TIOL-DDT 1230 · 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><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1230 </font><br> 05.11.2009 <br> Thursday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Compulsive Litigation - Should Revenue Work Overtime to Feed Consultants? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TODAY</strong> our <strong>CobWeb</strong> column deals with the Revenue Departments' urge for litigation, especially in administrative matters. Their ligation promotion is not certainly limited to administrative issues, but is actually more so in technical matters. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The other day, a Commissioner (Appeals) of Central Excise told me that his executive colleagues are treating him as a virtual outcaste because he is passing orders in favour of the assessee. I told him that no assessee or lawyer expects any justice from any of the Departmental officers and they simply pass through these stages with a hope of getting some justice in the Tribunal. And for a lawyer, a favourable order at any stage before the Tribunal is a loss as he will lose the fee at appellate stages. But the Department religiously ensures that he doesn't lose it. Every order favourable to the assessee is invariably taken at least up to the Tribunal. So these officers spend a lot of time to ensure that the lawyers are kept well fed. There was a time when the Tribunal's orders were routinely accepted, but now the Department has appointed a large number of counsels in the High Court and to keep them gainfully employed, almost all cases are taken to the High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government with good intentions had brought in a law that the decision to appeal or not has to be taken by a Committee of Commissioners or Chief Commissioners. But the field is notorious for defying with impunity all forward looking policies of the Boards, the Government and Parliament. The Committees of Commissioners and Chief Commissioners are a big farce – there is no meeting; One Commissioner or Chief Commissioner takes a decision and the other Commissioner or Chief Commissioner simply endorses it! And litigation continues merrily. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And strangely while a decision to appeal to the Tribunal has to be taken by a Committee of Commissioners or Chief Commissioners, the decision to approach the High Court can be taken by a single Commissioner! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The only way litigation can be curbed is to provide in the statute that the Commissioner or Chief Commissioner who want to appeal should bear the cost of appeal and they should be paid double the expenditure if they win in the Tribunal or High Court, but will lose the money if they lose the case. They should be asked to pass an order why they have not chosen to appeal – you will see some of the best literature! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is shameful to see Departmental officers telling assessees and consultants – “you will win in the Tribunal, but I cannot give the relief” They all pretend to be afraid of vigilance. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why can't our officers be trained to pass judicial and fair orders? The effort should start from the Academies and senior officers should be a role model rather than pathetic timid promoters of litigation! </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Licence to manufacture cigarettes by Central Excise Department </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC has received various references from the trade association and field formations regarding issue of licences to cigarette manufacturing units. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The matter had been taken up with Ministry of Commerce and Industry, Department of Industrial Policy and Promotion. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board Circular states, “The legal position regarding requirement of obtaining industrial licence by cigarette manufacturing units under IDRA has been clarified vide letter no. 9(3)2009-IP dated 8th September, 2009. A copy of the same is enclosed for your kind information. Trade and Field formations may be informed suitably.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board Circular does not enclose the Department of Industrial Policy and Promotion letter. Now what is this licence by the Central Excise Department? There is absolutely no requirement of any licence by the Central Excise Department and God knows what the requirements are under the IRDA. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But why can't the Board be a little more clear? </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2009/excircular905.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Circular No. 905/25/2009-CX., Dated: November 4, 2009 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Black Money Abroad - we want it back - FM </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finance Minister Pranab Mukherjee says, “a team would soon be visiting Switzerland to hold talks with the Swiss authorities in an effort to unearth unaccounted for money stashed away by Indian nationals. The government has finalised dates to renegotiate existing treaties with Switzerland and Belgium to broaden the scope for bringing back money parked illegally by Indians in foreign banks. “So far, the efforts to unearth the unaccounted money stashed elsewhere, we have taken initiatives. In respect of Switzerland, I think the team is going on 10th and 11th of this month. We are engaged in discussion with the Swiss authorities. We want to amend the Avoidance of Double Taxation agreement." </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What happened to Circular No.113/2009 - ST </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the CBEC website, you will find Circular No. 114 after 