TIOL-DDT 1395 · the untouched capture
Rendered as it looked. Links and images are disabled in this view; the file itself is untouched.
<!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 1395 </font><br>
</strong></font><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">06.07.2010 <br>
</font></strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tuesday</font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">'Largest Litigant' Tag for Government - HC asks CBEC to avoid frivolous litigation - Follow CBDT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Bombay High Court recently expressed its anguish over the frivolous appeals filed by the Customs and Central Excise Department. In one particular Central Excise case, the involved stake was Rs. 5000/-. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court noticed that the Centre and the States have acquired the “government is largest litigant” tag, accounting for 70% of the 3 crore cases – over 2.1 crore pending in various Courts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed, “Now, the Central Government has formulated a National Litigation Policy (NLP) to shed the tag “Largest Litigant”. Thus, keeping in view the policy of the Central Government, the time has come to invite attention of the Chairman of the Central Board of Excise and Revenue (“the Board”) to consider the necessity of taking policy decision not to file cases; wherein the duty/tax impact is negligible. The similar policy is already in vogue so far as Income Tax Department is concerned. The Central Board of Direct Taxes (“CBDT”) vide its circular dated 27th March, 2000 followed by other circulars dated 24th October, 2005 and 15th May, 2008 has taken a policy decision not to file appeals or references wherein the tax effect is less than the amount prescribed in the instructions issued from time to time, so as to reduce litigation before the High Courts and the Supreme Court. The said policy decision taken by the CBDT has definitely reduced volume of litigation, with the result, their officers are in a position to concentrate on the cases involving heavy stakes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It has, therefore, become necessary for the Board to impress upon the departmental heads not to go for appeals and litigation wherein tax or duty impact is not substantial, otherwise it results in harassment to the assessees and creates unnecessary burden on the infrastructure of the Revenue department. The “<strong>let the Court to decide</strong>” attitude needs to be given go bye. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the aforesaid backdrop, we hope that the Chairman of the Central Board of Excise and Revenue shall consider the necessity of issuing circular, on the lines of the circulars issued by the CBDT, so as to reduce litigations arising out of indirect tax legislations. This will definitely go a long way to reduce pendency of the cases in the various Courts and at the same time will help the officers of the department to concentrate more on the cases involving heavy stakes. Eventually, litigation expenses, burden of the Courts as well as that of the Revenue department to a considerable extent would get reduced.” </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2010/2010-TIOL-464-HC-MUM-CX.htm" target="_blank">Click
here</a></strong> for the HC Order. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC's Appeal Policy - A Mockery of Law, Discipline and Government </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> High Court has now made the observations about the irresponsible appeals. But way back in 1989, the Board had clarified that no appeal/SLP should be filed, in cases of insignificant revenue unless a precedent was involved, and Collectors must implement the orders of Tribunal/Collectors (Appeals) unless stay was obtained . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Three
years later, in <em><strong>F.NO.390/164/1992-JC, Dated : December 2, 1992</strong></em>,
Board lamented, “It has been observed from a perusal of the orders passed
by the CEGAT in the recent past that these instructions are not always observed
and appeals are filed in routine manner, without proper examination. You
are therefore requested to take up random scrutiny of cases where appeals
have been filed against the orders of Collectors (Appeals). Such random scrutiny
should be with a view to check the tendency to go in for frivolous appeals.
