TIOL-DDT 1307 · 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 1307 </font><br>
25.02.2010 <br>
Thursday </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Another Amnesty Scheme, Please - Let's not carry litigation legacy to GST </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> Central Excise and Customs alone there are lakhs of cases pending from the level of Assistant Commissioners right up to the Supreme Court of India. It takes about a year or two for an Assistant Commissioner to decide a case, then another year for the first appellate stage, three to six years for the Tribunal and five to ten years for the higher courts. Sometimes by the time a case is decided by the highest court, the issue is no more relevant! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">They say, in a war the first casualty is Truth. It is true of many of our legal battles. A lot of money, time and paper are wasted in thousands of pending cases at various levels. Tons and tons of printed orders are delivered often repeating the same old decided cases, sometimes overruling, sometimes distinguishing, sometimes just referring and <strong>almost always surely confusing everybody</strong>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reports are published that thousands of crores are locked up in court cases. Actually this figure is highly exaggerated. Every rupee locked up in litigation is not revenue. Actually what we may ultimately get is only a fraction of the amount under litigation and that too after years of agonising court room battles and may be <strong>a little retrospective legislation!</strong> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> suggests a new amnesty scheme: </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Ask the litigants to pay just ten percent of the duty/tax demanded and give them total immunity from all liabilities pertaining to that case. Cases pending at all levels should be covered in the scheme. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There should be a Samadhan within the department also as follows:- </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ As a onetime measure, close all the provisional assessments ordered before 1.1.2010 with absolutely no liability on either side.
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <font color="#FF6633"><strong>Treat all the existing Audit paras, both internal and AG's as closed. Simply destroy all the audit files.</strong></font> </font>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ In all cases booked, if Show Cause Notices are not issued within six months from the date of seizure/detection, return all the seized goods and records with no liability to the assessee. Destroy all the case records.
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Do away with the five year limitation for demands for the past five years. The five year period should apply prospectively from 1.4.2010. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Our offices and courts will have a better look with all those mountains of paper destroyed and with better looking officers having no worry about those pending arrears and audit objections. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This may make a lot of consultants lose their work, but <font color="#663399"><strong>consistency and clarity are far more important than consultancy</strong></font>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And let us enter the GST era with a clean slate – let us not carry this stinking mountain of litigation into the GST era </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appeal to Tribunal - Abolish Committees </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> institution of committees of Commissioners and Chief Commissioners to review the orders of Commissioner (Appeals) and jurisdictional Commissioners to decide on appeals to the CESTAT has miserably failed and is best abolished. This system has complicated matters and is a huge waste of money and time with absolutely no improvement in the quality of decisions. The field officers in the CBEC have over the years perfected a system of stymieing all good intentions of the Government and the Board. When indiscriminate Show Cause Notices were being issued, the Government amended the Act to stipulate that Show Cause Notices are to be approved by Chief Commissioners. Indiscriminate Show Cause Notices continued to be issued - now with the approval of the Chief Commissioner. They had to drop the provision as nothing good came out of it. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Committees of Commissioners and Chief Commissioners were brought into the statute with the hope that two heads are better than one and a Committee consisting of two Commissioners or two Chief Commissioners would not routinely decide to appeal but would have the courage to hold that no appeal is necessary. But sadly they ensured that the good intentions of the Board are defeated. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is how a committee works. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An order is passed by a Commissioner, a copy of which reaches the Chief Commissioner's office. A superintendent in the Chief Commissioner's office finds fault with the Commissioner's order and suggests that the order should be appealed against. He also prepares a draft review order. The Chief Commissioner approves it and sends the file to the other Chief Commissioner, who is the second Member of the Committee – and the second Chief Commissioner routinely signs it and sends the files back with some of his own review files which will be signed by the other member of the committee. There is an unwritten understanding that 'I sign your files, you sign mine'. Lo and behold, the Committee has decided that the Commissioner's order is not legal and proper. The same is the case with Committee of Commissioners. The Committee never meets and discusses the issue, unless if one of them wants to travel. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And because of these committees, you find Chief Commissioner, Bhopal holding additional charge of Bhubaneswar and that kind of jokes because the same Chief Commissioner cannot be two members of the same committee. Of course there was the case of one Commissioner holding two charges held himself to be the committee and signed twice in his capacity as two commissioners! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no point in continuing with this farce and it will save some time, paper and money if these committees are abolished. To simplify matters, we can stipulate by law that any Commissioner or Commissioner (Appeals) passing an order in favour of the assessee should mark a copy of his order to the Tribunal and the Tribunal shall take it as an appeal and serve notice on the other party. Tremendous amount of paper, money and time can be saved. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Committee is defined as; <strong>Individuals who can do nothing individually and sit to decide that nothing can be done together.</strong> </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT's Tryst with TDS Continues - While Confused Assessee's Fate Hangs in Balance - Nothing really happened! </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> yesterday's DDT, we carried a story with the above title and mentioned, “CBDT ‘s saga with TDS continues unabated and there appears to be no respite for the ill fated assessee. All this mess started with <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2009/it09not031.htm" target="_blank">CBDT's Notification No. 31/2009 dated March 25, 2009</a> </strong></em>with earth shattering consequences to the assessees. The amended Rules were first made applicable from April 1, 2009. Later on it was postponed to July 1, 2009 and thereafter it sunk without a trace.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We got anxious calls and emails from concerned taxpayers as to what the real consequences were. CBDT officials clarified to us that there were no serious consequences – all that they did was to undo the changes made by <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2009/it09not031.htm" target="_blank">Notification No. 31/2009 dated March 25, 2009</a></em></strong>, which were any way kept on hold. So what actually was done was bury the changes made by Notification 31/2009 and restore the position back to pre-March 2009 position. Means nothing has changed – you can continue with life as if nothing happened. But could they not simply withdraw the notification No. 31/2009. It seems that the Law Ministry advised them that it was not so simple. So the rules were again amended to state that they were not amended! Strange are the ways of LAW! </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Agony of a harassed officer </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> you think Revenue officers are there to harass you, this is the story of a harassed IRS (former) officer. Recently the CVC has in its website given a list of cases pending where process of documentation had been going on for more than six- months. One of the names in the list is STEPHEN DSOUZA, Additional Commissioner, CBEC whose case is shown as pending since 24.3.2009. Mr. Dsouza has written a letter to the CVC, a copy of which he sent us; </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Excerpts:- </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">My case is pending not since 24-3-2009, but since march 2005 when I was issued the charge memo. So far I have written more than 12 reminders-I have appeared for preliminary hearing before three Inquiry officers, including the present IO on 24-3-2009. So far not a single hearing has been conducted in my case for the past 5 years, despite repeated reminders to expedite my case. Being a misfit in the system, I wanted to settle down in my hometown Mumbai, with plenty of corporate offers, and a full-fledged MBA degree. Just after submission of my resignation notice in January 2002, CBI registered a case against me and other persons for a alleged misuse of drawback scheme in year 1999 at Mangalore. I withdrew my resignation, and obtained some copies of relevant documents which showed I didn't give drawback, raised all objections, and my department had given me a clean chit, since neither in the show cause notice or the commissioner deptl. adjudication order, was I even charged of any act of commission or omission. If not guilty of even minor customs offence, how can a charge sustain under CCs rules or by CBI. CVC in 2004 refused sanction for prosecution, saying case not fit for prosecution by CBI. The Mangalore court has since closed case registered against me. Fed up with delay in completing the inquiry despite nearly 10-12 reminders, in August 2008, I served legal notice of filing a writ petition in Bombay high court to 10 respondents of the union of India, including president, PM, CVC., CBI. Finance ministry, RBI and CBEC senior officials of blatant human