TIOL-DDT 1323 · 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 1323 </font><br> 22.03.2010 <br> Monday</strong> </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Does Revenue Departments fraudulently tinker with documents? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> may be shocking, but they do – not on a rare occasion but with routine flagrant regularity. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Backdating is a common fraud perpetuated by officers at all levels. When an officer is transferred, you can see him/her joining at the new place and coming back to sign orders with back dates which should have been signed when he/she was holding the post. This happens because they had already sent reports (wrong, fraud) to their bosses that these orders have already been passed when they were not written. If you look at the date of the order and the date of receipt of the order by the assessee, you will notice that often there is a difference of about three months. It doesn't take much of intelligence to realise that it really does not take three months for an order to reach an assessee. The fact is the order is backdated. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There are some honest officers who refuse to backdate their orders. There was one such officer who signed the order after being relieved from her post, but with no back date. The Department took the matter in appeal to the CESTAT arguing that she could not have passed the order after relinquishing her post. (Please see <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2006/2006-TIOL-95-CESTAT-BANG.htm" target="_blank"><em><font size="1">2006-TIOL-95-CESTAT-BANG</font></em></a></strong>). Had she signed it with a back date as all others do, there would have been absolutely no problem. Who suffers for these acts? The Assessee of course! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even Show Cause Notices are issued with back dates and the assessees are forced to acknowledge them with back dates – to get over the problem of limitation. An officer who is capable of persuading the assessee to accept a Show Cause Notice with a back date is considered to be a meritorious officer and will even be recommended for Presidential award. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An appeal is to be filed in the High Court within six months from the date of receipt of the Tribunal's order. This is often not done. But appeals are filed regularly. How? The receipt date is tinkered with. The Tribunal's order is shown to have been received just five months before filing the appeal in the High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reports to higher officers on pendency and arrears are routinely fabricated. Number of orders passed in a month is doctored to show a higher performance and pending matters are stuffed under the carpet – all with a confident arrogance that they will never be caught and if caught, there is absolutely no punishment – for it is done by everybody! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even in Service Tax cases, assessees are threatened with arrest and illegal ‘on the spot' recovery is made. Recording of statements, especially by the super sleuth agencies are outright fraud, where confession is obtained by torture and threat. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When delayed refunds are made, assessees are forced to abdicate their claim for interest – some officers even obtain undertakings from the assessees that they will not claim interest. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow we will be carrying a case wherein an Income Tax return was filed on 15.5.2000 and the Department claimed that it issued a notice on 16.5.2000 – the very next day. The Tribunal noticed that “The filing of return on a Receipt counter on one day and the issuance of notice u/s.143(2) on the very next day would mean that all the steps from the receipt of return on the Receipt counter till the issuance of notice got completed within one day's time.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Such steps would include </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. the receipt of return on the Receipt counter of the department; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. the Receipt clerk, after entering the necessary particulars in the relevant register, handing over the same to the office of the concerned Assessing Officer; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. the office of the AO receiving it from the receipt clerk; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. placing of such return before the AO; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. the AO pursuing the return and all the accompanying documents; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. jotting down the points on which the explanation of the assessee is required ; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. finalizing such points and accordingly sending the notice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. It is vital to note that it is a case of block assessment and the return was filed pursuant to the search action. It is but natural that before issuance of notice u/s.143(2) the Assessing Officer will take note of Appraisal Report of search and other relevant documents <em>vis-à-vis</em> the particulars disclosed in the return. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">ITAT observed, “It is difficult, if not impossible, to issue notice u/s.143(2) on the very next day of the filing of the block return”. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Strangely the Department did not show the same speed for the second notice. The Tribunal observed, “It is not understandable as to how the swiftness shown by the Assessing Officer in issuing notice u/s.143(2) on the very next day from the filing of the return on 16.5.2000 came to halt all of a sudden and it was only after a time gap of more than one and half years that the so called second notice was issued on 24.12.2001” </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Rebate under Rule 18 on clearances made to SEZs - CBEC Clarifies </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> view has been put forth that rebate under Rule 18 of the central Excise Rules, 2002 read with <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2004/exnt04_19.htm" target="_blank">Notification 19/2004-CE (NT) dated 06.09.2004</a></strong></em> is admissible only when the goods are exported out of India and not when supplies are made to SEZ. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In<strong> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2006/cuscir06_29.htm" target="_blank"><em>circular No. 29/2006- Cus dated 27.12.2006</em></a></strong>, Board had clarified that:<strong>- </strong></font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Supplies from DTA to SEZ shall be exempt from payment of any Central Excise duty under Rule 19 of Central Excise Rules, 2002. Similarly, such supplies shall be eligible for claim of rebate under Rule 18 of Central Excise Rules, 2002 subject to the fulfillment of conditions laid there under. The provisions relating to exports under Central Excise Act, 1944 and rules made there under may be applied, mutatis-mutandis, in case of procurement by SEZ units & SEZ developer from DTA for their authorized operations. