Lockdown 4.0 continues with the same vigour in major part of India whereas with MHA guidelines and appropriate guidelines by different States, some parts of India are slowly reviving after almost a 60-day slumber. Lives could not be the same again. Our editor for the present month, the first Lady President of AIFTP, Sr. Advocate Smt. Premlata Bansal has given a precise and quick insight to the days to come as aftermath of Covid-19.
The members who have started attending to office need to be extra cautious, the meetings with the client to be kept to the minimum and maximum benefit be taken of virtual meetings.
Last week we have seen the Hon’ble Finance Minister giving series of announcements on five days like a five-day test match. The policy announcements made, will take its own time to take shape by way of formalities and procedures in black and white. We will see the real text later. It would not be proper to comment upon the ‘atmanirbhar’ series. The motive is good. I sincerely hope the results are better – in long term and short term both.
Need for further relief in certain areas
While I find that MSME sector and the poorest of poor sector are likely to benefit out of the measures promised, it is also clear that the relief to the middle class is hardly to be seen.
As rightly observed in the Editorial,, the tax practise is going to witness a sea change in modalities and the ultimate result of the litigation may also come sooner. E-assessment procedures are already put in place under the Direct Tax regime, similar procedures would be soon made routine under the Indirect Tax too. The Office of the Commissioner of Central Tax GST, Thane, has already issued guidelines for conducting personal hearing in virtual board under the CGST Act on 18th May 2020. The Hon’ble Commissioner of CGST has, citing the observations of the Apex Court, underlined the need for virtual hearing and it is decided that “personal hearing” in respect of demand notice be given through video conferencing on WhatsApp. The standard procedure to be adopted is laid down. The WhatsApp video conferencing is preferred because it has end-to-end encryption.
Although the modalities presently look simple, the basic requirement would be that the litigant would have to send his submissions well in advance so that both sides, i.e. the litigant and the officer are aware of the submission and the officer should be ready to ask counter question, else the purpose of hearing would not be served. The hearing also pre-supposes the detailed show cause notice. While the intention behind the virtual hearing is noble, only time will tell how it is able to replace the personal hearing. The legal representative would also be able to be part of the WhatsApp video conferencing.
The ITAT Tribunal has already started virtual hearing. However, whether the Tribunals and the lower Courts would be able to perform to maximum strength with the help of virtual hearing? Much of the infrastructure needs to be put in place. In Tax practice we have seen the compilation of submissions as also the compilation of judgments cited run into more than 100 pages. A paradigm shift is required in the mindset of all concerned to be comfortable with such proceeding. As per the estimate being made worldwide, the social distance situation would continue for more than a year. Therefore for High Courts and other judicial and quasi judicial Courts to start in full strength, much preparedness is required from Government
Suggestions by Indirect Tax and direct tax Committee accepted ;-
I am happy to state that many of our suggestions made to the Hon’ble Finance Minister are accepted in full or part. For the ‘Vivad se Vishwas’ scheme we had sought extension up to 30th September 2020. The Hon’ble Finance Minister has extended the time up to 31st December 2020. It confirms the last line of my previous month’s message that the Government will have to be extend the time if it is looking forward to sizeable benefit from this scheme.
Some suggestions for the Central and State Government
Moratorium of further six months for repayment of loan of all types.
With the lockdown continuing for more than 60 days, today the financial situation in the major cities of India and the industries is vulnerable. There is no certainty as to when the normalcy would be restored. In my opinion, we will have to wait till 2021 to get back to near normal state of affairs. Just as GDP of India is likely to fall considerably, the expected income of an individual /borrower would reduce sizeably and therefore further six months moratorium for repayment or payment of Instillment , without any conditions is the need of the Hour. I would suggest the borrowers who are able to pay on time before the period of moratorium should be given some monetary incentive. (like some points as given by credit card ) This would ensure that the borrower would be more interested in making the payment of loan in time rather than waiting for moratorium period to be over. Only those who are in actual bad shape would avail the moratorium.
