Dr X is a leading medical practitioner in a city. He has set up a charitable trust through which he plans to establish a super-speciality hospital in the city to cater to the medical needs of all sections of the society. Incidentally, that part of the State had been neglected over the years. The proposed hospital would be a boon for the region. You are heading the tax investigation agency of that region. During an inspection of the doctor’s clinic, your officers have found out some major irregularities. A few of them are substantial which had resulted in considerable withholding of tax that should be paid by him now. The doctor is cooperative. He undertakes to pay the tax immediately. However, there are certain other deficiencies in his tax compliance which are purely technical in nature. If these technical defaults are pursued by the agency, considerable time and energy of the doctor will be diverted to issues which are not so serious, urgent or even helpful to the tax collection process. Further, in all probability, it will hamper the prospects of the hospital coming up. There are two options before you: (1) Taking a broader view, ensure substantial tax compliance and ignore defaults that are merely technical in nature. (2) Pursue the matter strictly and proceed on all fronts, whether substantial or merely technical. As the head of the tax agency, which course of action will you opt and why? (UPSC IAS Mains 2018 General Studies Paper – 4)
In the present case Dr. X, a leading medical practitioner through his charitable trust is planning to establish a super specialty hospital in backward region of the state.
Any irregularity or non compliance of tax at the end of assesses or tax department is illegal and a crime against the law of the land. Being the head of the tax investigation agency, my duty towards the department is to ensure that assesses comply with tax norms and pay taxes according to the law. As per my work ethics, I must abide by the rules and regulations of the department.
It has been found that there has been cases of irregularity in the clinic. Some irregularities are of substantial nature and of them, few are technical in nature that has led to withholding of tax. Dr. X undertakes to pay the tax immediately.
Super Specialty Hospital in backward region will cater to health needs of people of neglected area. Duty to the humanity is a greater service, and my duty is also towards my fellow citizens. My immediate focus will be on getting substantial irregularity fixed and get the pending tax amount paid. For technical irregularity, a dedicated team will be formed to get it solved in time bound manner.
As a medium term solution to the problem, as mentioned in the case, a team of officers and CAs will be formed to create awareness and educate the tax payers in compliance process.
In long term, a white paper will be tabled to the concerned ministry proposing ease in tax compliance process by use of technology, reducing paper work and making the process online and user friendly.
This will enable the department to handle any such case in near future and also make the tax payer less burdened with complex paper works.
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