ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles by Sukumar MukhopadhyaySubscribe to Sukumar Mukhopadhyay

Indirect Taxes

The budget proposals, instead of introducing a 'tariff with only a few exceptions', have actually complicated the tariff structure in customs and excise, and burdened it with even more exemptions. If the customs clearance procedure is to be speeded up, major reforms are needed to reduce the number of rates and to abolish exemptions. Similarly, the excise rate structure, which has seen little improvement in the past 10 years, should see a substantial abolition of exemptions and have fewer duty rates.

Weak Links in VAT Chain

CENVAT Rules need to be appropriately modified to ensure that the VAT chain - which ensures that duty paid at one point may be claimed as credit elsewhere - is strengthened so that deserving exemptions can be availed of by manufacturers.

'Mini-Budget': Sound Measures, Long Overdue

It is not uncommon to introduce some tax reforms and changes before a Budget. The finance minister's recent announcements, being termed a mini-Budget, must be viewed as overdue measures that are essentially growth-oriented. Except for the capital goods industry, all other sub-sectors of the manufacturing industry will receive the right impetus.

Expansive Definition of Manufacture

The definition of manufacture for levy of excise duty was significantly, but very quietly, enlarged in the 2003-04 budget through an amendment of the Central Excise Act. The change, which has largely gone unnoticed, will bring changes in prices at the first stage or even at the retail stage within the ambit of â??manufactureâ??. However, defining manufacture in terms of alteration of value amounts to imposing tax on value addition. This is clearly trespassing into the realm of sales tax or VAT.

Classification of Goods for Taxation

Defining goods is imperative for the purpose of imposing tax at the correct rate since there are different rates of taxes and there are also exemptions. To ward off controversies, statutory definitions have been introduced in many cases. They are binding even if they are artificial in nature. In fact they have to be artificial in many cases because of the very nature of the goods that are sought to be defined. It is advisable to introduce more statutory definitions in the tariff to minimise controversies in regard to classification of goods.

VAT in an Impasse

By taking the position that a patchwork VAT will not serve the purpose and threatening even to go back on its commitment to compensate the states for possible loss of revenue, the centre has created an impasse over the introduction of VAT. This may be the right time to reflect on VAT once again and consider seriously whether it will be at all worthwhile having the tax in the form it is being sought to be introduced.

Tax Change with Retrospective Effect

The legality and propriety of the retrospective withdrawal of excise duty exemption for cigarettes and pan masala manufactured in the north-east. A critical examination.

Indirect Taxes

The finance minister has claimed that his objective is to "eliminate procedural complexities, reduce paperwork, simplify tax administration�enforce efficiency�[and] move away from a suspicion-ridden, harassment generating, coercion-inclined regime to a trust-based green channel system". But the fine print of the Budget reveals that none of these laudable objectives have been seriously pursued. The finance minister has followed the established mode of keeping the general rates of tariff high and then bestowing exemptions galore.

Kelkar Committee on Indirect Taxes

The Kelkar Committee's final report on indirect taxes shows impressive clarity in its tariff proposals and provides ample evidence of much thought having gone into the framing of the recommendations. However, in respect of administrative and procedural aspects the committee has chosen to ignore many of the useful suggestions that had been made in response to its earlier consultation paper. What is more, no reasons have been advanced by the committee for doing this.

Task Force Report on Indirect Taxes: A Critique

While the consultation paper released by the Task Force on indirect taxes headed by Vijay Kelkar has some very important suggestions which are easy to agree with, there is scope for serious difference of opinion in respect of many of its recommendations. And some of its proposals are not enough to achieve the objectives for which they have been put forward.

Customs Tariff Reform

Contrary to the claims of successive finance ministers, the Customs tariff remains highly complicated after more than a decade of supposed reforms since 1991. There are too many rates still, apart from some specific rates, innumerable exemptions, numerous conditions and lists. A reform agenda for the 2003-04 Budget.


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