TIOL-DDT 1647 · 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 align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1647 </font><font color="#663399" size="2"></font><font size="2"><br> </font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>08.07.2011 <br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Friday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Board Empowers DRI, DGCEI to Issue SCNs </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is the practice for DRI and DGCEI to book cases left right and centre, prepare bulky Show Cause Notices running into hundreds of pages and then make the Jurisdictional Customs or Central Excise officers to adjudicate them. It is an unwritten rule in the field that a Show Cause Notice issued by DRI/DGCEI has to be invariably confirmed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, all this changed recently. The Supreme Court in the case of <em>Sayed Ali </em>- <em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2011/2011-TIOL-20-SC-CUS.htm" target="_blank"><font size="1">2011-TIOL-20-SC-CUS</font></a> </strong></em>held, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“ <em>it is only the officers of customs, who are assigned the functions of assessment, which of course, would include re-assessment, working under the jurisdictional Collectorate within whose jurisdiction the bills of entry or baggage declarations had been filed and the consignments had been cleared for home consumption, will have the jurisdiction to issue notice under Section 28 of the Act </em>”. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Lo and behold! All the Show Cause Notices issued by DRI, suddenly became illegal. A panicked Board, in Instruction dated 15.04.2011 told the field, “ <em>while other alternative measures are being considered to address the matter, it has been decided by the Board that henceforth all Show Cause Notices under Section 28 of the Customs Act, 1962 in respect of cases investigated DRI/Customs Preventive formations are required to be issued by jurisdictional Commissioners from where imports have taken place. Board also desires the field formations to examine the pending show cause notices and wherever the cases are not hit by limitation, show cause notices may be got issued afresh by jurisdictional Commissionerates in supersession of the earlier show cause notices and in the light of the Hon'ble Supreme Court judgement in the matter </em>”. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Board has come up with a notification assigning the functions of ‘proper officer' for the purposes of Section 17 (Assessment) and Section 28 (Recovery of duties) of the Customs Act, on the following officers. </font></p> <blockquote> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Additional Director Generals, Additional Directors or Joint Directors, Deputy Directors or Assistant Directors in the Directorate General of Revenue Intelligence. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Commissioners of Customs (Preventive), Additional Commissioners or Joint Commissioners of Customs (Preventive), Deputy Commissioners or Assistant Commissioners of Customs (Preventive). </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Additional Director Generals, Additional Directors or Joint Directors, Deputy Directors or Assistant Directors in the Directorate General of Central Excise Intelligence. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Commissioners of Central Excise, Additional Commissioners or Joint Commissioners of Central Excise, Deputy Commissioners or Assistant Commissioners of Central Excise. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please also see</strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=12440"><strong>DDT 1597 - 28.04.2011 </strong></a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">You can be sure this will be one of the retrospective amendments in the next budget. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2011/cnt11_044.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Notification No. 44/2011-CUSTOMS (N.T.), Dated : July 06, 2011 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>E-filing of Income Tax return in respect of companies under liquidation - MOC clarifies </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Official Liquidators have reported that they are facing problems in e-filing of Income Tax Returns in compliance as they are required to mention PAN No. of the person who files the return, representing the company in liquidation. The Official Liquidators brought to the notice of the Ministry that they are not able to file Income Tax Returns since the verification part of the report require them to mention their personal PAN Card No. even when they file the Return as a representative assessee of the company (in liquidation). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The matter was discussed with CBDT. It was explained from the CBDT side that IT Returns have been developed to enable all assessees to file the return and the Official Liquidators may quote PAN of the company as well as his personal PAN which is insisted for the purpose of identification of the person who has signed the Return. In order to avoid correspondence/notice issued to individual members, Official Liquidators should give their Office address in Part A-General Information against “address of the representative” column in all correspondence which reach his office. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfnoti/pdfmca/pdf2011/Circular_41-2011_06july2011.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>MOC GENERAL CIRCULAR NO. 41/2011 , Dated : July 06, 2011 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - MODIFICATION OF SION C-1058 under Engineering Product Group </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended Sl No. 3 of import list of SION C-1058. Till now, only Tubular Bags (Gaunlet) were permitted as an input at Sl No. 3 of the SION. Now, this is modified to permit an alternate item i.e. relevant sewn Gaunlet cloth. There is no other change. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn062.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Public Notice NO. 62 /(RE-2010)2009-2014 , Dated : July 07, 2011 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP - Amendment/modification of SION, J-373 </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>SION, J-373 of Textile Product Group (Product Code J), as notified vide Public Notice No.180/(RE:2008)/2004-2009 dated 14.05.2009 contained 4 (four) items as permissible to be imported. Now this is being amended to add a fifth item of import - “Pesticides (Biocides/Fungicides/Herbicides/Insecticides)”. There is no change in other four items: either in description or in quantity; or in the description of export item. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2010/dgft10pn063.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Public Notice NO. 63 /(RE-2010)2009-2014 , Dated : July 07, 2011 </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NDPS - If recovery is held illegal - No Conviction - Supreme Court </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SEVERAL</strong> judgements of the Supreme Court have loudly and clearly held that Section 50 of the NDPS Act requires the searching officer to inform the searched person his right of being taken to the nearest gazetted officer or the nearest Magistrate for making the search. The officers normally don't follow this and end up losing the cases. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yet another such case was decided by the Supreme Court yesterday. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“ <em>Ingenuity of counsel sometimes results in formulation propositions, which appear at the first flush to be legally sound and relatable to recognized cannons of criminal jurisprudence. When examined in greater depth, their rationale is nothing but illusory; and the argument is without substance. One such argument has been advanced in the present case by the counsel for the appellant State who contends that ‘even where the provisions of Section 50 of the Narcotic Drugs and Psychotropic Substances Act, 1985 have not been complied with, the recovery can otherwise be proved without solely relying upon the personal search of the accused </em>''. