C.A Madhukar N Hiregange

1. C.A Madhukar N Hiregange

2. Coverage Today • Understanding the bureaucrat • Provisions applicable for non – compliance with law? • Obligations of tax payers? • Obligations of department officials? • Powers & duties of department officials? • How to interact with dept. appropriately – email, telephone- letters- summons- statement..? • Questions

3. Respect others & Property of others • Rule based enforcement w/o considering- -> what lies behind the rule -> what happens as consequence -> what methods are used to enforce “ just doing ones job” High level- surrender of personal power Low Level- Anyone questioning their knowledge, intelligence, ability, morality or judgment is a threat

4. Provisions applicable for non – compliance with law.. • Under Service Tax law • Section 75 – Interest for not depositing tax amount in time • Section 76 – Penalty for non payment of ST • Section 77 - General penalty • Section 78 – Penalty for suppression, fraud & collusion

5. Provisions.. Cont’d • Under Central Excise law • Section 11AA - Interest for non payment of tax amount. • Section 11AC – Penalty for short/ non payment.. • Rule 25 of CER– Confiscation & Penalty • Rule 26 of CER – Personal Penalty • Rule 27 of CER - General Penalty • Rule 28 of CER –Confiscated property to vest in Central Govt.

6. Search, Seizure, Summons & Arrest • Under Service tax law • Section 82 - Power to search premises • Section 91 – Power to arrest (r/w section 89) • Under Central Excise law • Rule 22 & 23 of CER 2002 -Power to access to regd. premises & power to stop and search • Section 22 – Vexatious search, seizure, etc. • Rule 24 – Power to detain or seize goods

7. Search….Cont’d • Section 13 & 18 – Section 13 gives power to arrest and section 18 provides that, arrest shall be carried out according to Code of Criminal Procedure, 1898. • Section 9 & 9AA – Prosecution against responsible persons.

8. Obligations of Taxpayers or Assesses • Obligation to be honest – fundamental requirement for operation of tax system. • Obligation to be co–operative – voluntary compliance • Obligation to provide accurate information and documents on time • Obligation to keep adequate records to verify tax / credits • Obligation to pay taxes/ file returns on time

9. Liability and obligations upon departmental officers • Shall not disclose any of the sensitive information learned in his official capacity • Officers to issue SCN before imposing penalty, demand & arrest • Officers to visit in business hours only

10. Powers & duties of departmental officers • Search, seizure, prosecute and arrest under commissioner’s instructions • Issue summons to authorized persons of the company • Detain & give evidences as per CPC • Commissioner has power to appoint CA,CWA, CS for conducting an audit

11. Modes of Interaction ... • E-Mail –Recognized in Information Tech. Act 2005. Only if official ID. Maybe used as additional mode or where time short • Telephone - Use this mode as additional as no trace or evidence of what transpired. Record by way of written communication what was discussed/ understood. • Letters /notices from dept. - Reply to letters within 15 -30 days under RPAD.

12. Further Mode of Interaction .. • Letters to dept - Communicate at appropriate time at appropriate levels including giving voluntary initial declarations. – Period of Limitation • Visits by dept. – Official or Unofficial? Should be handled by a knowledgeable persons. Put on record what happened by way of written communication. • Visits to dept. - Record in register kept. Record by way of written communication with explanations & evidences provided.

13. Summons • How & when does the summon process begin? • Summons should not be vague/justify the purpose . • Can Summon be avoided? • Can someone be authorized to appear on behalf of summoned person?   • Ask for time if duration is short and take legal advice. • Must give correct information. • Give a written statement. • Is summons being misused?

14. Recording of Statement • It is a statement of tax payer & not that of department. • Be polite, calm but firm. • Statement should be voluntary & not under threat. • No vague statement/ rough figures be given. • Use of words “I have no idea” or “I will check & let you know”. • Making note of the questions & answers given(recorded and not recorded). • Right to ask copy of statement recorded.

15. Reply to SCN • Proper study of Show cause notice. • Note the date of receipt & date of SCN. • Prepare an appropriate reply (Facts, Submissions containing relevant legal provisions, decided case laws, circulars and notifications if any) • Only Relevant information (Precise and Concise) • Ensure all the allegations were noted & answered • Supporting Documents (Agreements/work orders/bills/GAR 7 challans/certificates etc) • Filing of reply including annexures in time. • Acknowledgement

16. Appeal • When to appeal? & Whom to appeal ? • Prescribed form should be used (E.A-1/3, S.T - 4/5) • Contain facts, grounds of appeal, verification & prayer . • Can Additional facts be submitted at this stage? • All the findings of the impugned order should be countered specifically • Additional grounds/documentation if any required should be submitted. • Filing of appeal within due date. • C.O.D with reasonable cause. • Acknowledgement.

17. Open to Questions…