Reduction in the rate of interest on Borrowings.
The banks have already reduced the interest rate on the deposits. However, corresponding suo moto reduction in the interest to be charged on the loan taken by the borrower would give major relief to middle class persons, industries and businessmen. This reduction in the rate of interest on the borrowings should be made at the earliest with retrospective effect from 23rd March 2020 at least up to 31st December 2020. The rates can be reviewed based on the position thereafter.
Making available the fresh capital to small traders and service providers.
On account of complete closure of trade, commerce and industries, biggest sufferers are the small traders and the service providers including professionals who had no possibility of earning during the lockdown. The situation after slow release of lockdown conditions would not result in inflow of cash and liquidity to the small traders and service providers. The administrative cost and the maintenance cost remain unchanged and therefore, in my earnest submission, this is the class which need immediate care and attention. It is this middle class who take services from industry and business houses, and simultaneously provide job opportunity to sizeable population. Almost 20% of the earning class population would fall into this category. The Financial Relief provided to the MSME should also be provided to them.
Waiver of property tax for rental property on account of non-receipt of rent
Recently the Apex Court has held that the lawyers must pay rent for the court chamber for the lock down period , even though their offices remain closed. Having held that, the Apex Court has laid down the law for all the rented property. It is the Government who can now give some relief by way of waiver of property tax. It is also true on humanitarian ground the tenant may not be thrown out for non-payment of rent, none the less the owner of the property and the tenant both would have sigh of relief if property tax is waived for at least six months.
Payment of GST and VAT.
The Hon’ble Finance Minister announced at the very initial stage of lockdown extension of due dates for filing various GST returns up to around 30th June 2020. At the same time, the registered person having turnover about Rs.5 crore was to make the payment up to 5th May 2020 , 5th June etc in a staggered manner and file the returns around 30th June 2020. Similar relief has not come forward from the State Authority for making the payment of Value Added Tax for the goods not covered within the scope of GST. The time ahead are more difficult and therefore the State Government must also allow filing of return without payment of tax and at the same time grant interest free instalment at least up to 30th September 2020. The Government should also give incentive by way of small discount if the payment is made in time. This would ensure that a registered person would try to make the payment in time.
Relief of refund and pending rectification and other applications.
Much of the refund claims under the VAT regime are still pending clearance from the VAT department as also from Income Tax and Sales Tax Appellate authorities, Such application must be scrutinised and refund be released forthwith. The need of the hour is to make available liquid cash in the hands of the persons who are entitled to refund. If the Government, whether State or Central, is not in a position to disburse the refund to the claimant dealer, a mechanism may be provided to permit such person to adjust his rightful claim of refund against future liability, be it under VAT or GST or Income Tax – against the current tax liability.
Allow appeal without mandatory part payment.
Majority of the assessment which were getting time barred in March , the orders are passed exparte, they are now being received on line, at least in Maharashtra. Insisting on mandatory part payment under various laws to file appeal would amount to denial of justice. The litigants may not be in a position to make the part payment and would suffer recovery proceedings although he has valid right of appeal and probably justifiable reason for filing appeal. The State and Central Government must allow filing of appeal without insisting on payment of mandatory part payment and after evaluating the matter the authorities may be permitted to grant stay with lesser part payment or no part payment.
Webinars to continue.
The members of federation has by now got aquatinted with webinar culture. North zone is proposing a series of webinar on direct tax where as West Zone along with GSTPAM is having series of intensive work shops on various intricate aspects of GST.
Keep watching and enriching. Suggestions on the subject and modalities from members are welcome. Visit our website for u tube link of all webinars of federation.
Last but not the least, reminder to update your data in our dictionary available on website
Wish by next month we would be free of complete lockdown. Stay Safe. Wish you and your family members best of health.
With best wishes,
Nikita R. Badheka
National President, AIFTP