Budget 2024: Litigation Digitisation, Amnesty Scheme Need Of The Hour For Customs Sector

Digitisation of litigation and an amnesty scheme are some of the key measures that are expected by the customs sector ahead of the pre-election interim Union Budget next week.

Here's an in-depth analysis of the key expectations.

Digitisation of Customs Litigation 

There is a need to bring digital transformation to customs litigation, drawing parallels with the complete digitalisation of the GST litigation in India, according to Smita Singh, partner at S&A Law Offices. This would bring enhanced efficiency and transparency, she said.

Currently, the litigation process within customs relies entirely on physical documentation. When individuals need to respond to show-cause notices or file appeals, they are required to submit physical copies of their responses directly to the customs authorities.

The signatories must physically sign the relevant documents. The entire customs-related legal process is conducted using the traditional paper-based methods.

In comparison, the goods and services tax portal provides an online platform that enables users to submit responses to notices in various filing fields. Instead of relying on physical paperwork, businesses can use this online system to respond to official communications.

The portal offers automated case tracking, allowing users to monitor the progress and status of their cases in real time.

Amnesty Scheme

The customs sector also needs an amnesty scheme in order to ease the burden on the judicial authorities and to bring revenue to the government, according to Saloni Roy, partner at Deloitte Touche Tohmatsu India LLP.

Amnesty schemes are government-launched special programmes to help people resolve problems related to taxes. Such schemes related to excise, service and income taxes have been implemented. Similar schemes have been introduced for the Export Promotion Capital Goods and advance authorisation.

There is a high expectation for an amnesty scheme under customs for legacy disputes, especially as several such schemes have been successful in the last five years, according to Sudipta Bhattacharjee, partner at Khaitan & Co.

Other Compliance Challenges

The person wanting to import anything is supposed to submit a document called "Bill of Entry" before the end of the day, even on holidays, just before the day when the plane, ship or vehicle carrying the goods arrives at the customs station, where it will be cleared for use or storage, according to the current norms.

The rule works well for shipments arriving by sea, but it becomes a problem for air shipments, which are often chosen for urgent production needs and not planned well in advance, according to Gunjan Prabhakaran, partner at BDO India.

Importers find it hard to submit the necessary documents within the current time limit. Therefore, suitable guidelines are required, Prabhakaran said.

Sometimes, customs demand is also raised by revenue and accepted by the taxpayer.

Prabhakar pointed out that the difference in demand is usually paid by manual challans, which are not considered valid for availing input tax credit for the Integrated GST portion of customs duty. This creates financial difficulties for importers.