TIOL-DDT 1199 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1199</font> <br>
17.09.2009 <br>
Thursday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Former ITAT Members – Practice Before ITAT? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Government had taken a decision that former Members of the CESTAT and ITAT should not be allowed to practise before the respective Tribunals. And the CBEC and CBDT took different routes to achieve this goal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC got the Parliament to amend Section 129 of the Customs Act to insert a new sub-section that </font></p>
<blockquote>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">(6) On ceasing to hold office, the President, Vice-President or other Member shall not be entitled to appear, act or plead before the Appellate Tribunal . </font></strong></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This was challenged in the High Court and the Delhi High Court in the PC Jain's case <strong><em>(</em></strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2009/2009-TIOL-185-HC-DEL-CESTAT.htm" target="_blank">2009-TIOL-185-HC-DEL-CESTAT</a></em></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>)</em></strong> dismissed the writ petitions and held that the former Members had no right to practice before the CESTAT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While this was so, the CBDT was sleeping. In the PC Jain's case, the Court noted that that the Government has in principle agreed that steps should be initiated to bring about a suitable amendment so that similar bar could be incorporated in the Income Tax Act, in respect of, members of the Income Tax Appellate Tribunal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And it came - by way of a notification amending the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963, whereby it was stipulated that: </font></p>
<blockquote>
<p align="justify"><em><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">The President, the Senior Vice-President, the Vice-President and the Members of the Tribunal shall not practice before the Tribunal after<strong> retirement</strong> from the service of the Tribunal. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now see the difference – In CESTAT, it is <font color="#FF6633"><strong>On ceasing to hold office</strong></font> while in ITAT, it is on <font color="#FF6633"><strong>retirement</strong></font>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the amendment in CESTAT is by amending the Act while in ITAT it is by amending the Members Recruitment Rules. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why two Boards under the Revenue Department try to achieve the same goal by two different means? It proves without doubt that there is absolutely no co-ordination between the two Boards – but what is the Revenue Secretary and the Law Ministry doing? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When CBEC suggested an amendment in the Act there should have been a natural question in the minds of the Revenue Secretary and the Legislature Secretary – What about Income Tax? But apparently this did not appear important to any of the stalwarts running the country. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anyway the matter reached the Special Bench of the ITAT and there it was argued that Parliament consciously wanted the difference in ITAT and CESTAT! This is what happens when Government has so many limbs and all of them start thinking on their own! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The ITAT Special Bench in a landmark order on 15.09.2009 decided that </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Bar on practice before ITAT does not apply to Members who have retired prior to the date of publication of notification; </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. It applies to the Members who retired from the Tribunal on or after the date of the publication of this Notification.; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Once the Member retires after the date of Notification, it certainly applies. It does not matter when the Members were recruited. Even it applies to the Members who are recruited prior to the date of Notification. Crucial date must be the date of retirement. If it is after 3rd June, 2009, it applies; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. the Members who retire on or after 3-6-2009, even if otherwise qualified to practice u/s 288 of the Act, would still be debarred to appear and argue before the Tribunal, in the light of Rule 13E of the ITAT Members (Recruitment and Conditions of Service ) Rules, 1963; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Persons who have resigned from service prior to the date of Notification, without any retirement benefits would not be covered by this Notification because it applies to those persons who have retired after the date of Notification; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Does not apply to members who are appointed on a temporary basis and resign from service without being confirmed during probationary period. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So all those former Members who were practising can happily continue to do so. Only those who retired after 03.06.2009 are barred. Isn't this discrimination? And is ITAT competent to decide the issue? This is certainly not going to be the end of the matter. We will see interesting court battles. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=39&filename=legal/itat/2009/2009-TIOL-571-ITAT-DEL-SB.htm" target="_blank">Click here</a> </strong>for the ITAT Order.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Also
see: </strong></font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. PC Jain's case <strong><em>(</em></strong></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=51&filename=legal/hc/2009/2009-TIOL-185-HC-DEL-CESTAT.htm" target="_blank">2009-TIOL-185-HC-DEL-CESTAT</a></em></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>)</em></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9209" target="_blank"><strong>TIOL-DDT 1137 22.06.2009 </strong></a></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Can retired ITAT Members practise in the ITAT – Special Bench to hear. - <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9412" target="_blank">TIOL-DDT 1159 22.07.2009 </a></strong></font></p>
</blockquote>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central
Excise - Benefit of reduced penalty under provisos to Section 11AC - whether
