Revenue department, IRS officers at loggerheads

Arun Jaitley
A divide between the department of revenue (DoR) and Indian Revenue Service officers (IRS), particularly those in Mumbai, sharpened on Thursday, with both sides toughening their stance over some officers passing a resolution against the department for interfering in day-to-day work.

The resolution was passed at a meeting of these officers in Mumbai, after one of their colleagues received a transfer order for allegedly using unfair means to meet tax collection targets. 

While Union finance minister Arun Jaitley warned the officers of disciplinary action, saying no government department had ‘absolute autonomy’, IRS officers in Mumbai said they would stick to their resolution and  might consider a legal remedy against DoR.  

“(The) minister has taken a serious view of such a resolution by officers of an Organised Group ‘A’ service to advise the government on what role it should play.  This is an act of insubordination,” went an official statement.

Supervisory powers of the next higher authority ensure there is no misuse of power by anyone in the government, it further said.

The case pertains to action taken against a Mumbai assessment officer for allegedly using unfair means to meet a revenue collection target. Field officers argue these targets, set by the DoR, "led by an IAS officer", are unrealistic.

“Is it the accountability that is pinching the income-tax department?” a senior DoR official questioned. Revenue Secretary Hasmukh Adhia had insisted on action in a case where an assessment officer in Mumbai used unfair means to meet the revenue target, his officials said. 

The officer in question had, they said, "unduly" raised a demand of Rs 10,000 crore against State Bank of India (SBI) on March 30, 2016, which the government-owned bank paid. It had to pay Rs 4,900 crore in advance tax but the officer took only Rs 1,200 crore into consideration and slapped an interest of Rs 5,800 crore for short payment. A rectification order was passed by him the next day (which falls in the next financial year) and a refund of Rs 9,500 crore was made to SBI.

“This was a clear case of how officers of the I-T department jacked up their achievement of revenue collections for the year,” said a DoR official, on condition of anonymity.

Adhia took a serious view of this and asked the Central Board of Direct Taxes (CBDT) to initiate action against the officer responsible, DoR officials said. "There was no excuse this time, as the secretary had made it very clear to all field functionaries that no such unfair means will be used for jacking up the collection achievements,” added the official.

IRS officers, however, said they'd continue with their ‘resolution of solidarity’ and not follow DoR directives. I-T field officers alleged DoR had no role in the administration of IRS. “DoR should function within the rules,” a senior tax officer told this newspaper. 

I-T officers said DoR was undermining the autonomy of CBDT, the board under which the I-T department functions.  A top I-T officer said DoR interfered in their operational matters. "For instance, DoR has been deciding the format of the scrutiny letter that is sent to taxpayers in case of tax evasion, which is supposed to be decided by CBDT. There is also a clear case of micro management in transferring and posting of tax officials, which is the board's domain,” said the officer.

Adhia, meanwhile. has communicated to the I-T department his disappointment over its performance in 2015-16, sources said. Direct tax collections grew 7.6 per cent, much lower than the potential, as nominal gross domestic product growth for the year was close to nine per cent. “If we look at inflation and GDP growth, the collection should be higher. Somewhere, the I-T department has not put in their best. Therefore, last minute, they try to opt for unfair practices and get caught,” the senior DoR official said.

To which, I-T officers say the collection targets set by DoR are unrealistic. And, say IRS officers, Adhia should take the blame as well for missing the revenue targets. Direct tax collection might be lower on account of persistent weakness in the economy, they argued.

In a letter dated July 22 to the finance ministry, the IRS Association said, “Unfair and whimsical actions by DoR affecting the morale of the service, especially in matters of targeted transfers and posting as a tool of punishment and harassment at various levels."

The letter also asks for carrying out the reforms suggested by the Parthasarathi Shome-headed Tax Administration Reforms Commission (TARC).

"TARC should be implemented expeditiously, which says the role of DoR (should be) restricted to dealing with matters concerning CBDT and CBEC (Central Board of Excise & Customs).  It has no power to exercise any supervision over the respective boards and any of its attached offices."
  
The officers might challenge the DoR directive on transfer in court. “We are getting support from I-T offices across the country. Ahmedabad and Hyderabad zones have agreed to support the cause,” added a senior I-T officer who was part of the emergency meeting of the IRS Association, which drafted the letter to the ministry. 

To which a DoR official said, "How can an assessing officer not know how much advance tax anyone has paid? This was done deliberately. Agreed, these practices were going on in earlier years but, this time, we sounded them.” 

The secretary had emphasized on fair and honest practices to meet tax targets well in advance, he added. Adhia is taking regular meetings with the I-T department through video-conferencing on Saturdays, he said.

Since the action of the Mumbai IRS officers amount to administrative impropriety and not financial wrongdoing, the officers involved in passing the resolution will probably not be dismissed, said another official. However, the matter will be investigated and based on the findings, increments and promotions could be held back for a number of years. There could be demotions, too.

“There are many forums within the government to address grievances. The Centre will investigate but it seems that these IRS officials might not have aired their concerns through the official channels. Issuing such a resolution against the department is a clear breach of the conduct rules,” said the person. 

THE CONTROVERSY
  • The Indian Revenue Service officers (IRS) has passed a resolution in Mumbai, after one of their colleagues received a transfer order for allegedly using unfair means to meet tax collection targets.

     
  • Finance Minister Arun Jaitley warned the officers of disciplinary action, but IRS officers are sticking to their resolution and  might consider a legal remedy against the department of revenue (DoR).

     
  • The officer in question is charged with,“unduly” raising a demand of Rs 10,000 crore against SBI on March 30, 2016. The lender had to pay Rs 4,900 crore in advance tax but the officer took only Rs 1,200 crore into consideration and slapped an interest of Rs 5,800 crore for short payment. A rectification order was passed by him the next day (which falls in the next financial year) and a refund of Rs 9,500 crore was made to SBI.

     
  • Revenue secretary Hasmukh Adhia had insisted action be taken in the case.


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