TIOL-DDT 1779 · 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 1779</font><br>
20.01.2012<br>
Friday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Vodafone Judgement Today? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Supreme Court of India is likely to deliver the much-awaited Vodafone case today. The Supreme Court is to lay down the law on the taxation of offshore mergers and acquisitions of Indian companies in the legal challenge to the tax demand on Vodafone International's acquisition of Hutchison Essar's telecommunication business in India from the Hong Kong based Hutchison Group, which was heard by a three-judge bench headed by the Chief Justice. International Tax Review adds, “This is probably the first case of its kind being heard by the highest judicial authority, not only in India but anywhere in the world, and the judgment in this landmark case is likely to have a decisive impact on the future development of international tax jurisprudence. At a time when several multi-billion dollar cross-border M&A transactions are coming under the scanner of revenue authorities, this judgment is likely to lay down the marker for revenue authorities and tax practitioners everywhere on the taxation of such transactions. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Income Tax Demand against Vodafone is to the tune of Rs. 11,000 Crores of which the Supreme Court had asked Vodafone to pay Rs. 2500 Crores in cash and for the balance Rs. 8500 Crores, they had to give a bank guarantee. </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Consequences: </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>If the Government wins:</strong> Vodafone will have to pay an additional amount of Rs. 8500 Crores with interest at the rate to be fixed by the Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>If Vodafone wins:</strong> It will get back Rs. 2500 Crores with interest at the rate to be fixed by the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A big case indeed for both sides! </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Can
Commissioner (Appeals) correct mistakes in order passed u/s 35A by issuance
of corrigendum? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE </strong>received this mail from a Netizen – </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A. Paragraph 4 of the Law Ministry's opinion communicated under Board Circular No. 502/68/99-CX dated 16.12.1999 titled “Adjudication — Corrigendum issued subsequent to Adjudication Order passed by departmental authorities — Advice sought from Law Ministry” reads thus - </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"4. Commissioner of Customs is no doubt a quasi-judicial body required to work within the provisions of law. Neither the powers of review nor correction to the order is available under the Customs Act to the Commissioner of Customs to exercise such powers. He becomes functous officio after signing the adjudication order and, therefore, he cannot lay his hands again on the order. The corrigendum is tantamount to review of the decision which is not provided under Law, and therefore, we are of the view that this impugned order is not legally sustainable notwithstanding Section 21 of the General Clauses Act."</font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">B.The Board Circular thereafter instructs the officers the following – </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"3.The above advice of the law Ministry may please be noted by all concerned for information guidance and necessary action. Where any significant change in the order becomes necessary after the order has been issued which cannot be termed as clerical or arithmetical or typographical mistake, proposals for review may be mooted to appropriate authority instead of taking recourse to corrigendum." </font></em></p>
</blockquote>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">I recently came across an order-in-appeal (passed in Departmental appeal) wherein although in the Discussion and Findings portion the Commissioner(A) had indicated his decision to accept the prayer made by the department, the operative portion of the order instead of mentioning “I allow the departmental appeal.” was worded “I reject the departmental appeal.” </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But naturally, going by the logic contained in the Board Circular, the first option open may be of filing an appeal to the higher appellate authority viz. CESTAT. However, I feel that the Commissioner (A) is not expressly barred from issuing a corrigendum to the Order passed by him and correct the inadvertent mistake in view of the following – </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Firstly, the Commissioner (Appeals) is not an adjudicating authority as he has been expressly excluded from the definition of an adjudicating authority as given in section 2(a) of the CEA, 1944 which reads “[(a) "adjudicating authority" means any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act,1963 (54 of 1963), [Commissioner of Central Excise (Appeals)] or Appellate Tribunal;". As such, the Board Circular referred to is not applicable to the facts of the case. Incidentally, unlike the provisions of Section 35C(2) of the CEA, 1944, the Commissioner (A) has not been given any express powers for passing an order on a ROM application. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ In such a situation, it is felt that Section 21 of the General Clauses Act, 1897 comes to his aid as it allows issuance of an amendment to the earlier passed order. Section 21 reads - </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>"21. Power to issue, to include, power to add, to amend, vary or rescind notifications, orders, rules or bye-laws.