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court held, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Satisfaction of the requirements in terms of Section 50 of the Act is <em>sine qua non </em> prior to prosecution for possession of an unlawful narcotic substance. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is a settled canon of criminal jurisprudence that when a safeguard or a right is provided, favouring the accused, compliance thereto should be strictly construed. As already held by the Constitution Bench in the case of <em>Vijaysinh Chandubha Jadeja </em>, the theory of ‘substantial compliance' would not be applicable to such situations, particularly where the punishment provided is very harsh and is likely to cause serious prejudices against the suspect. The safeguard cannot be treated as a formality, but it must be construed in its proper perspective, compliance thereof must be ensured. The law has provided a right to the accused, and makes it obligatory upon the officer concerned to make the suspect aware of such right. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once the recovery is held to be illegal that means the accused did not actually possess the illicit article or contraband and that no such illicit article was recovered from the possession of the accused such as to enable such conviction of contraband article. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this judgement today. Please see <strong>Breaking News</strong>. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Factory Stuffing of Export Containers - Vapi Commissioner complicates procedure - So do many others? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT </strong>'s report yesterday about the complicated export supervision procedure has created ripples across the country. We are informed that almost all the Commissioners in Gujarat have issued identical <em>facility </em> notices. This has been done on the directions of the Chief Commissioner and Commissioners have simply followed the directions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Exporters in Gujarat feel that they are being discriminated against and a concerned exporter requests the Commissioner, “ <em>Sir, Please kindly withdraw this draconian Trade facility Notice which is against the interest of trade and exporters as well as demoralising your Officers </em>”. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Justice Dinakaran is intelligent; wants to adopt every possible tactic to delay - Supreme Court </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF </strong>things had gone right (for him) Justice Paul Daniel Dinakaran Premkumar would have been a judge of the Supreme Court, but right now, he is a petitioner before the Supreme Court praying for quashing the enquiry against him ordered by the Rajya Sabha Chairman and also questions the inclusion of Senior Advocate PP Rao in the enquiry committee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court observed that the petitioner's apprehension of likelihood of bias against respondent No.3 (PP Rao) is reasonable and not fanciful, though, in fact, he may not be biased. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Supreme Court added, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“ <em>Belated raising of objection against inclusion of respondent No.3 in the Committee under Section 3(2) appears to be a calculated move on the petitioner's part. He is an intelligent person and knows that in terms of Rule 9(2)(c) of the Judges (Inquiry) Rules, 1969, the Presiding Officer of the Committee is required to forward the report to the Chairman within a period of three months from the date the charges framed under Section 3(3) of the Act were served upon him. Therefore, he wants to adopt every possible tactic to delay the submission of report, which may in all probability compel the Committee to make a request to the Chairman to extend the time in terms of proviso to Rule 9(2)(c). This Court or, for that reason, no Court can render assistance to the petitioner in a petition filed with the sole object of delaying finalisation of the inquiry </em>”. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A High Court Chief Justice as a petitioner does not enjoy any special status in the Supreme Court! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Should a person about whom the highest Court of the land commented thus, continue as a Chief justice? His Lordship knows best! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the Supreme Court dismissed the writ petition, it requested the Rajya Sabha Chairman to nominate another distinguished jurist in place of respondent No.3. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please also see </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2011/2011-TIOL-65-SC-MISC.htm"><em>2011-TIOL-65-SC-MISC</em></a></font></strong></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"> - Monday's cases</font></strong></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#663399"><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"></font></font><font color="#663399">Customs </font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Over-invoicing of export goods to get undue DEPB benefit - Illegal fraudulent transactions indulged in by individuals, corporate and even banks - Customs officers not moving their finger to ward off possible abuse; CESTAT orders pre-deposit of Rs 1 crore </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> DEPB scheme, as laid down by CBEC through circulars, required the assessing officer to maintain records, draw samples and take all other precautions to ward off possible abuse of the scheme. Prima facie, these three officers did not move a little finger in this direction. Their conduct was, apparently, irresponsible. When such conduct results in fraud on the Revenue, it assumes dismal proportions so much so that hefty penalty under Section 114 of the Customs Act gets attracted. </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>Sec 32(1)(iia) - Whether when Directors' report admits that there is no change in installed capacity of company, a contrary CA report cannot contradict same to claim additional depreciation - Assessee's appeal dismissed: ITAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEE</strong> Company purchased a new plant and machinery and claimed depreciation @25%. It further claimed additional depreciation @10% relying on the provisions of section 32(1)(iia) of the Act. AO during the course of assessment proceedings noted from the director's reports that the capacity of the unit remained un-changed - AO further observed that the machinery installed not in any way had enhanced the capacity of that process by virtue of which production could have been increased - accordingly the AO disallowed the claim of the assessee. </font></p> <p align="justify"><font 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>Services rendered by Research Designs and Standards Organization - Just because organization giving such service is constituted under statute activity does not become statutory function: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PROVIDING</strong> railway service cannot be considered as a "Sovereign Function " as per the classical understanding of the expression. So the issue has to be seen with reference to the expression "statutory function". Just because the organization giving such service is constituted under a statute of the Parliament the activity does not become a statutory function. Further, the consideration to be paid is not in the nature of fees to recover the cost for doing such service but in the nature of a commercial consideration. In the case of fees charged for testing the equipment to be used on Indian railways system, the matter is on a more disputable footing. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more DDT </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend. </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>