112 in the Service Tax Circulars of 2009. What happened to Circular No 113? How did it go missing? Was it quietly withdrawn? Even if a circular is withdrawn/amended/superseded – the original circular is not withdrawn from public circulation. But why this Circular had been removed from the CBEC web site? Is it a new way of disowning what you do not want? Will someone clarify? </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI SMS Campaign hugely Successful </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBI's SMS campaign started last year is a huge success. A person calling or sending the message need not reveal his identity if he does not wish to. One of its officers will take down the complaint without asking any questions after which they start the investigations. <br> <br> The CBI has this year registered 26 trap cases against officials of railways, Income Tax officials, Customs and Central Excise officers. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Kleptomania - Top Industrialist arrested for stealing mobile phone at airport </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Kleptomania </strong> (also spelled <strong>cleptomania</strong>) (Greek: ???pte??, kleptein, "to steal", <em>µa??a </em>, "mania") is the condition of not being able to resist the urge to collect or hoard things. People with this disorder are compelled to steal things, generally objects of little or no significant value, such as pens, paper clips, tape, traffic cones, signs, and small toys. Some kleptomaniacs may not even be aware that they have committed the theft. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A top industrialist, the MD of a 1100 Crore Glass Industries was arrested for stealing a Blackberry phone. The CISF at Delhi airport arrested him as he was caught with hiding the stolen phone in the toilet of the aircraft. </font></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><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" 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color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Training in biotechnology and pharmacy through software - vocational training – matter remanded - CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">M/s. Bio Campus was found to have engaged in imparting education in the branches of biotechnology and pharmacy through software. The students who received the training and successfully completed the course had been issued certificates in “Protein Modeling & Rational Drug Design”. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The original authority found that Bio Campus had rendered taxable services classified under ‘Commercial Training or Coaching” during the period from 1.7.2003 to 30.9.2004 and had not followed the statutory formalities including payment of service tax due. He rejected the assessee's claim that the training imparted was “computer software training” exempted from payment of service tax under Notification No.9/2003-ST dated 20.6.2003. He confirmed the demand of Rs.7,40,200/- towards service tax due on services rendered during 1.7.2003 to 3.6.2004 and imposed penalties under Sections 76, 77 and 78 of Finance Act, 1994. He appropriated an amount of Rs.4,95,502/- paid by the appellants towards their tax liability for the period from 1.7.2004 to 31.3.2005. </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>Assessee returns an income of Rs. 300 – AO adds Rs. 2.85 Crores; On appeal, tribunal finds that addition should have been 9.5 Crores; Assessee makes a quick retreat and concedes. To protect at least part of the Revenue, AO's order upheld – ITAT Sp. Bench </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is a strange case. The assessee is in appeal before the ITAT against addition of an income of Rs. 2.85 Crores. The Revenue also is in appeal against the Commissioner (Appeals) ordering this addition on receipt basis and not accrual. On a perusal of the accounts by the Tribunal, it was found that the addition should be over 9.50 Crores and not 2.85 Crores as decided by the AO. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What does the assessee do in such a case? RETREAT!. They quickly conceded all issues including Revenue appeal – It was better to taxed for an income of Rs.2.85 Crores than for Rs. 9.50 Crores! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But what can the Tribunal do? It cannot enhance the assessed income. To protect the Revenue's interest without going into the merits of case, the ITAT treated the Assessee's appeal as dismissed and treated the Revenue's appeal as allowed. Revenue simply lost the tax on about Rs. 7 Crores . The assessee had returned an income of Rs. 350/-; AO must have been excited when he made it Rs. 2.85 Crores, in the process forgetting Rs. 9.5 Crores.! </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Allegation of mis-declaration and undervaluation of imported opal white polycarbonate sheets used in signage/advertising – Difference of opinion between two Members on applicability of evidences gathered by revenue to substantiate allegations – Matter goes to Third Member </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellants imported ‘opal white polycarbonate sheets' for signage/advertising industry from Korea, Singapore, Hong Kong, UAE and Taiwan by declaring them as sheets made out of recycled or waste polycarbonates and cleared them on payment of appropriate customs duties at lower values. DRI conducted investigations and found that the appellants had mis-declared the goods as having originated from recycled polycarbonate thereby undervaluing the goods resulting in evasion of duty. Notices were issued to all the four appellants for demand of differential duties amounting to Rs. 19.35 crores in all from four appellants and imposition of substantial penalties on the importing firms and also individuals. </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> </body> </html>