-</strong> Where, by any Central Act or Regulation, a power to issue notifications, orders, rules or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any notifications, orders, rules or bye-laws so issued."</font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I would also like to rely on the following case laws to fortify my view – </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Rabindra Singh v. Financial Commissioner, Cooperation, Punjab & Ors. [2008 (8) SCALE 242], the Supreme Court has held: </font></em></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“17. What matters for exercise of jurisdiction is the source of power and not the failure to mention the correct provisions of law. Even in the absence of any express provision having regard to the principles of natural justice in such a proceeding, the courts will have ample jurisdiction to set aside an ex parte decree, subject of course to the statutory interdict.”</font></em></p>
</blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">+ Smt. Pravita Rani Samanta v . Collector of Central Excise, Calcutta has held:- </font></em></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Undoubtedly, this court has inherent powers in view of the Supreme Court's judgment in the case of ITO v . Muhammad Kunhi <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=37&filename=legal/sc/2002/2002-TIOL-122-SC-IT.htm" target="_blank"><font size="1">2002-TIOL-122-SC-IT</font></a></strong> and Puran Mal Kantia v . ITO (98 ITR 39). It was also held in the case Jagadambika Pratap v . ITO (76 ITR 619) that the Tribunal has inherent jurisdiction to rectify a wrong committed by itself when that wrong causes prejudice to an innocent party. There is another judgment reported in 82 ITR 314 Malchand Surana v . CIT where it was held that having decided an appeal on a preliminary issue, the Tribunal has implied jurisdiction to vacate the order in appropriate cases and hear the appeal on merits.” </font></em></p>
</blockquote>
<p><strong><em><font color="#FF3333" size="2" face="Verdana, Arial, Helvetica, sans-serif">I request Netizens to respond. </font></em></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Uniform For Central Excise Officers - Archaic? </font></strong></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A </strong>Superintendent of Central Excise writes in: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14062"><strong>DDT dated 13.1.2012</strong></a>, you have stated that 335J register has become archaic. Well said. Not only 335J register, uniform for Excise officers has also become archaic consequent on the scrapping of Tobacco Excise Manual in 1979. The Central Information Commission vide Order F.No.CIC/AT/A/2009/000832 dated, the 29th January, 2010 has stated as follows: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"6. It is seen that the CBEC has not formulated clear guidelines about the use of uniform by officers, Equipment Advances and its relationship with the uniform usage, etc. Apparently, these rules did exist a long time ago before Independence and had been followed more in the form of conventions than any set written directions. </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Now that this point has been raised, CBEC may consider issuing detailed and clear guidelines in this regard." </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Despite the above order, various Commissionerates insist on wearing of the uniform and CBEC has not issued any guidelines in this regard as mandated by the CIC. Certain anomalies relating to prescription of uniform for Central excise Executive Officers are as follows: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Uniform equipment allowance is granted only once in the career. Thereafter, maintenance allowance alone is granted. It implies that the officers are required to continue the same set of uniform materials for about 4 decades. Will the uniform last for 4 decades, even if it is made of Iron and steel? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ As per 1967 CBEC Bulletin, certain uniform articles have been prescribed for various cadres. The post of Deputy Collector was also specified in that order. The post of Deputy Collector as mentioned in the 1963 order is equivalent to the post of Joint Commissioner. (not equivalent to the current Deputy Commissioners). In that case, why uniform is not insisted on the Joint Commissioners? Is there any amendment to the aforesaid order? Will anybody throw light on this aspect? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ There is no prescription of physical standards or endurance test for recruitment to the post of Examiners and Appraisers. Some of the Examiners and Appraisers may not have the requisite height and other physical standards. There is no problem so long they stay as non-executive officers within the comfortable zone of Custom House, where they are not expected to be in uniform. But, after getting promotion to the post of Asst. Commissioner, they are expected to be in uniform. Will the norms for prescription of uniform not apply to those officers? Is there any prescription of physical standards for direct recruit IRS officers?. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ It seems Indian Customs and Central Excise is the only Department in the World, which prescribes uniform without insistence on the physical standards.