United Nations Public Service Awards Case Studies

Service sector is one of the most important sectors of Indian economy that account for more than 60% of the GDP. However, this sector was untaxed till 1994. Service Tax was introduced in 1994 in India on 3 services with the tax rate 5%. Gradually the numbers of services were increased to 12% in 2006 and the number of services taxed increased to 100. The number of service tax payers in the country are close to 1 million. However, no separate department was created to administer service tax and it was to be managed by the existing Central Excise Commissionerates. In 2004, six Service Tax Commissionerates were formed from the existing strength of the officials for the metro cities. In last few years the service tax revenue had been rising by almost 60 percent per annum against the rise of less than 20% in the other indirect taxes. The expected revenue for the current financial year is INR 550 billions

The Commissionerate of Service Tax, New Delhi is the second largest revenue earning Service Tax Commissionerate in India. In the year 2006-07, the revenue collected by this Commissionerate was around INR 57 billion and the revenue expected in the current financial year is INR 80 billion. There are more than 100,000 registered assessees in the Commissionerate.
Service Tax administration faced following challenges in tax collection:
1. It has less than 200 officers for collection of taxes from more than 100,000 assessees. The workload of an officer is almost 20 times more than the number of assessees that are handled in a other Commissionerates.
2. The Service tax assesses are the most important drivers of the economy in India
3. All records and returns filed with the department are in the paper form
4. There were frequent complaints by the taxpayers regarding the delay in granting the service tax registration certificate to the assessees
5. The scrutiny of the tax returns needed the revenue data of the assessees for the previous years and other important information. Such information being available in files were not readily available to the officers.
6. Only a small number of units could be audited due to shortage of the staff in the audit section. Hence high risk units have to be identified for maximization of the result of the audit.
7. Since service tax is a new levy and most of the assessees are brought in the service tax levy for the first time, they have a large number of doubts and queries. The procedure for replying the query was complicated, bureaucratic and time taking that used to cause delays and dissatisfaction to the tax payers
8. There was a big IT project being implemented by the Government of India costing more than INR 8 billion. However the implementation of the project was to take more than 2 years.
9. The financial power of the Commissioner of Service Tax for software development was only INR 50,000 (US$ 1200) per year.
10. There was no possibility for substantially increasing the manpower in the Commissionerate or improving the IT infrastructure in the near future.

What is the initiative about? (the solution)
The project was designed to benefit the tax payers as well as the service tax administration. The project empowered the taxpayers in a big way and provided him a tool to solve their problems using the website of Service Tax Delhi. The popularity of the Service Tax Delhi website www.servicetaxdelhi.gov.in increased manifold after the incorporation of the new features. The numbers of hits increased from barely 400 per day in June 2007 to more than 2000 per day in November 2007. The most visible effect of the website is in the area of replies to the queries. The Discussion Forum is receiving more than half a dozen queries every day which are being promptly answered by the experts. More than three dozen experts have so far registered on this Forum and the experts have replied to more than 100 questions within less than two months. The online reply of query has also reduced the numbers of written queries from the assessees. The number of queries was 29 in September, and 27 in October. However, after the introduction of discussion forum in October, the queries were reduced to almost half as only 16 queries were received in November 2007. The initiative allowed the taxpayers to file complaints online on any issues like the delay of registration. When the system of online complaint was received, the number of complaint received was almost 4-5 cases every day in July-August 2007. However, the numbers of complaints have drastically reduced and the average numbers of complaints have declined to less than one per day by December 2007. The project MONITOR also benefited the department by providing the official the information needed for the decision-making. Better quality of data provided by MONITOR helped the audit in better targeting of the units thereby improving the cases made by the Audit. The audit teams in the last quarter (July-Sept 2007) audited 45 units, raised 60 paras involving INR 350 millions and recovered INR 23 millions. However in the current quarter (October-December 2007), the same team has already conducted audit of 64 units, raised 78 paras involving more than INR 650 millions and recovered INR 46.3 millions. The Commissionerate also improved its performance on the area of anti-evasion. In the last financial year, upto the month of November (8 months), there were 58 cases detected by Ant-evasion wing that involved revenue of over INR 128 millions and recovery of INR 86 millions. In the same period this year, the Anti-evasion wing of the Commissionerate made 65 cases involving over INR 1750 millions and recovered more than INR 210 millions. The MONITOR software enabled the senior officers to monitor the scrutiny. As a result almost all ranges completed their scrutiny targets as per the norm. The recovery of additional revenue due to scrutiny increased from more INR 2.2 millions to more than INR 12.5 millions in the first 8 months of the year (upto November 2007). The project also reduced the paperwork of the department as a large portion of world could be done online. This enabled the officers to focus their time and energy in other pressing assignments.

