March of the Professional

Gist of Inaugural address by Hon’ble Justice Shri Mohit Shah, Judge, Gujarat High Court
at the National Convention on Taxation at Ahmedabad on 24th March, 2007

Hon’ble Justice Shri Mohit Shah in his inaugural address stressed that the measures for curbing tax evasion should be taken. Such measures should be by way of providing incentives rather than deterrent provisions. The compliance is voluntary if the laws are tax-payer friendly. The incentives should be given for payment by cheque rather than cash. For example, the luxury tax on a Hotel bill is 20% irrespective of mode of payment. If the payment is made by cash then the luxury tax is 20%. If the payment is made by credit card or cheque the luxury tax is also 20%. It was suggested by Hon’ble Justice Shri Mohit Shah that the luxury tax should be only 10%, by way of incentive, if the payment is made by cheque or credit card. By this method the payment by cheque or credit card will be encouraged. There is no need to have army of tax inspectors for curbing tax evasion but the social sanction should be used for providing incentives. Hon’ble Justice Shri Mohit Shah also said that in Delhi the cases of violence against women are more since they are not economically independent. The problem was well understood by lady Chief Minister of Delhi. The incentive was given by the Government by way of reduction in stamp duty. Namely, if the property is transferred in the name of wife or women then the stamp duty would be 4% as against 8%. The experience has proved that many properties were transferred in the name of ladies whereby at the end of the year the collection of stamp duty was more as compared to previous year. The cases of violence against women have also come down. The Hon’ble Chief Guest also said that any person would like to comply with the law, if such law is complied by others. This is necessary since in the country it is seen that there is more non-compliance rather than compliance. There is no need for policing but the laws should be reasonable so that the same can be complied with. The Hon’ble Chief Guest further said that the tax-payers should be given the incentives by way of providing some social security after retirement. It should be co-related with the tax paid by the tax-payer. For example, Government should make the scheme for giving pension after retirement of 65 years where the tax-payer has paid the taxes during the period he is working; i.e. from by 25 to 65 years. It is said that the taxes are the price for civilization.
At the same time taxes should be priced or premium for the pension that may be given after retirement with reference to or in proportion of the taxes paid.

The Revenue is in habit of tinkering with the judicial pronouncement. The laws are changed with retrospective effect frequently. This gives wrong signal to the tax-payer inasmuch as the tax payer would like to opt for short cut rather than to pursue long drawn litigation. The option of short cut is bad for the economy.

The Hon’ble Chief Guest also said that the fundamental principal of management is consumer friendly. Similarly, Revenue Department should also be user friendly or assessee friendly to collect more taxes. To be assessee friendly the Revenue should not be given up but what is required is easy procedure. At present the tax-payers are scared of Revenue Department if the return is filed. For example, in case of scrutiny assessment, the inquiry will be about the transaction reflected in the books of account but if the transaction is not reflected then nothing will happen. In other words, if the procedures are simple and if the incentives are given to comply the law and if the system is assessee friendly then there will be more collection of revenue and there will not be any need to provide a stick by Hon’ble Finance Minster every now and then.