TIOL-DDT 1106 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="3">TIOL-DDT 1106</font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><br> 08.05.2009<br> Friday</strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">CBEC's dream walk hand in hand with ADB – To implement mega projects for Scrutiny of Returns and streamlining Audit Wing</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHAT</strong> has Asian Development Bank got to do with CBEC? Well, it's all about tax administration! In this era of self assessment, assessees are provided with enormous liberty to assess the tax liabilities themselves, pay the taxes and furnish the returns periodically. With so much of freedom and liberty at their disposal, there is apprehension that there could be tax leakage.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We all know that tax collection forms the backbone of every Government's developmental programs and projects. If there is leakage in the tax collections, there is every possibility of these developmental projects getting derailed and Governments will have to resort to external borrowings to bridge the gap in funding for these projects. Therefore, to plug this leakage and minimize Government's dependence on external funding for internal development projects, Asian Development Bank has stepped in to aid the Indian tax administration.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As a part of this grand exercise, through its technical assistance project titled ‘<strong>Capacity Building in Tax Administration</strong>', ADB has come out with detailed guidelines for strengthening the tax administration's verification systems to plug the loop holes and shoring up assessees' tax compliance. As a first step in this direction, the three important wings of tax administration viz., ranges, audit and anti-evasion are proposed to be streamlined. To achieve this objective, CBEC prepared two elaborate manuals titled ‘<strong>Manual for Scrutiny of Central Excise Returns</strong>' and ‘<strong>Manual for Quality Assurance Review</strong>' for scrutiny of excise returns and streamlining audit wing respectively.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Manual for the Scrutiny of Central Excise Returns is organized into four chapters. Chapter 1 outlines the rationale for returns' scrutiny and discusses the related legislative provisions. Chapter 2 discusses the Board's guidelines for preliminary scrutiny and contains the list of risk parameters which could be used for selecting returns for detailed scrutiny. It is visualized that with the implementation of the ACES (Automation of Central Excise and Service Tax Project), the preliminary scrutiny would be automated. In Chapter 3, the changeover from manual returns' scrutiny to automated returns' scrutiny is discussed while Chapter 4 contains the guidelines for carrying out detailed manual scrutiny of selected returns.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This manual provides detailed check lists for preliminary scrutiny of all ER1/ER3 returns, checklist for selection of assessees for detailed scrutiny of ER1/ER3 returns. It also provides for a register for scrutiny and assessment of ER1/ER3 returns and a report on scrutiny of ER1/ER3 returns. In addition to this, an elaborate checklist for scrutiny of ER1/ER2/ER3 returns is also provided. Unfortunately, there is not a word on the scrutiny of Annual Returns viz., ER4 and ER5 and the monthly ER6 filed by certain class of manufacturers for declaring principal inputs and finished goods. So much for capacity building.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One glance at the guidelines and checklists gives an impression that to put this project on track and successfully implement it in the long run, the starting point for CBEC would be to increase the staff strength in the Range offices across the country tenfold.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As for the ‘Manual for Quality Assurance Review' which provides for a complete face lift of the Audit Wing of CBEC, the less said the better, because on the face of it the standards set are simply sky high.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Given the history of CBEC's lacklustre approach in implementing automation projects (several projects have come and gone in the last decade or so with little or no success – the latest getting the axe was the SERMON), we can rest assured that these dream projects will be nothing but non-starters.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If at all they are implemented, the assessees can brace up for more questions from the tax authorities in the days to come</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally these manuals have not been made available to the people who they were meant for – the Departmental officers. DDT contacted at least a hundred officers from various parts of the country at various levels – not one of them had heard about these manuals. We got them from ADB.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/auditexcise.pdf" target="_blank">Manual for Scrutiny of Returns</a> and <a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/auditquality.pdf" target="_blank">Manual for Quality Assurance Review </a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Regulations for Courier imports and exports through electronic declaration and processing in specified Customs stations – draft issued – rush your comments</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC has published the draft (to elicit responses/comments) of <strong>Courier Imports and Exports (Electronic Declaration and processing) Regulations, 2009.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Views, comments and suggestions are solicited from the trade and industry associations, departmental officers and from all other concerned. – BUT THEY SHOULD REACH LATEST by 11.05.2009.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now these draft regulations were published on 7.5.2009, i.e. Thursday. Today is a Friday when people actually see it. And the last date to send comments is Monday, the 11th.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If CBEC is not serious about calling for comments, why should they do it at all?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A journalist friend remarked, the Board should have said that the comments may be directly sent to the Waste Paper Basket or trash folder of CBEC.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">How many suggestions will they get when they give hardly a day for giving them? In any case they never ask for public opinion, when they really want to mess up the Law.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/dftregu.pdf" target="_blank">CBEC's F.No.450/54/2008-Cus.IV - Dated: May 06, 2009</a></strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600">–</font></strong></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> Monday's cases</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><font color="#663399">Central Excise</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Another Revenue appeal fails in EZB due to lack of jurisdiction of Review Committee – An authority is appointed and vested power in the manner known to the law through an Official Gazette, any deviation thereto makes the appointee powerless and incompetent to exercise jurisdiction – When review orders have no <em>locus standi </em>, revenue appeals are liable for dismissal at the threshold – CESTAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AFTER</strong> dismissal of countless Revenue appeals by the EZB last year, citing lack of jurisdiction by the Review Committees in recommending appeals to be filed before the Tribunal, which even led to the Member, CBEC being summoned for personal appearance in one of the cases, the dismissal spree continues in the EZB without any respite. And even the President's judgement is held to be <em>per incuriam</em>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Income Tax</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">Assessee is NIIT franchisee - payments made for providing copyrighted material, proprietary information and technical knowhow are hit by provisions of Sec 194J but no TDS is deductible on royalty, courseware consumables and educational aids provided by licensor: ITAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TDS</strong> is a tedious issue not only for the deductors but also tax collectors and policy formulators. Even as a hot controversy continues on half-baked introduction of new TDS challan - Form 17, the ITAT in the case of a NIIT franchisee has held that the payments made by the assessee to NIIT for allowing the use of trade mark and providing copyrighted material, proprietary information and a substantial body of technical knowhow relating to the location, design and operation of the computer education centres are hit by the provisions of Sec 194J as such services catered to the assessee do qualify as technical service. It is also a settled law that technical services also include professional services. However, the Tribunal also ruled that the payments made for courseware consumables, educational aids and royalty cannot be subjected to TDS provisions.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">Customs</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6600">One or even more illegalities by one or by some persons cannot create any right in favour of others to commit or to insist for commission of similar illegality by others - In an appeal, the issues cannot be decided on hypothetical basis – CESTAT</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>ASSUMING</strong> that the Department has granted such exemption in some of the cases either intentionally or otherwise, or negligently or carelessly or illegally that would not create any right in favour of the appellant to claim the benefit under the said exemption notification contrary to law. One or even more illegalities by one or by some persons can not create any right in favour of others to commit or to insist for commission of similar illegality by others. Rule of parity cannot be invoked to claim illegal gratification.</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">See our columns Monday for the judgements</font></strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend</font></p> <p align="justify"><font color="#FF6600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p> </body> </html>