25th August 2011,

 The finance ministry has substantially raised the monetary threshold for legally contesting indirect tax disputes, a move which aims to reduce the burden of litigation.

The Central Board of Excise and Customs ( CBEC), the apex indirect taxes body under the finance ministry, has instructed its officials not to file appeals in the tax tribunals if the fine and penalty on an alleged offender is less than Rs 5 lakh.

The existing threshold for approaching an appellate tribunal is Rs 1 lakh.

The order, which will take effect from September 1, covers all the indirect taxes levied by the central government, that is, customs duty, excise duty and service tax.

“The idea is to cut down on unnecessary litigation,” a government official said, adding, “the revision in threshold had become necessary in the present day economic reality.”

The ministry has similarly raised the monetary limit for filing appeals in high courts to 10 lakh from 2 lakh now, and in the Supreme Court to Rs 25 lakh as against Rs 5 lakh at present.

The threshold for litigation was introduced only last year. The finance ministry has been forced to revise it because of the high volume of tax-related cases pending in courts.

There were 87,862 appeals pending at various levels as on March, locking up over Rs 62,000 crore in indirect taxes, the ministry had said in reply to a question in Parliament.

The ministry has, however, clarified that adverse judgments, irrespective of the amount involved, would be contested in cases where the constitutional validity of the provisions of an Act or rule are under challenge, and where notification, instruction, order or circular has been held illegal or ultra vires.

Monetary limit will also apply in all cases where audit objections have been accepted by the department.

In such cases, officials would have to continue raising protective demands, but monetary limit would have to be considered before filing appeals.

The new rules are in line with country’s national litigation policy that seeks to make the government an efficient and responsible litigant.

The Central Board of Direct Taxes, the apex direct taxes body, has already revised the monetary threshold to cut litigation in direct tax disputes.

 13 Apr 2010

 Agents facilitating import or export of goods at Customs stations will have to take greater responsibility for their clients through know your customer (KYC) guidelines similar to that for the banking sector.

The KYC norms for Customs house agents are expected to help check the increasing instances of misuse of export promotion schemes, fraudulent claims and duty evasion.

Customs House Agent or CHA has a license to act as the representative of importers or exporters for transaction of any business relating to import or export of goods at Customs.

The highly involved and technical nature of clearance of imports and exports makes these agents almost mandatory for importers and exporters who would want to focus on their business rather than get involved in these complex transactions.
CHAs will have to verify the antecedents, correctness of import export code number, identity of his client and functioning of his client in the declared address, as per the new rules.

Exporters and importers on their part will also be obliged to furnish details to CHAs, according to the new norms prescribed by the apex indirect taxes body the Central Board of Excise and Customs.

“This move is in the interest of genuine exporters. The agency responsible for carrying out business on behalf of exporters or importers will now carry out intense scrutiny of their antecedents so those isolated cases that brought bad name to the whole trade will be taken care of and whole trade will not have to suffer because of them,” said an official with an export promotion organization.