Fixing of tax collection targets for the field staff is not a healthy sign
CHENNAI: The fixing of tax collection targets for the field staff is not a healthy sign as such practices will lead to harassment of tax payers. Industry should come forward to pay the taxes voluntarily, said A.K. Ganguly, Chief Justice of Madras High Court here on Friday.
Inaugurating a two-day all India workshop on Indirect Tax Laws organised by the Madras Chamber of Commerce and Industry (MCCI), he said tax jurisdiction was highly developed in India, but taxation laws were pretty complex. There was utter confusion among tax payers and the administrators.
The Government was in the process of simplifying the tax structure along with the new legislation for indirect taxes.
He said that quasi-judicial tribunals have been set up to reduce the areas of hostility between tax administrators and tax payers.
However, these bodies have failed to inspire confidence among litigants.
Tax laws could be evolved better, if there was a proper redress mechanism. But at the same time, there was need for better understanding among tax payers, administrators and the tribunals.
In this connection, the Chief Justice urged tribunals and arbitrators not to increase the load of pending cases which burden the judiciary. Referring to the conflicts between Value Added Tax (VAT) regime and Central Sales Tax (CST), he said the problem arising out of input tax credit for VAT along with CST claims would have to be resolved soon.
MCCI Chairman on Expert Committee on Indirect Taxes, K. Vaitheeswaran said that even after three years of existence, there was no uniformity in VAT regime with regard to classification in application, rate of taxes, procedures and assessment.
VAT and Service Tax are mutually exclusive. Unfortunately, there are serious transgressions and increasingly Service Tax is entering the territory of VAT and vice versa.
VAT on a ‘service’ and Service Tax on ‘goods’ raises serious constitutional questions, which will have to be ultimately settled by the courts.
MCCI vice president T.T. Srinivasaraghavan explained the two aspects that caused concern among the tax payers. First, is the fixation of tax collection targets for the field staff which is indeed a recipe for all manner of harassment. The second is the arbitrary fixation of pre-deposits as a precondition for an appeal, regardless of the prima facie merits.