TIOL-DDT 1640 · 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 1640 </font><br> 29.06.2011 <br> Wednesday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Are Retired Members of ITAT Eligible to Practice before ITAT? Matter once again before ITAT Special Bench </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> Special Bench has been constituted by the President of ITAT in ITA 2170/Ahd/2005 in the case of M/s Nanubhai D. Desai, Surat , for deciding the following issue on July 11, 2011: </font></p> <p align="justify"><em><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“Whether Shri Deepak R. Shah, advocate and ex-Accountant Member of the Income Tax Appellate Tribunal, is debarred from practicing before the Income Tax Appellate Tribunal in view of the insertion of Rule 13 E in the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963?” </font></strong></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Special Bench of ITAT will be a three member bench headed by President of ITAT himself along with two Vice Presidents.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This issue is not being dealt with by the ITAT Special Bench for the first time. In fact it has come under the scanner of ITAT Special Bench earlier as well in <em>M/s CONCEPT CREATIONS vs. ADDL CIT </em></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=39&filename=legal/itat/2009/2009-TIOL-571-ITAT-DEL-SB.htm" target="_blank">(2009-TIOL-571-ITAT-DEL-SB)</a></strong></em> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(date of judgment 15.09.2009), wherein a three member Special Bench of ITAT decided a similar issue in favour of practitioners. Before we delve into the ruling of this Special Bench judgment let us revisit the Rule which generated this controversy. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> Rule 13E of Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 reads as follows: </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">13E. The President, the Senior Vice-President, the Vice-President and the Members of the Tribunal shall not practice before the Tribunal after retirement from the service of the Tribunal. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In Concept Creations case, the Special Bench dealt with the following questions: </font></em></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Whether, the said Notification applies to the Members who have retired prior to the date of publication of the Notification? </font></em></strong></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Whether, the said Notification applies only to the Members who retired from the Tribunal on and from the date of publication of this Notification? </font></em></strong></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Whether, the said Notification applies to those Members who are recruited before but retire after the date of Notification? </font></em></strong></font></p> <p align="justify"><strong><em><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Whether, the said Notification applies to the Members who retire, if otherwise are qualified to practice u/s. 288 of the Income-Tax Act, should still be debarred to appear and argue before the Tribunal? </font></em></strong></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Whether, the said Notification applies to the Members who resigned from service before the date of Notification, without any retirement benefit? </font></em></strong></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Whether the said Notification applies to the Members who are appointed on temporary basis and resign from service without being confirmed during the probation period, either before or after the date of Notification, without any retirement benefits? (This question was taken up by the Special Bench at the behest of interveners) </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Special Bench also compared the impugned Rule 13E with sec. 129(6) of the Customs Act, 1962 which is extracted below: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Section 129 (6).- On ceasing to hold office, the President, Vice-President or other Member shall not be entitled to appear, act or plead before the Appellate Tribunal.” </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Special Bench took up the following issue as well, amongst others, for its consideration: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether, there is any difference in the legislative amendment in section 129(6) of the Customs Act, 1962 and Rule 13-E of the Income Tax Appellate tribunal Members (Recruitment and Conditions of service) Rules, 1963. Whether, that really makes any difference? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After deliberating on the arguments put forth by the counsels on this specific issue of comparison between the two enactments, the Special Bench observed as follows: </font></p> <p align="justify"><em><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“………Having regard to the fact that in the case of P.C. Jain (supra), the Delhi High Court was not at all concerned with any employee who was appointed on temporary post and on a probationary period and resigned from service during the probation period. The instances mentioned in the case of P.C. Jain (supra), do not even deal with such type of cases…………..it must be appreciated that in the case of P.C. Jain (supra), the Hon'ble Delhi High Court proceeded with interpretation for the provision of statute and not a condition of service as has already been discussed earlier. Therefore, what we are basically required to interpret here is Rule 13E which is part of ITAT Members (Recruitment and Conditions of Service) Rules, 1963, as a part of conditions of service. Therefore, the ratio laid down therein may not strictly apply to a case where amendments are to the conditions of service………..” </font></strong></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And finally the Special Bench answered the references (questions framed for consideration) as follows: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#FF6633"><strong>1. It does not apply to Members who have retired prior to the date of publication of notification. </strong></font></em></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The question no. 2 is answered to the effect that it applies to the Members who retired from the Tribunal on or after the date of the publication of this Notification. </font></em></strong></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. That once the Member retires after the date of Notification, it certainly applies. It does not matter when the Members were recruited. Even it applies to the Members who are recruited prior to the date of Notification. Crucial date must be the date of retirement. If it is after 3rd June, 2009, it