rights violation under article 14, 19 and 21 of the constitution of India. Thereafter I was relieved officially by the dept. in Jan 2008, and allowed to work , a fundamental right to living, my seized accounts were released by banks under instruction from RBI and later awarded interest, a decision that benefited thousands in the country. Last year CBI closed the case as per the Mangalore metropolitan magistrate not taking cognizance of case. Today a news item has appeared in DNA quoting CVC website, giving the impression that the dept is shielding me. The fact is that I am a victim, and the department is unable to explain why after giving me a clean chit in investigation, SCN, and commissioner adjudication order, suddenly they found me guilty of not a minor customs offence, but a major act of misconduct, as also even an IPC violation, which has since been closed both by CBI and CVC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DEar sir, I was trying to rebuild my shattered life. I have been a mgt. consultant in my hometown Mumbai. In the circular you yourself have quoted. <strong><font color="#663399">"Natural justice demands that disciplinary proceedings are finalised in an expeditious manner. The delay in completion of proceedings works against the institutional incentive built to fight corruption. It may either cause undue harassment and demoralization of innocent employees, who at the end of the proceedings are exonerated of the charges framed against them; or it enables the guilty officers to evade punitive action for longer periods of time. In the former, it is not fair to the official concerned. In the latter, it provides perverse incentive for the corrupt. The delay in handling disciplinary cases has, on several fact been instances where the proceedings initiated against the delinquent employees were quashed solely on the ground that there were inordinate delays in handling the disciplinary cases. It is important that the formal proceedings, once instituted, are completed within the time frame laid done by the Government so that timely action can be taken against the delinquent employees."</font></strong> Putting names on websites tantamounts to pronouncing the officer guilty, without even a single regular personal hearing over 5 long years. Is this fair? Is this your brand of instant Justice? I have suffered enough for 8 years, and may not last this ordeal and torture OF SOCIAL AND GOVT. SPONSORED OSTRACISM.. Please hang me if I am guilty, I wrote to president Kalam and president Pratibha Patil, but please do it soon. if DEPT HAS DELAYED THE INQUIRY, WHAT IS MY FAULT? IF DEPT HAS RELIEVED ME, ONLY AFTER LEGAL NOTICE TO 10 RESPONDENTS INCLUDING PRESIDENT, PM, FINANCE SECRETARY, RBI GOVERNOR ETC ON JANUARY 2008, WHAT IS MY FAULT? My children in std xii and std x exams, I have no option but to teach them. AFTER MARCH 17, I SHALL BE MOVING THE COURTS AND CAT FOR THIS GROSS VIOLATION OF NATURAL JUSTICE, AND DAMAGE TO REPUTATION WITHOUT EVEN A TRIAL FOR 5 YEARS, WHICH VIRTUALLY DEPRIVES MY OF RIGHT TO A DECENT LIVING. I AM MARKING THIS COPY TO ALL WEBSITES, THE PRESS, AND HUMAN RIGHTS GROUPS. I KNOW I CANNOT FIGHT THE SYSTEM, BUT I PREFER TO GO DOWN FIGHTING” </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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><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"><strong><font color="#663399">Central Excise</font></strong> </font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">EOU – DTA clearances - maintained separate accounts regarding goods manufactured out of imported raw material and goods produced from indigenous raw material. – Duty paid correctly – High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Commissioner (Appeals) as well the Appellate Tribunal have both returned categorical findings of fact that the respondent had maintained separate accounts regarding the goods manufactured out of imported raw material and the goods produced from the indigenous raw material. There was also no evidence on record to show that the respondent had utilized any part of the imported raw material and had got them cleared in the DTA. Thus, in the absence of any proof on part of the Revenue that goods for sale in DTA were manufactured out of the imported raw material, the respondent cannot be held liable to pay duty in terms of Notification No.2/95 </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">Assessee is non-resident - executes contracts in India - receives payments for offshore supplies - payment made outside India - Such income cannot be said to have accrued in India - not taxable; CBDT Circular 7 of 2009, withdrawing earlier Circulars is operative only from Oct 22, 2009: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NETIZENS</strong> may recall the CBDT had vide Circular No 7 of 2009, withdrawn three controversial Circular Nos 23 of 1969, 163 of 1975 and 786 of 2000, on the perceived ground that they had outlived their utility for the present time of taxation. Now the issue before the Tribunal is whether such withdrawal will be retrospective of prospective. An easy guess - the Tribunal has held that it is prospective, and their withdrawal will not affect the assessment of earlier years. It noted that the withdrawal is effective from October 22 of 2009. Along with this the Tribunal also reiterated that the payment made for offshore supply is not taxable in India. </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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