Further, you are requested to undertake such random scrutiny on a regular
basis in future, during your visits to and inspections of Collectorate headquarters
.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Eighteen years later - nothing has changed. Only one thing is proved. THE FIELD DOES NOT TAKE THE BOARD SERIOUSLY. </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=34&filename=legal/cestat/2004/2004-TIOL-242-CESTAT-DEL.htm" target="_blank"><font size="1">2004-TIOL-242-CESTAT-DEL</font></a></strong>, the CESTAT observed, It is unfortunate that appeal which is frivolous in nature is filed by the Revenue. This results in only harassment to the assessee and clogging this Tribunal which is not in the interest of the appellant also. We direct the Registry to forward a copy of this order to the Chairman of the Board who would consider giving necessary directions so that more care is taken while deciding to file appeal . </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=28&filename=legal/cestat/2004/2004-TIOL-376-CESTAT-DEL.htm" target="_blank"><font size="1">2004-TIOL-376-CESTAT-DEL</font></a></strong>, the Tribunal observed, “We are compelled to observe that Revenue should not have filed such a frivolous appeal which would not only go to the harassment of the assessee but would amount to wasting of time of the Tribunal ”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The fact is that the field officers have no respect or fear for Law, Board, Courts, Constitution, Government or the Citizens who are their real masters. They are afraid of vigilance and Audit, but not the majesty of LAW. Okay one Commissioner or Chief Commissioner is too scared to accept a lower Authority's order. Will two Commissioners make any difference? Did the change in law to review orders by Committee of Commissioners or Chief Commissioners, make any change for the better? </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=34&filename=legal/cestat/2007/2007-TIOL-1104-CESTAT-DEL.htm" target="_blank"><font size="1">2007-TIOL-1104-CESTAT-DEL</font></a></strong>, the Tribunal observed, “ Before parting with the case, we may note that the provision for review of orders by a Committee of Commissioners was introduced in the Finance Act, 2005 with a view to bringing about qualitative improvement in the review process and to prevent frivolous appeals. This appeal clearly shows that, even under the Committee system, appeals are getting filed routinely and qualitative improvement is a far cry ”. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Why Field Officers are bent on making frivolous Appeals? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the recently held conference of Chief Commissioners and DGs of CBEC, one of the groups discussed the issue of improving productivity and the Group concluded that productivity can be improved if frivolous litigation was avoided. This was recognised as the biggest malaise. But a very senior officer asked a pertinent question, “How can frivolous litigation be avoided?; Till the Supreme Court decides the issue, you have to continue issuing notices and filing appeals!” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the conference, the Chief Commissioners exhort the Commissioners, “The Board may say so many things; but you have a career to protect”. The message is loud and clear. Don't give refunds; don't pass any order in favour of the assessee; if any officer has the audacity to pass any order favourable to the assessee, ensure that an appeal is filed. You will never get into trouble for filing a frivolous appeal or passing an order against an assessee, however ridiculous it is! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the Tribunal and High Courts, the DRs and Counsels for Government put up a pathetic performance defending atrocious orders and frivolous appeals. In fact some corrupt officers collect money to pass orders against the assessees and tell them, “you will surely win in the Tribunal”. Some officers openly tell their <font color="#FF6633"><em><strong>order writers</strong></em></font>, “why should you worry, let them go to Tribunal” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The officers who blindly pass orders in favour of Revenue and file appeals routinely are certainly not the sincere and loyal officers of the Department. They are the real enemies to the Department, bleeding it unwarranted expenditure, clogging the courts and tarnishing the image of the Department. Such irresponsible officers cause irreparable damage not only to the Department, but the Government as a whole. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">24X7 Operations at Sea Ports - On Trial Basis</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Task force of the Department of Commerce to reduce transaction cost involved in exports has recommended that customs operations should be made available on 24x7 basis at identified 14 customs locations, especially on weekends. This recommendation has been accepted by the government. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, CBEC has decided to introduce 24x7 operations in select customs stations on trial basis in the following phases. </font></p>