Who proposed the solution, who implemented it and who were the stakeholders?
The project MONITOR was jointly prepared by Mr. V K Garg, Commissioner and Mr. Awdhesh K Singh, Additional Commissioner (Systems) of the Service Tax Commissionerate Delhi. Once the concepts were finalized, the designing of the software was done by Mr. A K Singh. However, the implementation of the project required the support and collaboration of all the officials of the Commissionerate. Mr. V K Garg provided the financial sanction to the project and ensured its smooth implementation. He also took lead in answering the questions of the tax payers. Mr. Singh trained the other officials and staff of the Commissionerate to use the software.

Describe how and when the initiative was implemented by answering these questions
a. What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The Service Tax Commissionerate Delhi used the concept of the immensely popular “discussion forum” and “social networking” websites in the realm of e-government for the first time. The software project was named as MONITOR (Management of ONline Information & Trends Of Revenue) which was designed as a web-based System to be hosted on the website of the Service Tax Commissionerate Delhi (www.servicetaxdelhi.gov.in). MONITOR captures the important data of the registration (ST-1) and Service Tax returns (ST-3) for increasing the supervisory control and to provide assistance to the officials in the search, analysis, scrutiny, audit and anti-evasion work. It also has the modules like discussion forum, online query submission and publication of the news. All the utilities of the MONITOR are designed to be user-friendly that requires least training of the officers. The objective of the project MONITOR was to reduce the physical interaction between the tax payers and the government official and to provide an alternative platform for information supply and grievance redressal to the assessees. A database was needed to capture the essential information of the assessee and the tax return to assist the tax officials in effective and targeted scrutiny of the return, select high-risk units for audit so as to cause minimum inconvenience to the genuine assessee yet effective to check the evasion of taxes. The ultimate goal of the project was to collect the taxes efficiently and effectively using the existing manpower and the use of information technology to provide best possible service to the tax payer while maximizing the revenue to the government. The Government of India was in the process of automation of entire department costing more than INR 8 billion. However, this was quite an ambitious project which was to take minimum 2-3 years. The strategy was to design the software within the limited financial power of the Commissioner, which can add maximum value to the department and the taxpayers in the shortest possible time.

b. What were the key development and implementation steps and the chronology? No more than 500 words
The website of the Service Tax Commissionerate Delhi was launched in September 2006 which provided for the downloading of the rules, laws, and forms of service tax. The website also enabled the assessee to find out the status of their service tax registration application. The project MONITOR was conceived in March 2007. The development work of the software started in April 2007 and phase I of the software was completed in June 2007. The testing of the software and the security-audit was complemented in July 2007 and it was made operational in August 2007. The second phase of the MONITOR including News, Discussion Forum was completed by September 2007 and released to public in October 2007.

c. What were the main obstacles encountered? How were they overcome? No more than 500 words
The project MONITOR faced many obstacles. The first challenge was to develop a software within INR 50,000 (US$ 1200) as more expenditure was not likely due to the ambitious project of the department. The vendors were convinced to develop the project at low cost as there was huge possibility of its replication in other government department. The vendor understood the importance of this project and agreed to do the work within the financial limitations. The next challenge was to train the officers and convince them in feeding the data and use the information for various decision-making. Mr A K Singh, the Additional Commissioner (Systems) trained few officers from each division who then trained other officers. The third major challenge was to reply to the questions of the assessee. Since there is only one Service Tax Act in India, the answers provided by the Service Tax officials on the website could be used by any other assessee in the country. Thus, it was decided to name the online query reply mechanism as “Discussion Forum” where the experts were recruited from the department and well as from outside. A disclaimer was placed that the replies published on this Forum were the opinions of the experts and not the department. However, the tax payers still found lot of value into the answers of the experts as they could get satisfactory answers in most of their queries. In other cases, they could get a balanced opinion from the department as well as from the outside experts. The main factor that contributed to the success of the innovation was the leadership provided by the top officials of the Commissionerate. The senior officers particularly the Commissioner and the Additional Commissioner (Systems) took the initiative in replying to the large number of questions posted by the taxpayer’s daily. This gradually gave the encouragement and confidence to the junior officers, who started contributing immensely in the success of the forum.

