great help to assesses across the country to get justice in time which is the real example of taking measures towards ‘Ease of doing business’

I convey my sincere thanks to the Hon’ble Finance Minister on behalf of the Trade and Industry and expect a favourable response from you, Sir.

Thanks and Regards

S. Gokarnesan

Advocate

Chennai

98400 87349

Mail: [email protected]