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Phase 1 : Provide services for delivery of export goods (15 days) </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Phase 2: Provide delivery for RMS facilitated import goods. (15 days) </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Phase 3: Provide facility of assessment and examination of import/export goods. (15 days) </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the total 45 days trial period, the outcome will be reviewed and based upon the success achieved subject to getting additional staff sanction and custodians, CHAs, banks and other related agencies agreeing to provide necessary complementary services, a decision will be taken by the Board to expand the services to the other customs locations. </font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=25&filename=notification/custom/2010/staff_seaports.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC F.No.450/25/2009-Cus-IV: Dated: July 5, 2010 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Clean Energy Cess on Imported Coke? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> have been getting queries in the last few days about the Service Tax notifications and the new Cess in the Finance Act, 2010. One such query reads as: </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service tax and clean energy cess notifications have been issued. There is a state of confusion regarding the effective date of new services e.g Health Checkup etc for which no notifications have been issued till date. Further, there is a confusion regarding the levy of clean energy cess on imported coke, in this case also no notifications have been issued. Request you to kindly let us know the exact position. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Another Assessee wanted to know:- </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax on Health Services: No separate notification notifying the effective date has come in this regard. Request you to clarify whether a separate notification is going to be issued or not. Whether this is applicable from 01.07.2010 or not. </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All the new taxable services and the amendments proposed to the scope of existing taxable services are brought into effect from July 1, 2010, by virtue of <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2010/stnot10_024.htm" target="_blank">Notification No. 24/2010-ST dated June 22, 2010</a></strong></em>. Separate notifications are not issued to bring into effect each and every taxable service or an amendment to the scope of existing taxable services separately. Notifications are issued only to provide for any specific exemption or abatement for the newly introduced taxable service or an existing taxable service. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards levy of 'clean energy cess' on imported coke, it may be noted that in terms of Section 83(3) of the Finance Act, 2010, a cess called '<u>clean energy cess' is levied as a duty of excise @ effective rate of Rs. 50 per tonne</u>, on certain specified goods viz., raw coal, raw lignite and raw peat, <u>which are being produced in India</u>. There is no proposal as such to levy 'clean energy cess' separately on import of said specified goods or import of coke as per the provisions of Finance Act, 2010. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, by virtue of Section 3 of the Customs Tariff Act, 1975, additional duty of customs in lieu of a duty of excise (CVD in common parlance) shall be levied on import of a like article manufactured or produced in India. Further, this aspect of levy of CVD on imports of the said specified goods was also clarified vide paragraph 6 of TRU letter D.O.F. No. 334/1/2010-TRU dated February 27, 2010. CVD on import of the said specified goods would be equivalent to the effective rate of 'clean energy cess' i.e. Rs. 50 per tonne. </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"> – Wednesday'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">In absence of ingredients of s.11AC of CEA, 1944, mandatory penalty cannot be imposed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> an earlier round of litigation initiated by the Revenue, the CESTAT had rejected the appeal holding that as the respondent had paid the duty and interest before issuance of show-cause notice, no penalty can be levied under section 11AC on the respondent. Incidentally, at the material time, there were many CESTAT decisions which took such a view in the matter. </font></p>
<p><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">Does provision of Sec 68 stands on different footing in case of share application money, and burden of assessee stands discharged on submission of names and addresses of applicants without proving their creditworthiness - YES, says HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SHARE</strong> application money is generally taken with a pinch of salt by our taxmen. The Revenue often tends to believe that this is one of the sure shot routes to channelise own fund into the company or to convert black into white money. Anyway, the issue in the instant case is - Whether provision of section 68 stands on different footing in the case of share application money, and the burden of the assessee stood discharged on the submission of names and addresses of the share applicants, without proving their creditworthiness. And the High Court decision is YES. </font></p>
<p><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">Imbalance between existing strength of Members and huge pendency of appeals - Early hearing application cannot be considered, ignoring these factors - Substantive issue different from that involved in appellant's own case decided by WZB, Ahmedabad - EH application dismissed: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> pendency of appeals at Mumbai is very high when compared to that at Ahmedabad. The bench at Ahmedabad ordinarily works in full swing. On the other hand, at Mumbai, even one Division Bench is constituted through strenuous administrative arrangements inasmuch as both the permanent Members of the West Zonal Bench at Mumbai are Judicial Members. The sanctioned strength of Members at Mumbai is 6, which means, there are three vacancies of Member(Technical) and one vacancy of Member(Judicial) at Mumbai. The practice of considering EH applications is in vogue since the inception of the Tribunal and the same has worked in a balanced way as long as the different Benches of the Tribunal worked in full strength. Today, there is an imbalance between the existing strength of Members and the huge pendency of appeals at Mumbai. No EH application can be considered, ignoring these factors. </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"><strong>vijaywrite@taxindiaonline.com</strong></a></font></p>
</body>
</html>