applicable at appeal stage? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A case has been brought to the notice of the CBEC that a Commissioner (Appeals) had allowed the benefit of proviso to Section 11AC of the Central Excise Act, 1944 to pay penalty at the reduced rate of 25% within 30 days of the communication of the Order in Appeal. Commissioner (Appeals) has read Section 11AC and Section 35 F together to arrive at the decision. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The provisions relating to reduction of penalty to 25% are contained in proviso (1) to (4) of Section 11AC . In terms of proviso (1) and (2), a penalty imposed under Section 11AC can be reduced to 25% on fulfillment of following conditions. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i) Duty determined under Section 11A ( 2) and interest payable thereon has been paid within 30 days. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ii) The said period of 30 days is calculated from the date of communication of the order passed by a Central Excise Officer determining the duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">iii) The reduced 25% penalty is also paid within 30 days of the date of communication of the order passed by the Central Excise Officer. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC clarifies that in order to avail the benefit of 25% penalty, the duty, interest and penalty are required to be paid within 30 days of communication of the order passed by the adjudicating authority. The benefit of 25% penalty is applicable only when the assessee has paid duty, interest and the reduced penalty within 30 days of communication of the order passed by the adjudicating authority. However, if the penalty amount is increased at the appellate stage, in that case the 25% of differential amount of penalty can be paid within 30 days of communication of said appellate order. Therefore, the view taken by the Commissioner (Appeal) is not as per the provision of law. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants this to be informed to the Trade and Industry. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2009/excircular898.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 898/18/09- CX ., Dated: September 15, 2009 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Inter-Ministerial Committee to redress/resolve problems/issues of exporters </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has been decided to constitute an Inter-Ministerial Committee to redress/resolve problems/issues of exporters. The Committee will discuss such issues raised by exporters which affect the exporting community as a class. Normally, the Committee will not look into the individual grievance of any exporter, for which other mechanisms in terms of Grievance Committee in the Office of DGFT and Grievance Redressal Committee in Department of Commerce already exist. The Committee, based on consultation shall seek to identify the solution/resolution of the problem posed by exporting community. The decisions of this Committee would guide the concerned administrative Department to take a final view on the problems posed before the Committee. In essence, the role of the Committee shall be recommendatory in nature. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Committee shall be chaired by Secretary, Department of Commerce and will have representative from DGFT, Department of Revenue, Department of Economic Affairs, Reserve Bank of India , Directorate General of Export Promotion (CBEC) and in addition, any other administrative Ministry of Govt. of India may be co-opted for a particular meeting, in case issues concerning them are raised. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Exporters/export organizations/trade organizations are advised to bring their issues/grievances to the notice of Directorate General of Foreign Trade for placing before this Committee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Committee would normally meet once in every quarter. </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2008/dgft09cir007.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Circular No. 7/2009-2014 Dated: September 16, 2009 </font></strong></a></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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"> – Friday's cases</font></strong></font></strong></font></p>
<p><strong><font color="#660099" 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 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="#660099" 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 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></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></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></strong></font></strong></font></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">P&P medicament manufacturer - In-process analysis of semi-finished goods as well as final products so that goods meet specifications laid down under Drugs & Cosmetics Act and Pharmacopoeia – Debit notes raised - whether liable to Service Tax under category of 'Technical Testing and Analysis Service' - pre-deposit ordered - CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench noted that the issue is an arguable one and could be dealt with in detail at the time of the final hearing of the same. Keeping in view the facts and circumstances of the case, the CESTAT directed the applicants to pre-deposit a sum of Rs.75 ,000 /- towards service tax and report compliance. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income
Tax</font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Indo-German DTAA - even if PE exists, time requirement in
Article 5(2)(i) needs to be fulfilled</font></strong></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" color="#000000">German
Company got a contract for the Sethu Samudram ship channel project - sub
contracted substantial part of the work to an Indian company - design to
be supplied from outside India - supervision work to last less than 6 months
- whether a PE exists - Held, no - Even if there is a fixed place whether
time requirement in Article 5(2)(i) needs to be fulfilled - held, yes - Whether
services rendered for designing from outside India will be can be taxed as
FTS - held no.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p>
<p align="justify"><font color="#FF6633"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No restriction of imports against REP licenses under Project Import Regulations – Regulation 5(4) does not specify requirement of specific Import Trade Control license for Project Imports – Mumbai High Court </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">M/s Gujarat Godrej Innovative Chemicals Limited held an industrial licence for setting up a plant in Bharuch District of Gujarat for manufacture of alpha olefins and its precursors and derivatives with a capacity of 35,000 Tonnes per annum. For this purpose, the petitioners proposed to import various capital goods, raw materials, components, instruments, tools, consumables, packing material etc required for their plant at concessional rate of duty in terms of Chapter 9801 read with Notification No.131 /85 dated April 19, 1985 and Project Imports Regulations, 1986. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong> </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p>
<p align="justify"><font color="#FF6666" 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>
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