GUEST COLUMN

 

Signature….Is it a hard job??

 

Purushottam Sandye

 

Gone are those days when dispatch section of a company was preparing Gate pass 1(GP-1) or Gate pass 2(GP-2) (now called excise invoice) which was hand written or type written and signed, also before the Gate pass was prepared the stationary was pre-authenticated by Central Excise inspector needless to say that these clearances were on payment of duty.

The service tax legislation per say was not in existence then and the litigation matter where tariff classifications and filing of declarations etc. No sooner we come into market economy and computers come to our beloved tech savvy country the documentation was the first aspect of corporate governance which was computerized, this was is in mid-nineties. Side by side there was one more child born called as “SERVICE TAX”, after a humble beginning with 2 services, now we are in a era where everything is taxable other than negative list (with some exemption). With service industry in boom, the documentation was a big issue because of the intangible nature of service.

 

The outwards documentation started with Invoice or Bill and Rule 4A of service tax says that “the Invoices, bill or as the case may be, a challan signed by such person or a person authorized by him in respect of such taxable service provided or to be provided and such Invoices, bill or as the case may be challan shall be serially numbered and shall contain the following

 

(i)   The name, address and registration number of such person;

(ii)  The name and address of person receiving the service

(iii) Description, classification and value of taxable service; and

(iv) The service tax payable thereon”

A big issue in hand was signing of bills / Invoices / Challans and companies like telecom which have crors of customers it was easy for them to capture all the mandatory information required, however it is next to impossible task of signing the bills/invoices. With such a problem in hand companies come up with the ideas such as Facsimile Signature or simply mention on the bill “Computer Generated Invoice, No Signature Required” this is not in accordance with the rule book.

 

To overcome this problem CBEC under the famous garb called “ease of doing business” come up with the option of digital signature. The implementation of the provision was made effective vide Notification No. 18/2015–CE(NT), dated 6 th July 2015 which was introduced vide Notification 5/2015-S.T, dated 1-3-2015 and Notification 18/2015-C.E.(N.T) dated 6-7-2015 which had the scheme in detailed. Also under the name of trade facilitation Board issued Instruction vide F. No. 224/44/2014-CX.6 dated 6th July 2015 listing the detailed procedure for usage, verification and controls of the scheme.

 

Though we were too late to introduce this, however its better late than never. It must be noted, that many companies are still using Facsimile Signature or simply mention on the bill “Computer Generated Invoice, No Signature Required”. As a service provider they are ignoring the rule book and probably department is considering their case sympathetically because its enjoying double benefit, i.e., on one side they are getting their revenue and on other side they can deny the credit on such Invoices / Bills saying this is not in accordance with the rule book viz not signed. Though this is not in right spirit because if the tax is allowed to charge and collect on such Invoices than credit should also be allowed. The auditors may argues that the service receiving entity should not pay the tax amount to provider in such a situation, so that provider will be compelled to issue properly signed Invoices, but the fact is otherwise because these service providers are giant and its simply not possible for a normal service receiver to get into logger head with them also when department is well aware of the pattern of issue of bills. For instance take an example of mobile bills, I am sure by now almost 90% of the CBEC officers will have mobile phone some of them well be having post paid connections wherein they are receiving the bills which are of such kind and I am sure they are paying service tax component of such bills to service provider, unfortunately though they get assertive only while denying the credit taken by any service provider / Manufacture of such bills. Actually Department has power under Section 77 (1) e & (2) of the Finance Act, 1994 wherein it can impose penalty upto Rs 10,000 for non-issuance of Invoice in accordance with the provisions and simultaneous penalty under rule 27 of the CER, 2002. It surprises me and equally bothers because all these taxes are adding to cost which is against the very principle of any Value Added tax scheme, it should be noted that such issues need to be addressed on immediate basis, as this hampers the cause of “Ease of Doing Business in India”.

 

Views expressed are strictly personal