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now Board clarifies that - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2006/cuscir06_29.htm" target="_blank"><em>circular No. 29/2006- Cus dated 27.12.2006</em></a></strong> was issued after considering all the relevant points and it was clarified that rebate under Rule 18 is admissible when the supplies are made from DTA to SEZ. The Circular also lays down the procedure and the documentation for effecting supply of goods from DTA to SEZ, by modifying the procedure for normal export. Clearance of duty free material for authorised operation in the SEZ is admissible under Section 26 of the SEZ Act, 2005 and procedure under Rule 18 or Rule 19 of the Central Excise Rules is followed to give effect to this provision of the SEZ Act, as envisaged under Rule 30 of the SEZ Rules, 2006. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board reiterates that:- </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">the settled position that rebate under Rule 18 of the Central Excise Rules, 2002 is admissible for supplies made from DTA to SEZ does not warrant any change even if Rule 18 does not mention such supplies in clear terms. <font color="#FF6633"><strong>The field formations are required to follow the circular no. 29/2006 accordingly. </strong></font></font></p> </blockquote> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will they? </font></strong></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/cuscir10_006.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Circular No. 6/2010-Cus., Dated: March 19, 2010 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax - Journalism Institutes exempted? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2004/stnot04_024.htm" target="_blank"><em>Notification No. 24/2004- Service Tax, DATED : September 10, 2004</em></a></strong>, taxable services provided in relation to commercial training or coaching, by a vocational training institute , is exempted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Manorama School of Communication sought a clarification from the Board whether the institutes providing training/ coaching in journalism, were covered under the exemption Notification. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC in a letter addressed to the Manorama School, clarified that “the institutes providing training/ coaching in journalism as mentioned in your representation are covered by the exemption under the said <strong><em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2004/stnot04_024.htm" target="_blank">notification No.24/2004-ST</a></em></strong>.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board's letter dated 24.12.2009 was also sent to the DG, Service Tax with a request to bring the clarification to the notice of the field formations. The said letter was received by the DGST on 5.1.2010 and the DG sent a copy of the letter to the field formations recently. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the mean time in the budget, this notification was amended by <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2010/stnot10_003.htm" target="_blank"><em>Notification No. 03/2010-S.T., dated 27-02-2010</em></a></strong> and now vocational training institute means an Industrial Training Institute or an Industrial Training Centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961(52 of 1961). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So journalism may not be covered under the new definition! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the moot point is, in this era of transparency, why does the Board issue important clarifications secretly to its DG and one or two assessees? Why can't it be made public and issued as a circular? Is the benefit available to Manorama School not available to other journalism schools and how will they know it if the Board is so secretive? </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2009/circular_137_2009.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Letter in F.No.137/23/2007-CX.4 Dated: December 24, 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"> –Tuesdya'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">Refund claim of 75% of penalty on ground that duty along with interest was paid before issue of SCN – Held, since petitioner did not challenge adjudication order, it attains finality and binds petitioner - HC while exercising jurisdiction does not sit in appeal over adjudication orders: High Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> High Court observed that since the petitioner did not challenge the order dated February 1, 2001, in view of the Apex Court's decision in <em>Flock (India) Pvt. Ltd </em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=32&filename=legal/sc/2002/2002-TIOL-208-SC-CX.htm" target="_blank"><font size="1">2002-TIOL-208-SC-CX</font></a></strong>, the said order attained finality and was therefore binding on the petitioners. It was further observed that the High Court while exercising jurisdiction under Article 226 of the Constitution does not sit in appeal over adjudication orders and/or appellate orders. The Writ Petition was summarily dismissed. </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">It is simple and plain that edifice of assessment cannot be created on foundation of a time barred notice - no notice u/s.143(2), as claimed by Revenue authorities, was issued – assessment quashed: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BLOCK</strong> return was filed on 15.5.2000. The filing of return on a Receipt counter on one day and the issuance of notice u/s.143(2) on the very next day would mean that all the steps from the receipt of return on the Receipt counter till the issuance of notice got completed within one day's time. Such steps would include the receipt of return on the Receipt counter of the department; the Receipt clerk, after entering the necessary particulars in the relevant register, handing over the same to the office of the concerned Assessing Officer; the office of the AO receiving it from the receipt clerk; placing of such return before the AO; the AO pursuing the return and all the accompanying documents; jotting down the points on which the explanation of the assessee is required ; finalizing such points and accordingly sending the notice. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">DRI directed to defreeze EEFC accounts of Petitioner and pay costs of Rs. 5000/- for failure to complete investigation and issue SCN even after four years – High Court</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FREEZING</strong> of EEFC Accounts for more than four years in connection with investigation into undervaluation of imported computer parts – If an authority exercising extensive statutory and coercive powers is unable to ensure completion of investigation within a reasonable period, it would be unfair to keep the bank accounts frozen indefinitely – DRI directed to de-freeze bank accounts forthwith – Costs of Rs. 5000/- awarded. </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>