" IRS OFFICERS PROMOTED FROM THE GRADE OF SUPERINTENDENT OF CENTRAL EXCISE ARE ALSO MEMBERS OF AIACEGEO. THIS IS THE ONLY ASSOCIATION FOR SUPERINTENDENTS OF CENTRAL EXCISE AND IRS OFFICERS PROMOTED FROM THE GRADE OF SUPERINTENDENT OF CENTRAL EXCISE THROUGH OUT THE COUNTRY . President Mr.T.Dass and SG Mr. Harpal Singh.

Tuesday, 28 February 2017

GST, DPC

Dear friends,
namaste.
All members are requested to appeal the Hon'ble Prime Minister regarding GST on the following lines immediately.
Love,
Ravi malik.
ALL INDIA ASSOCIATION OF CENTRAL EXCISE
GAZETTED EXECUTIVE OFFICERS
President:                                     Address for communication:                                         Secretary General:
R. Chandramouli                   240, Razapur, Ghaziabad-201001 (U.P.)                                                Ravi Malik
Mob. 08939955463   mail Id:ravimalik_sweet@yahoo.com, Site: cengoindia.blogspot.in  Mob. 09868816290
Vice Presidents: P. Parwani, L. L. Singhvi (Central); AnuragChaudhary, Ravi Joshi (North); N. Raman, G. Srinath (South); B. K. Sinha, AshwiniMajhi (East); Rajesh Chaher, J. D. Patil (West) Joint Secretaries: Anand Kishore, J. S. Aiyer (Central); R. K. Solanki, AshishVajpeyi (North); M. Nagaraju, Ajithkumar P. C. (South); P. K. Sen, S. Bhattachariya (East); JasramMeena, M. K. Mishra (West) Office Secretary: C. S. Sharma Treasurer: N. R. MandaLiaison Secretary: A. S. KunduCoordinator on Telangana: P. Shravan Kumar
(Recognised by G.O.I., Min. of Fin. vide letter F.No. B. 12017/10/2006-Ad.IV A Dt.21.01.08)
Ref. No. 30/T&P/17                                                                          Dt. 28.02.17 
To,                                                                                       
Sh. Narendra Modi,                          
The Hon’ble Prime Minister, Government of India,  
South Block, New Delhi-110001.  

Sub:  Wishing a successful roll out of GST–reg.
Sir,  
It is submitted with due regards that GST is a biggest historic Tax reform in India for achieving the objective of “One Nation, One Tax & One Market”. It is aimed at better Tax compliance, more revenues, ease of business and reduction in inflation. The purpose of it is an instant spurt in Economic Growth.  
            2. We all want a successful and smooth roll out of GST. We have successfully implemented several transitions and evolved a mature indirect tax administration for ease of business from the year 1855 onwards including 1991 tax reforms and introduction of Service Tax in 1994. Our officers have made significant contribution to the GST process and continue to do the same. Our officers have tirelessly been working on GST for last 10 years and wish to nurture it having got requisite expertise. They are aware of the intricacies of indirect tax functions and have experience of general administration, tax administration, adjudication, investigation, enforcement etc. with required technical expertise. 
            3. However, the decision dt. 16.01.17 taken by GST Council has caused serious concerns being detrimental to the Centre. The decision seems to be one-sided in favour of states weakening sovereign function of Centre regarding levy and collection of taxes. Our apprehension is that GST in this form may not bring the desired goals. Following three key concessions have been made to the states by GST Council- i) Upto Rs. 1.5 Crore turn-over assessees distribution in ratio of 90 (states) :10 (Centre), 
ii) Cross-empowerment in IGST with minimal carve-outs and 
iii) Converting supplies to territorial waters into Intra-State supplies. 
            4. With the above concessions to the states, the following concerns need to be addressed- 
 (A) Lower Tax Receipts in the hands of UOI in post GST era-The Vertical division that too in the ratio of 90:10 below 1.5 Cr is not only an undignified bad optics to the Centre but also is likely to lead to a situation where only 18% of the assessee base is available with the Centre. Such skewed distribution of assesses does not bode well for the Centre-State fiscal balance of power. With this ratio the Govt. of India may lose revenue to the tune of Rs. 1 lakh and 10 thousand Crores. Accordingly, our concern is how GOI would compensate states for 5 years with 14% escalation clause for the losses. 