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the fight of the executives against uniform is understandable, almost all of them are claiming uniform allowance of Rs. 2000/- very promptly. Why they should have double standards? They are not inclined to wear the uniform, but keen to get Rs. 2000/- </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Attack on CJI - Case pending for 37 years </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ON</strong> March 20, 1975, at about 4.15 p.m when the car in which Mr. Justice A.N. Ray, the then Chief Justice of India, was travelling, along with his son Shri Ajoy Nath Ray and a Jamadar Jai Nand and the driver Inder Singh, stopped at the intersection of Tilak Marg and Bhagwan Dass road, at a stone throw distance from the Supreme Court of India, two live hand grenades were lobbed inside the car. Fortunately, the grenades did not explode and the occupants of the car, including the Chief Justice of India, escaped unharmed. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">About two and a half months before the attempt on the life of the Chief Justice, the Minister of Railways in the Union Cabinet Shri L.N. Mishra was killed in a bomb blast during a function on the platform of Samastipur Railway Station. In connection with that case, Sudevanand Avadhoot and one Vikram alias Jaladhar Das were arrested at Bhagalpur. On July 27, 1975 they were also arrested in the case relating to the attempt on the life of the Chief Justice and were brought to Delhi where they were sent on police remand from July 31, 1975 to August 14, 1975. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The case is pending in appeal. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday while disposing an appeal related to the case, the Supreme Court observed, </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Before parting with the record of the case, we are constrained to say that we are distressed beyond words to find that the case relating to the attempt on the life of the CJI remains stuck up at the stage of the appeal even after about 37 years of the occurrence. We are informed that the other case of the killing of Shri L.N. Mishra is still mired before the trial court. We would request the Chief Justice of the Delhi High Court with all the strength at our command to take notice of the inordinately long time for which these appeals are pending before the High Court and to put a tab on them so as to ensure that the appeals are disposed of without any further delay."</font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is there any point in punishing a 70 year old man for a crime he committed 40 years ago? </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"> – Monday'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">Since appellants are not able to prove that burden of amount claimed by them as refund has not been passed on to their consumers, refund has rightly been rejected: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> refund claim of Rs.1.01 Crores filed by the appellant on the basis of the CESTAT's order was sanctioned by the adjudicating authority but the same was credited to Consumer Welfare Fund on the ground that the appellants were not able to prove that the amount was not collected by them from their buyers. </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">Whether first appellate authority has inherent powers to grant stay even if provisions in I-T Act do not confer any such specific power to grant stay against recovery of disputed demand - YES, rules ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> powers of the appellate authorities are indisputably concurrent and co-extensive with that of the Assessing Authority but wider and superior in nature. Section 251 of the Act clearly stipulates that in disposing of an appeal, the CIT (Appeals) can confirm, reduce, enhance or annul the assessment. Section 251 (1) (c) of the Act further provides that in other cases, he may pass such orders in appeal as he thinks fit. These words harmoniously read, definitely mean that powers of appellate authorities under the Act are wide enough. Such powers could not be intended to be drained out or rendered meaningless, if the power to grant stay against the recovery of disputed demand is to be taken away from the first appellate authority. Such implied, necessary and inherent power must necessarily be read into these provisions conferring the powers upon the appellate authority to modify the impugned assessment order in any manner. </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">Non-fulfilment of export obligation resulting in demand of customs duty on brass scrap imported duty free – Pre-deposit to be made in three equal monthly instalments: Delhi HC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant imported 144.163 MTs of brass scrap in 1998 without payment of duty and was obliged to fulfil export obligation of 134.105MTs in the form of builder hardware. As per the relevant notification, the appellant was required to submit details of exports made within one month from the expiry of the period of export obligation, which was not submitted. The department contended that the appellant fulfilled only 14.977% of the export obligation and had exported hardware of the requisite quantity. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Monday for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday 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><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>
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