I wish you a very Happy New Year being Editor-in-Chief. First of all, I thank the NEC led by President Dr. Ashok Saraf for reposing confidence in me to shoulder the responsibility as Editor-in-Chief of our most prestigious journal. I shall do my level best to shoulder the responsibility and with the support of all of you and the guidance from past president we shall continue to 
provide useful information and update on taxation through publication of journal.

Dr. K. Shivaram, Senior Advocate, Past President and as Editor-in-Chief, has rendered yeoman service to this august organisation for 18 years, who has handed over reign of this journal to me, with a condition that he will act as Chairman of Editorial Board. I on behalf of all of you and personal behalf acknowledge the services of Dr. K. Shivaram.

We at the Board always try to improve the quality of Journal. We also propose to have major changes in Journal from April, 2019. So we request you to send your valuable suggestions.

Recovery of Tax

A Parliamentary panel in March 2018 has asked the Government to formulate a concrete action plan to recover tax arrears that have reached to ₹  11.5 lakh crore. The standing committee on Finance (2017-18) has said that it is “alarming” that the Department of revenue seems to be caught up in vicious circle of tax areas. More than ₹  11.5 lakh crore [₹  9,30,741/- crore in direct tax and ₹  2,28,530/- crore indirect taxes] are outstanding in the form of tax arrears, almost equal to the size of economy of the country. Considering the fact that tax arrears have been increasing year-after-year the committee recommended for devising a concrete action plan and road map to clear the backlog through a time bound fast track mechanism. On direct taxes, it is said that over 94% of it has categorised under ‘demand difficult to recover’ and indirect taxes only 22.84% are said to be clearly recoverable. Therefore, it is suggested that tribunals and courts should be regularly moved for early and expeditious hearing of the cases. The Government should take immediate steps to fill the vacancy in judiciary to boost the disposals of appeals at the earliest.

Really this alarming position that recovery of Government dues through Direct and Indirect taxes are equal to size of economy. Therefore, serious effort is required by the tax collector to recover the taxes. It is stated that in indirect taxes only 22.84% are recoverable, which should be recovered at early date. If not, a stern action should be taken against the defaulting taxpayers. In direct taxes it is stated that 94% of demand is categorised under ‘demand difficult to recover’ which means that it is in dispute and on which either stay has been granted by the Courts or matters have been decided in assessee’s favour but Revenue has not accepted and matters are pending at appellate levels and the Assessing Officer has not given proper effects to the appeal orders. Unless tax is recovered at an early date, the nation cannot prosper as this is developing nation. Only blaming the assessee or taxpayers are not proper as most of demands are paper demands or would be struck down by the Courts.

Therefore, as suggested by Dr. Raja J. Chelliah in his Committee report [197 ITR 177 (St)] that Assessing Officer be made accountable for kinds of assessments they made. His suggestion is under:

The Assessing Officers should be made accountable for their actions by being blamed for raising demands which are not upheld by a reasonable figure, say 50 per cent, the officer should be given a black mark and also reprimanded. On the other hand, an Assessing Officer should be protected and defended if he has observed instructions of the Board and followed the Court ruling even though audit might raise objections about his action.”

Federation has sent representations from time-to-time to introduce the accountability provisions in the Act. It is desired that the accountability provision as suggested by Dr. Raja J. Chelliah Committee be incorporated in the proposed new Act. Bringing in accountability in tax administration is the first step in reducing avoidable litigations, and paper demands and would benefit honest taxpayers of the country. If accountability provisions are not introduced, whatever may be the law, the desired object of simple tax law and ease of its administration may not be achieved.

A word of caution, in a bid to recover tax dues by the recovery officer he must take the note of judiciary pronouncements by the Courts. Attention is invited to the recent decision of Bombay High Court in Nu-Tech Corporate Services Ltd. v. ITO bearing W.P. No. 1730 of 2018 dated September 24, 2018, wherein the Court has awarded the cost to the Assessing Officer for wrongly adjusting refund against the demands particularly when no notices of demand were served to the assessee.

Therefore, no attempt should be made to recover demand in coercive manner particularly when the appeals have been filed and stay applications are pending.

CA. H. N. Motiwalla

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