(B) Legal Hurdles in cross-empowerment in CGST & SGST: 
 i) GST Council has been created under Article 279A and assigned functions under clause (4). The word “administration” does not find mention in list of responsibilities cast upon the Council. The residuary clause (h) empowers the Council to take decision on any matter relating to GST, however it is only a residuary clause and important item of the administration can not be construed as included in this clause. It is, therefore, requested that the recommendations of GST Council in relation to administration of CGST and IGST may not be treated binding on the Central Government. 
ii) Delegation of power by Central Government to State Government under Art. 258 is an extraordinary power which can be used only where the Central bureaucracy is not available. In the present instance, there exists a bureaucracy. Delegation of Central indirect tax related assessment function would indirectly amount to appointment of State officers for Central work despite of our officers being capable of discharging the duty cast upon them. Accordingly, only our officers should be allowed to continue with such functions. 
iii) Adjudication proceedings under a fiscal law have never been delegated by the Centre to the state or vice-versa under Art. 258 or 258A, as the case may be. The Government to which a particular tax accrues administers that tax. This has been the tax administration philosophy of all taxes in the past. This philosophy may kindly be applied for administration of CGST and IGST also. 
iv) Delegation of powers in IGST: 
a) IGST is a union levy as per Art. 269A. It has been decided to be cross-empowered to the State Government officers by the GST Council contrary to the opinion of Ministry of Law. It is requested that the opinion of Ministry of Law may kindly be placed before the GST Council. This opinion is first to be overruled by the Central Government before taking any contrary decision. 
 b) The issue of parliamentary oversight has not been addressed by the GST Council while taking decision on dual control. IGST assessment errors by State Government officers would go outside the oversight of CAG and PAC. CAG and PAC submit reports to the parliament to which the CBEC tax administration is answerable. However, such oversight collapses once the powers under IGST are delegated to the states and will lead to grant of power without any accountability which is not in consonance of the Constitution. 
c) There is also issue of jurisdiction of CBI. Once a Central Act and Central Levy is being administered by any officer of state in his deemed capacity as CGST and IGST officer, such officer should come under the jurisdiction of CBI.  
d) GST is destination based consumption tax. Delegation of IGST powers to the states means empowering originating state to adjudicate on revenue which belongs to the consuming state and the Centre. Such adjudication would take place after the monthly fund settlement has taken place for cross-utilization of IGST against SGST and vice-versa. Therefore, IGST delegation to states is not warranted from the perspective of design philosophy also. 
v) Supplies within and to territorial waters: 
a) A supply arising in a Coastal State and reaching territorial waters is inter-state supply. Converse of such supply would also be an inter-state supply. It appears that Council has decided to make the same supply as intra-state to continue with the old practice which is not correct as there is no promissory estoppel in taxation law. Art. 269A (5) does give powers to the parliament to define what constitutes inter-State supply, however use of such power to convert inter-state supply to and from territorial waters (which is a Union Territory) into intra-state supply may not be a fair exercise of such power. 
b) Even if it is assumed that such exercise of power is possible, there is a more difficult situation with supplies originating and getting consumed in the territorial waters. Draft IGST law has provided that supplies originating and consumed within the territorial waters be treated as intra-state supply in the Coastal State to which the territorial water touches. Quite clearly such supplies are intra-State supply in the Union Territory. Even under Art. 269A(5), no such power vests with the parliament to convert intra-state supply in a UT into an intra-state supply in another state. Supplies originating and getting consumed in the territorial waters cannot even by legislation be deemed as intra-state supply in the Coastal State as no part of the sale takes place in the Coastal State and thus there is no nexus of any of the events of the sale with the Coastal State. For nexus to exist, at least some element of the four events namely, signing of contract, passing of property, delivery of goods or payment of consideration must take place in the state where it is proposed to be taxed. In the transaction under examination, no nexus exists with the Coastal State. 