applies. </font></em></strong></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Question no. 4 is answered that the Members who retire on or after 3-6-2009, even if otherwise qualified to practice u/s 288 of the Act, would still be debarred to appear and argue before the Tribunal, in the light of Rule 13E of the ITAT Members (Recruitment and Conditions of Service ) Rules, 1963. </font></em></strong></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Persons who have resigned from service prior to the date of Notification, without any retirement benefits would not be covered by this Notification because it applies to those persons who have retired after the date of Notification. </font></em></strong></font></p> <p align="justify"><font color="#FF6633"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The notification does not apply to members who are appointed on a temporary basis and resign from service without being confirmed during probationary period. </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Much earlier, when the Delhi High Court delivered the judgment in P. C. Jain case in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8903" target="_blank">TIOL-DDT 1091 17.04.2009</a></strong>, we prophesized, </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#663399">“By Finance Act 2007, former members of the CESTAT were barred from appearing acting or pleading before the Tribunal. Some of the former Members who have been practising in CESTAT after retiring as Members were aggrieved and approached the Delhi High Court in writ petition. </font></em></font></strong></p> <p align="justify"><strong><font color="#663399"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court found nothing wrong with the bar and held that there was no discrimination; it was not unconstitutional; lawyers had no unregulated right to practice. </font></em></font></strong></p> <p align="justify"><strong><font color="#663399"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no such bar for ITAT Members; Why? It will come eventually; a good beginning has been made…” </font></em></font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact, when the Law Ministry issued this Notification on June 3, 2009 amending Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 by inserting Rules 13E and 13F , in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9209" target="_blank">TIOL-DDT 1137 22.06.2009</a></strong> this issue was discussed threadbare and we asked, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#663399"><strong>“…….But is the current amendment enough to bar the ITAT Members, VPs and President from practising before ITAT? In fact, there is a slight distinction in the provisions incorporated for restricting the President, VPs and Members of ITAT from practising before ITAT when compared with similar provision incorporated for the President, VPs and Members of CESTAT……..While the CESTAT President, VP and Members cannot practice before CESTAT after ceasing to hold office in the CESTAT, ITAT President, VP and Members cannot practice before ITAT only after retirement. So, if a Member, VP or even President of ITAT resigns from his/her post, there is no bar for them to practice before ITAT because the relevant rule only says that they shall not practice before the Tribunal after retirement. Whereas for the Members, VPs and President of CESTAT, even if they resign from their posts, they are not entitled to practice because the relevant provision says 'on ceasing to hold office'. This is certainly a bit unfair considering the fact that both their positions are at par. </strong></font></em></font></p> <p align="justify"><font color="#663399"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This entire episode raises a pertinent question. Do the retired Members of Tribunals need to be told by the Court or declared by the Statute that they are not eligible to practice before the respective Tribunals? When a High Court judge retires from his/her position, if they intend to practice post retirement, they do not practice before any High Court or lower Courts but appear only before the Supreme Court. This not only enhances their stature but also protects the dignity of the Judiciary and the individual alike. Likewise, the retired Members of ITAT or CESTAT or for that matter any Tribunal should have voluntarily refrained from practising before the respective Tribunals or any forum lower to the Tribunals and practice before High Courts or Supreme Court…..” </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finally after the Special Bench delivered its verdict in Concept Creations case on 15.09.2009, in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9680" target="_blank">TIOL-DDT 1199 17.09.2009</a></strong>, we asked why there should be discrimination between Members who retired before 03.06.2009 and Members who retired after this date and wondered if ITAT was competent to deal with this issue <font color="#FF6633"><strong><em>(though this aspect was dealt with by the ITAT Special Bench, it is felt that the preliminary objection raised by the Departmental Counsel was not adequately answered)</em></strong></font>, </font></p> <p align="justify"><em><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">“……..So all those former Members who were practising can happily continue to do so. Only those who retired after 03.06.2009 are barred. Isn't this discrimination? And is ITAT competent to decide the issue? This is certainly not going to be the end of the matter. We will see interesting court battles.” </font></strong></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards the factual matrix of the latest reference to the Special Bench, it is not clear as to whether the ex-Accountant Member Mr. Deepak R. Shah, <em><strong>Advocate</strong></em> and Ex-Accountant Member retired or resigned and if he retired, whether the retirement was before June 3, 3009 or not. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While all the pertinent questions on this matter were extensively deliberated by the Special Bench in Concept Creations case and the references therein were answered by the Special Bench, the question as to whether an ex-ITAT member who also happens to be an <em><strong>a</strong></em><strong><em>dvocate</em></strong>, could practice before ITAT as a matter of right, has to be deliberated upon in view of the latest notification issued by the Law Ministry bringing into force sec. 30 of the Advocates Act, 1961 with effect from June 15, 2011. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 30 of the Advocates Act, 1961 is extracted below for ready reference: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#663399"><strong>“Subject to the provisions of this Act, every advocate whose name is entered in the State roll shall be entitled as of right to practise throughout the territories to which this Act extends,- </strong></font></em></font></p> <p align="justify"><font color="#663399"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) in all courts including the Supreme Court; </font></em></strong></font></p> <p align="justify"><font color="#663399"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) before any tribunal or person legally authorised to take evidence; and </font></em></strong></font></p> <p align="justify"><font color="#663399"><strong><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) before any other authority or person before whom such advocate is by or under any law for the time being in force entitled to practise.” </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per this provision, an advocate whose name is entered in the State roll <em><strong>shall be entitled as of right to practise</strong></em> before any tribunal or person legally authorized to take evidence, amongst others. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It will be interesting to see how the Special Bench would view this reference in the context of this provision which provides advocates right to practise in all courts as a matter of right and resolve the conflict between section 30 of Advocates Act, 1961 and Rule 13E of Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This brings us to our earlier question as to whether ITAT is competent enough to resolve issues beyond the purview of Income Tax Act, 1961. The ethical issues raised in <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=9209" target="_blank">TIOL-DDT 1137 22.06.2009</a></strong> of allowing a Member (retired or resigned) to practice in the forum which employed him/her prior to his/her retirement or resignation also has to be addressed legally/statutorily . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is also noticed that an ex-Member of CESTAT is still practising before CESTAT in spite of the Delhi High Court judgment in P C Jain case. We will witness interesting court battles ahead. However, to set these matters to rest once and for all, it is time for the Parliament to bring in suitable amendments in the Statutes. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Timely submission of proposals for extension of period of deputation of officers in SEZs - Instruction </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DEPARTMENT</strong> of Commerce has observed that proposals for grant of extension of deputation period of officers in Special Economic Zones are sent to the Department for approval in a routine manner without indicating adequate justification and also whether the extension of deputation period is in public interest. Further, the proposals are also sent very late allowing the department very little time for processing the proposal. In some cases, extension of deputation has been sought even after the expiry of approved tenure of deputation. The approvals in many cases are to be granted by Commerce Secretary or CI & M. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of this, all Development Commissioners are requested that proposals for grant of extension of deputation period of officials/officers in Special Economic Zones should be sent to this office at least six months prior to the date of expiry of deputation period of officials/officers [<font color="#FF6633"><strong>what is the difference between officials and officers?</strong></font>], complete in all respects as per the prescribed proforma along with adequate justification for seeking such extension. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=260&filename=sez/sez_instructions/sez_order_2011.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">F. No. A.9/18/2011-SEZ., Dated: June 27, 2011 </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"> – Thursday's cases</font></strong></font></strong></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a></a><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">Income Tax</font></strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income tax - Whether when assessee enters into contract with a builder to construct a building and also get approvals from authorities concerned, it is merely a case of transfer of right in land, and Sec 80IB(10) is not available - NO, it is available: Tribunal </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue before the Bench is - Whether when assessee enters into agreement with a builder to construct a building and also get approvals from various authorities, it is merely a case of transfer of right in the land and Sec 80IB(10) benefits cannot be allowed to the assessee. The verdict goes in favour of the assessee. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Temporary assignment of brand name - MOU is valid for five years and after five years both parties are at liberty to change - whether assessee eligible for SSI benefits - legal issue - difficult to come to conclusion as to whether the appellant has been able to make a strong prima facie case for full waiver – Pre-deposit ordered and matter remanded: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>APPELLANT</strong> was manufacturing mixer and grinder with brand name “VIPANCHI” and claiming the benefit of SSI exemption notification no. 8/2003-CE. On the ground that the brand name belongs to Sri Ram Kishan and not to the appellant, proceedings were initiated and finally a demand of duty of Rs.30,77,629/- with interest was confirmed and penalty was imposed. The lower appellate authority directed the appellant to make a pre-deposit of the full amount of duty demanded and since the same was not made the appeal was rejected for non-compliance. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appellants purchasing old and used industrial valves and subjecting them to processes such as machining, welding, drilling, grinding, gas cutting, assembling, painting etc., and thereafter transferring to their sister-company who affixed brand names of various other companies and disposed of goods – Process does not amount to manufacture - Appeal allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant is engaged in the manufacture of industrial valves. On the ground that the appellant had manufactured and cleared industrial valves with the brand names ‘Audco', ‘BHEL', ‘AIL' etc. which were not eligible for SSI exemption a show-cause notice was issued proposing to demand duty and proposing confiscation of seized goods and imposition of penalty. Proceedings were dropped by the original authority on the ground that appellants had, in fact, repaired and reconditioned old valves and the process did not amount to manufacture and since the process did not amount to manufacture the question of payment of duty could not arise. </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><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>