d. What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The total expenditure made so far on the development of the website and the MONITOR software is around INR 800000 (US$ 2000) and INR 40,000 (US$ 1000) for the security audit. The IT fund of the Commissionerate was used for the project. The server was provided free of cost by National Informatics Center (NIC), a government of India agency. So far the training of few officers has been done by the Additional Commissioner (System).

Is the initiative sustainable and transferable?
The initiative is not only sustainable but also getting more and more poplar due to its uniqueness and ease of use. Most of the service tax assessees are the highly educated and represents the elite section of the society. They are quite familiar with the use of internet and web technologies. The departmental officers are finding the software useful as they can find important information using the software which improves their efficiency and effectiveness. The tax payers find the software very useful as they can interact with the department from the convenience of their officer and home. The MONITOR software can easily be replicated by any other government department after suitability modification to suit the local requirement. Central Board of Excise & Customs (CBEC) has already issued instructions to the Commissionerates of service tax to develop website similar to Service Tax Delhi. Almost half a dozen Commissionerates are already implementing this software. Its replication in other government departments is also possible after critical analysis of the need of the organization and the prioritization of the responsibilities. Some features like News, Discussion Forum, and Message Board can easily be replicated without much change.

What are the impact of your initiative and the lessons learned?
Often e-government initiatives of governments are based on the successful models of a developed country. However, these models fail in developing country like India due to difference in the socio-economic-political-cultural conditions. The chances of failure becomes even more in the big-bang approach where the entire department is planned to move from paper-based system to web-based system in a single step. These projects take years of planning and execution besides huge cost. In this period, the officials and engineers of the government and the vendors get transferred and the enthusiasm gets diminished with time. Further, a drastic change in procedure is resisted by the not only the government officials but also the citizens which further diminishes the chances of success. Therefore, MONITOR was designed in the modular manner so that it can be implemented in phased manner. Each module creates value to the government as well as the citizen and they eagerly wait for the next initiative. It was further learned that no design can be planned perfectly as only the actual use can highlight the limitation of the software. There has been many iterations in the designing of the software. A good software evolve with user’s feedback. Therefore, instead of planning the complete application in advance, it is better to develop it in modules so that development, testing and improvement of the software becomes part of the process. Another lesson that was learned was that the government must use the successful case studies of not only other government departments but also the private sectors. For example, Time magazine awarded the “Person of the Year” in 2006 to none other than “You” i.e. the people of the world. It was recognized by them that it is the people who are changing the world not by conflict, not by diplomacy but by discussing the matter with each other on one to one basis. The popularity of the websites dealing with participatory role of the people can be assessed from the simple fact that six out of top ten websites of the world namely YouTube, Myspace, Facebook, Wikipedia, Hi5 and Orkut are based on the concept of people’s participation and interaction with each other. However, this concept was never used in government before the initiative taken by the service tax Delhi in this project. Many such success stories of websites can easily be replicated in government. Finally, it was learned that a good website application can be developed in very small budget, if new ideas can be generated. Small projects are really the value of the money and give confidence to the public and the government department about the use of internet and web technologies for good governance.


Institution Name:		Service Tax Commissionerate Delhi
Institution Type:		Government Agency
Contact Person:		Awdhesh Singh
Title:		Mr
Telephone/ Fax:		911123378711
Institution's / Project's Website:		911123705673
E-mail:		aksinghirs@gmail.com
Address:		17-B I.A.E.A. House, Mahatma Gandhi Marg, IP Estate
Postal Code:		110002
City:		New Delhi
State/Province:		Delhi
Country:		India

The Problem

Solution and Key Benefits

Actors and Stakeholders

(a) Strategies

(b) Implementation

(c) Overcoming Obstacles

(d) Use of Resources

Sustainability and Transferability

Lessons Learned

Contact Information