c) Further, the provisions of Art. 297 of the Constitution provide that the minerals in the sub-soil of territorial waters belong to the Centre. It would need to be examined whether converting supplies within Coastal Waters to intra-state supply in the Coastal State infringes on such ownership of the Centre when the minerals are extracted as extraction and sale would amount to supply under GST law. 
d) Finally, Art. 245 puts a bar on states from acquiring extra-territorial jurisdiction. Therefore, it may not be possible even by legislation to grant such rights to the Coastal States.
e) Taxing powers constitute basic structure of Constitution and it may not be open even by legislation to convert intra-state supplies outside coastal state into intra-state within the Coastal State. It is, therefore, requested that the decision in relation to Coastal Waters be reversed to take a legally valid decision. 
(C) Problems in ease of business and in the concept of One Tax One Nation- 
 i) GST law has been framed in light of experience of incremental tax reforms of Central Govt starting from the era of MODVAT in 1986. CBEC & its subordinate offices, in tune with the international best practices adopted vide experience in Customs administration, gradually underwent from a control based obtrusive framework to trust based non obtrusive administration that worked primarily to facilitate business. This emphasis was not only required, rather it was sine qua non for the ease of doing business so that Indian business can be globally competitive. On other hand, state administration has yet to evolve such framework. Administrative structure remains highly control oriented with emphasis on seizure, attachment of goods or nakas on tolls. Such approach may not be prudent to growth in service sector that has always faced a very open & pro-trade tax administration. Moreover, provisions of VAT laws for checking of vehicles in transit have been carried forward in draft GST law despite of opposition by the CBEC. It is highly desirable for the GST Council to do away with these provisions of draft GST law to truly make the pan-India movement of goods seamless besides helping the Transportation industry immensely. 
ii)  At present, a big service tax assessee in sectors like Aviation, Telecom, Insurance or similar sectors has just to face one stop single assessment point with one tax administration. However in the proposed GST administration, they will have to take around 30 separate registrations, thereby making them face 30 different tax administrations. This belies the promise of ‘One Nation One Tax’. Also, states have no experience of Service Tax which is very different as a concept. In such a scenario, divergent views on similar tax issues may emerge across states leading to a plethora of litigations. Initially, Service Tax assessees were supposed to be with the central government. These sectors have also made several representations to be allowed for centralized registration.  
 iii)  Service providers in the Banking, Insurance, Logistics, IT & ITES and Aviation sectors are operating under a single Centralised registration of Service Tax at present. Accordingly, they have to file 3 Service Tax returns in one year at present. In GST era, they will have to file 61 Returns per state per year after taking registration in each state in which they have presence. So, a major bank like SBI, which has branches in all 35 States / U.T.’s, will end up filing over 2000 (61*35) Returns annually. This does not seem to be in the spirit of Ease of doing business as it will lead to severe rise in compliance costs.  Therefore in the National interest, the GST Council needs to convince the states to allow centralised registration for certain sectors as their business model warrants the same. 
iv) There is a reported failure rate of 30% in Karnataka invoice matching. In the proposed GST, Invoice Matching is a central means of establishing the sanctity of tax credit chain. Such a massive failure rate of 30% will lead to tax anarchy whereby tax assesses will be denied legitimate credit due to machine failure. 
v)  Any Order passed under the VAT laws can be revised by the department even after 5 years (even after 6 years in some states). These powers of revision don't bring finality and closure to the tax implications of any transaction for a very long time. The procedure under the Central Indirect Tax Laws is different and provides an identical time frame to the taxpayer and to the Department to file appeal against any order. This time limit is 3 months. However, the provisions relating to revision by departmental officer have been retained in draft GST law at the insistence of the states. GST Council needs to convince the states on this. 
