TIOL-DDT 1201 · 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 1201 </font><br>
22.09.2009 <br>
Tuesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Fiscal Autonomy for CBDT – The DTC</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> used to be joked that the mighty Chairman of the Central Board of Direct Taxes (or for that matter the CBEC) does not have the power to buy a sheet of white paper – for that he has to depend on the Revenue Administration. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The service had demanded, before the Pay Commission, functional and financial autonomy on par with that available in Railway Board for the Revenue Boards – CBEC and CBDT. Status of Principal Secretary along with pay of Cabinet Secretary has been demanded for the post of Chairperson with the status of Secretary to Government of India demanded for Members of CBEC and CBDT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The VI Pay Commission was not of course impressed and observed, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Work entrusted to CBEC/CBDT is revenue collection which is one of the sovereign functions. The Boards cannot, therefore, be equated to the Railway Board which primarily discharges functions of a commercial nature. As such,<font color="#663399"> <strong>complete functional and financial autonomy to CBEC/CBDT is not justified. </strong></font></em></font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What the Pay Commission refused, the proposed Direct Taxes Code, seems to have granted. Under the new Code, there will be a grant for the CBDT, passed by Parliament. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 125 of the Code reads as, </font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>125.(1) The Board shall prepare an estimate of the sums of money which may be required in any financial year for meeting the following expenditure:- </strong></font></p>
<blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the salaries, allowances and other remuneration of the Members, officers, and other employees of the Board, its attached offices and the Income-tax Department; and </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) the expenses of the Board, its attached offices and the Income-tax Department in the discharge of its functions under this Code. </font></strong></p>
</blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) The estimate prepared under sub-section (1) shall, on approval by the Central Government with such modifications as may be considered necessary on the basis of discussion with the Board, be presented to the Parliament for due appropriation by law. </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">3) The Central Government shall, after due appropriation under sub-section (2), make to the Board grants of the amount so appropriated for being utilised for the purposes referred to in sub-section (1). </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) The administration of the grant referred to in sub-section (3) shall, regardless of anything contained in any other law or rules, vest in the Board. </font></strong></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now the Board has a grant and the administration of the grant vests with the Board. The Chairman can after all buy that sheet of white paper. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Board under Code </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT is to be <em><strong><font color="#FF6633">established </font></strong></em> by the Government. What will happen to the present Board constituted under the Central Board of Revenue Act, 1963? Obviously it has to be wound up and allowed a reincarnation under the Direct Taxes Code. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Management of the Board: </strong><em>The general superintendence, direction and management of the affairs of the Board shall vest in a Board of Members, which may exercise all powers and do all acts and things which may be exercised or done by the Board</em>.<font color="#663399"> <strong>Does this mean there will be another Super Board? </strong></font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A Super Chairman? </strong>: the <em>Chairman shall have the powers of general superintendence and direction of all the affairs of the Board and may also exercise all powers and do all acts and things which may be exercised or done by the Board or any Member thereof. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Meetings: Elect a Presiding Officer? </strong> Who presides over a meeting of the Board in the absence of the Chairman? <em>Any other Member chosen by the Members present from amongst themselves at the meeting, shall preside at the meeting. </em><strong><font color="#663399">So before the meeting, the members are to elect a Presiding Officer and what happens if there is no consensus? Why can't the senior-most Member preside? </font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Issues to be decided by Consensus </strong>: <em>All questions which come up before any meeting of the Board shall be decided by consensus. </em><strong><font color="#663399">What if there is no consensus? No decision? </font></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Why not Financial Powers to Commissioner (Appeals)? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Next to the DRs in CESTAT, the most humiliated cadre in Central Excise and Customs is the Commissioner (Appeals). He sits in a Commissionerate and most often, the jurisdictional Commissioner who is a virtual prince treats the Commissioner (Appeals) as dirt. The poor Commissioner (Appeals) has to depend on the Jurisdictional Commissioner even for that white paper, which is quite often denied to him. Every Commissioner (Appeals) I speak to has volumes of woes against the territorial Commissioner who wields the strings of the purse. A Commissioner (Appeals) tells us that he walks to work - not for health or austerity - because he is not provided with a car and there is no reliable public transport and he can't afford a cab. He has made several representations to his Chief Commissioner, but with no result. A jurisdictional Commissioner, who had gone out of his way to be rude to the Commissioner (Appeals), is now the Commissioner (Appeals) and is at the receiving end - the roles are reversed. Of course the Commissioner (Appeals) has forgotten his old foible and is now angry that the jurisdictional Commissioner who is far junior to him is haughty and denying him basic facilities. Every Commissioner who humiliates a Commissioner (Appeals) should realise that one day he may also end up as a Commissioner (Appeals). Small men occupying big posts? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Be that as it may – the Board/Government should seriously think of revamping the institution of Commissioner (Appeals). </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. First of all the Commissioner (Appeals) should be delinked from the control of the jurisdictional Chief Commissioner. We have so many DGs – let there be one more – A DG (APPEALS)- All Commissioners (Appeals) should be under the DG and not the Chief Commissioner. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. They should have separate and adequate funds allotted to them so that they are not at the mercy of the local Commissioners for their small needs. When the ADGs in DRI DGCEI, AUDIT, NACEN, Inspection etc, have their independent offices and funds, why should Commissioner (Appeals) be a poor appendage to a Commissioner? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Preferably the Commissioner (Appeals) office should not be in the premises of the Commissionerate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The Commissioner (Appeals) should function like a Court and more transparently. Proceedings should be open to public and orders – at least the operative part, should be dictated in the open court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Senior Additional Commissioners should be posted in the CESTAT as DRs and on promotion they should be posted as Commissioners (Appeals). This will make them more judicial minded. </font></p>
</blockquote>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
</font><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"> – Wednesday's cases</font></strong></font></strong></font></p>
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color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cess </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Menthol Crystals BP/USP manufactured from peppermint may also be called “Mint” and is liable to Export Cess under the Spices Cess Act, 1986 – CESTAT orders pre-deposit of Rs.50 lakhs. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench held that it was constrained to take a view that the applicant had not made out <em>prima facie </em>case against the demand of cess on Menthol Crystals under section 3 of the Spices Cess Act, 1986. Noting that the applicant had not pleaded any financial hardships the CESTAT directed the appellant to make a pre-deposit of Rs.50 lakhs and report compliance. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income
Tax – Appeal to High Court – Limitation Act not applicable - <em>Hongo
India </em></strong></font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>followed – High
Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The remedy of appeal is a statutory right and hence it has to be presented in accordance with the procedure, the manner and within the time prescribed by the Statute, and the principles of natural justice are not remotely attracted so far as the question of limitation is concerned.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Bogus invoices allegedly issued by non-existing manufacturing units – first stage dealer issuing invoices based on these invoices and second stage dealer following suit – Revenue failing to conduct probe and gather evidence in respect of invoices issued by first stage dealer –Commissioner(A)'s order setting aside penalty upheld – CESTAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue has failed to bring the evidence on record that “the respondent has contravened the provisions of law”. The revenue arrived on the conclusion without investigation and evidence.” </font></p>
<p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements</font></strong></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></p>
<p><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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