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Tahseen Tabassum (CA-FINAL) (644 Points)

26 February 2010

Hello frnds, Plz anyone let it clear ....for e.g as per budget tax rate increase for some particular product and it is made applicable from 1st April onwards but after wards it remains to be the same in the act as bill not passed for that, then what will be its effect for those who had paid the tax at higher rate.

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6 Replies

CA Amit Kumar Khaitan (Research Analyst) (360 Points)
Replied 26 February 2010

Dear mam,

There are many provisions in Central Excise whereby, the excess taxes collected by the government on the basis of a notification etc that is required to be approved by the parliament, are not required to be refunded and any action based on such notification etc remains valid even if parliament does not approve.

However, unless the Finance bill is passed by parliament, there is no statutory backing to it. A notification has the backing but the bill has no backing till passed by the legislature. The matter should accordingly be interpreted, in accordance with the manner in which it has come to existence.

Please wait for other posts

Amir (Learner) (4016 Points)
Replied 26 February 2010

Dear Friends,

Look there r two dates -

1) On which Bill gets approval in the Parliament or passed by the Parliament & takes the shape of Act

2) The date from which it is made effective..

For taxation purposes what is important is the date mentioned at point no. 2

Now amendments can be made effective

1) going forward or

2) Retrospectively

In the first case there is no problem.

But in the second case Yes it is a practical difficulty - There can be 2 situations -

1) Increase in rate - In this case Govt. generally grants relief by Waiver of Interest on late payments, etc but again if not granted then there is a harship.

2) Decrease in Rate - IIn this case Govt. refunds the excess amount to the one who had borne the burden of taxes, like "End Customers in case of Indirect Taxes"

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Tahseen Tabassum (CA-FINAL) (644 Points)
Replied 27 February 2010

Thanks for your response. Mr. Amir let me know one more thing that the refund will be made automatically or through any circular.

Amir (Learner) (4016 Points)
Replied 27 February 2010

Dear Tahseen,

Refund will be allowed only when the same is claimed by sumone....& there is no concept of automatic refund.......

Now whether it will be allowed by any notification or circular or by the provisions of ACT, will depend upon the relevant laws under which u r seeking refund.....I mean if Act itself contains such a provision then no need for any notificarion, etc otherwise Govt. /Board may issue notification/Circular,