vi)  Settlement Commission has been providing an alternate dispute resolution mechanism for nearly two decades now on the Central Indirect Tax side too, thereby reducing the load on the Tribunals and Courts. The States need to be convinced by the GST Council that the proposal of CBEC to have a Settlement Commission for GST is a win-win proposition 
(D) HR issues & demoralised work force- 
i) In relation to distribution of assessees in the ratio of 90:10 below 1.5Cr, the ratio is unfair and reduces the legitimate work and career aspirations of the officers under CBEC. This decision would lead to the assessee base of CBEC becoming extremely small bringing into risk the very survival of the department. Taxes subsumed in GST are almost equal and the number of assessing officers available with Centre & States are also almost equal but the division of work is not equal. The number of non-assesing officers  in states and number of traders joining GST base may be high but that should not become the sole criteria for distribution of work in favour of the states when  the revenue subsumed of Centre and states are nearly equal, i.e., 52% vs 48%. The officers under Centre (CBEC) have long standing expertise of dealing with various laws of the country than state officers and are working on complex GST law for 10 years from conception to execution and imparting training to state officers. 
ii) Other HR issues have also caused deep sense of discrimination, dissatisfaction and frustration being unresolved for years and acute stagnation in promotions for our officers. For the successful implementation of a historical tax reform, we need a pepped up workforce and not a demoralised lot. 
iii)  In the vertical split, 90% of assesses of less than 1.5 Cr turnover have been entrusted to the states. Here, it is prudent to mention that the cost of collection of revenue is very low in the Central Government tax machinery in comparison to that of states. Such an arbitrary and unscientific split may increase administrative burden of tax collection. It is also worth to mention that the states have already started demanding extra fund for infrastructure etc. to manage huge tax base. 
5. Considering above concerns, there is a feeling that the dignity and the vital role of the Central Government has been compromised and the role of Indirect Tax experts has been undermined in the hand of generalists which is the major cause of above perceived problems. It may be seen that there is no one to represent us in the GST Council to give expert advice and technical input.  
6. In view of the above, it is requested to consider the following points- 
(i) Revision of the division of assessees below 1.5 Cr also in the ratio of 50:50. This would mean a vertical split of the entire assessee base in the ratio of 50:50.  
(ii) Role in Audit: If the base split in the ratio of 90:10 of the small taxpayers is non-negotiable, it may be seen that the 10 % base does not provide the adequate sample space for selection for 5% audit. Therefore, it is absolutely necessary that risk base selection for audit of a number not exceeding 5% be allowed to the Centre below 1.5 Crore. It may also be considered that there is no mechanism of Audit available with states, while the Centre has evolved a complete audit procedure manual EA-2000 for risk based audit. This will help ease of doing business as well as quality audit to curb black money and revenue leakage. 
(iii) Decision of IGST cross-empowerment may be rescinded and be placed with Centre as it is not constitutionally valid. 
(iv) In the spirit of the Constitution, exclusive role of Center in Territorial waters may be maintained. 
(v)  Role in dispute resolution: With cross empowerment, the dispute resolution process needs simplification and multiple layers in the dispute resolution should be avoided.  
v(a) First stage appeal must lie with Commissioner level officer in the cases where revenue involved is above say Rs 25 lakhs. Appeals vertical in states are not well developed and CBEC officials at the level of Commissioner and above can be productively used for dispute resolution of these cases.  
v(b)  Member (Technical) in Tribunal should be common for CGST and SGST taking into account the cross empowerment and he should be Commissioner level officer. This would obviate need for a three members bench. The bench can be of two members and consequently CBEC officials at the level of Commissioner and above can be productively used for dispute resolution of these cases.
v(c)  Advance Ruling be given at the level of Commissioner as such Rulings will have wide ramification in GST for Ease of Business and will often have all India implication. 
v(d) Settlement Commission is required to be revived. 
vi) Ease of Business-Further for Ease of doing Business, the assesses from sectors like Banking, Insurance, Telecom, Aviation, Information Technology, Railways, e-commerce are required to be retained under centralised registration. 
vii) Economic Survey 2017 0f Union of India said, "A GST with broad coverage to include activities that are sources of black money creation….land and other immovable property….should be implemented." 
Current scheme of GST has excluded land, liquor, immovable properties, which may kindly be included in GST to curb black money generation in the country and help succeed the demonetization. 
viii) The Chairman, CBEC may be considered to be ex-officio Secretary to GSTC. 
ix) Additional Secretary, GSTS may be considered to be from CBEC who are expert in administration equipped with technical knowhow. 
x) Central officers may kindly be considered for GST Commissioners in states.  
xi) GSTN may kindly be placed under CBEC. 
7. Successful GST being our utmost desire, it is further submitted that we would be failing in our Constitutional duties, if we do not bring above concerns to your kind notice before the roll out of GST. Final call is always with the Govt. to which we promise to abide. Accordingly, we sincerely hope that the issues raised above would be redressed for the smooth and successful implementation of GST.
8. It is also requested to take due steps to improve the career prospects of our officers by granting them parity with the better placed counterparts in the form of functional or at least non-functional upgradations. It is worth to mention that no scheme has been introduced to remove their acute stagnation of our officers despite of the decision already taken by the Cabinet to bring some scheme independent of cadre restructuring to remove their stagnation. No need to submit that our officers are forced to retire with single promotion in comparison to 5-6 promotions being enjoyed by our counterparts despite of us being instrumental in collecting Govt. revenue always above targets. 
Thanking you,
                                                           Yours faithfully, 
     
               

                                                                                                                                                  (RAVI MALIK)                         Secretary General.
ALL INDIA ASSOCIATION OF CENTRAL EXCISE
GAZETTED EXECUTIVE OFFICERS
President:                                     Address for communication:                                         Secretary General:
R. Chandramouli                   240, Razapur, Ghaziabad-201001 (U.P.)                                                Ravi Malik
Mob. 08939955463   mail Id:ravimalik_sweet@yahoo.com, Site: cengoindia.blogspot.in  Mob. 09868816290
Vice Presidents: P. Parwani, L. L. Singhvi (Central); AnuragChaudhary, Ravi Joshi (North); N. Raman, G. Srinath (South); B. K. Sinha, AshwiniMajhi (East); Rajesh Chaher, J. D. Patil (West) Joint Secretaries: Anand Kishore, J. S. Aiyer (Central); R. K. Solanki, AshishVajpeyi (North); M. Nagaraju, Ajithkumar P. C. (South); P. K. Sen, S. Bhattachariya (East); JasramMeena, M. K. Mishra (West) Office Secretary: C. S. Sharma Treasurer: N. R. MandaLiaison Secretary: A. S. KunduCoordinator on Telangana: P. Shravan Kumar
(Recognised by G.O.I., Min. of Fin. vide letter F.No. B. 12017/10/2006-Ad.IV A Dt.21.01.08)
Ref. No. 31/P/17                                                                          Dt. 28.02.17
To,
Ms. Vanaja N. Sarna,
Member (Admn.), CBEC,
New Delhi.
Sub: DPC for the post of Asstt. Comissioner.
Madam,
            Kindly refer to the Office Order No. 33/2017 Dt. 23.02.17 of CBEC.
2. With due regards, it seems that all vacant posts meant for the promotion to the post of Asstt. Commissioner have not filled. Only 800+ promotions have been made against 1200+ posts for the year 2014-15 & 2015-16.
            3. It is submitted that 1214 posts were communicated under RTI to be filled for the year 2014-15 and 2015-16. It was also impressed that total posts to be filled for the year 2014-15 to 2015-16 were 1766 in toto. These include promotion quota against direct recruitment and posts against retirements, VRS, demise etc.  
4. It is further submitted that the DPC for the year 2017-18 has also become due in January, 17. Accordingly, we have 1000+ posts of Asstt. Commissioner in hands. It is also worth to submit that it includes 764 (230+200+230+104) posts alone against direct recruitment which seems not to be included for DPC as promotions have been affected only against temporary posts as mentioned in the promotion order itself. If retirements, VRS, demise etc. are added, this figure shall cross 1000.
5. The officers promoted against temporary posts have also not been moved upwards in r/o retirements against regular posts. It is worth to submit that promotions were made against 421 regular posts under the DPC of October, 14.
6. In view of the above, it is requested that immediate steps may kindly be taken to fill-up all vacant posts of Asstt. Commissioner to benefit the maximum number of our officers who are forced to retire merely after single promotion in the career. 
Thanking you,
Yours faithfully,



 (RAVI MALIK),

Secretary General.