TIOL-DDT 2022 · 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 2022</font><br> 11.01.2013 <br> Friday </strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC's Draconian Circular - High Court Order </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> report in yesterday's DDT on the AP High Court's Order evoked huge response, mostly from lawyers. They were all asking for a copy of the order. We carry the order today. Please see <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2013/2013-TIOL-23-HC-AP-CX.htm"><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong>2013-TIOL-23-HC-AP-CX</strong></font></a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The whole order is as given below: </font></p> <blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Petition under Section 151 of C.P.C. praying that in the circumstances stated in the affidavit filed in the W.P. the High Court may be pleased to grant stay of clarification issued vide Sl.No.3 of the Circular No.967/01/2013-CX dated 01.01.2013 and consequent Letter O.C.No.496/2012-13 dated 04.01.2013 issued by the Respondent No.2, pending disposal of WP No. 734 of 2013 on the file of the High Court. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The court, while directing issue of notice to the Respondents herein to show cause as to why this petition should not be complied with, made the following order.(The receipt of this order will be deemed to be the receipt of notice in the case). </font></p> <p align="center"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u>ORDER </u></strong></font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">There shall be interim stay of recovery of the amount involved, till the appellate authority disposes of the application for stay. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There were nine such writ petitions challenging various provisions of the controversial circular. Though the High Court did not quash or stay the Circular, the recovery of the amount involved has been stayed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the next few days all High Courts in the Country will be flooded with such writ petitions - the lawyers should be grateful to the CBEC for this most unexpected prosperous New Year gift. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When I discussed the issue with a senior advocate, he asked me, "What are you complaining about? When you are in the business of selling coffins, you should be happy about people dying; if they don't die, how can you sell your coffins?" </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Recovery of Service Tax and Customs Dues not Governed by Draconian Circular </font></strong></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> netizen sent us this mail - </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Sir, while every taxation portal & publication is abuzz with the supposedly foolhardy Circular 967 issued by the CBEC when the sun rose on the Indian sub-continent this New Year and mention of petitions being filed in the High Court seeking to strike down this Circular, I know for sure that the women-powered Board would stand by its decision unless of course they have a change of heart. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That apart, the Circular has been issued under the File number having extension CX.6 and which means it purely relates to Central Excise matters. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the benefit of readers, I would like to extract the following paragraph 5 from the Board Circular 661/52/2002-CX dated 11.09.2002 (as updated) & titled ‘Work distribution amongst various sections of CBEC". It reads - </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>"5. <a>CX-6 Section</a></strong></font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">List of Subject :- </font></strong></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Amendments to Central Excise Rules and interpretation thereof (excepting matters relating to Modvat, Cenvat, Proforma Credit and sampling)</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Procedures relating to Assessment, Internal Audit, Preventive Control, Exports, Licencing and Bonds, Delegation of powers, overtime fees and Budget and pre-Budget day clearances, prosecution, adjudication, Rewards under Central Excise Act and all other matters not covered by CX-8 Section. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Amendments to the Basic Excise Manual, the Audit Manual, the Preventive Manual and the S.R.P. Hand book.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Policy concerning anti-evasion, prosecution, approval of action plan of Directorate General of Central Excise Intelligence, submission of periodical reports and returns concerning preventive work etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. All complaints, representations and Parliament Questions relating to the above items of work." </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">My conclusion is also supported by the paragraph 4 of the Circular 967 which mentions - </font></p> <blockquote> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">"4) Instructions in CBEC's <strong>Excise</strong> Manual of Supplementary instructions on the above subject or any other circular, instruction or letter contrary to this circular stand amended accordingly."</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I would like to place emphasis on this word "EXCISE" because it would mean that the Circular does not apply to "CUSTOMS" although there is in existence a Manual brought out by CBEC catering to Customs also but the Board has chosen to ignore this fact. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, this would leave us with "Service Tax" and to this my answer would be - Service Tax Circulars are issued with the extension "ST" and which is not the case here. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, for the moment, the New Year Circular would be applicable only to Central Excise matters, where the recovery is envisaged in terms of section 11 of the CEA, 1944. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For recovery of Customs & Service Tax dues, the Board may come out with another Circular after reading this note of mine, I presume!" </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">CESTAT Member Seeks One Rupee Damage from ELT Editor </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BANGALORE</strong> CESTAT Member (Judicial), PG Chacko recently filed a Civil Suit in the City Civil Court, Bangalore against a report carried in Excise Law Times (ELT) on 18.06.2012, wherein it was mentioned, <em>"In the seized records, two entries are learnt to have been found regarding alleged payment of bribes of Rs.30 lakhs and Rs.11 lakhs respectively for seeking favourable orders on stay applications from CESTAT, Mumbai. It is learnt that as per DRI report in both the cases the orders were passed by the CESTAT Bench of Shri P.G. Chacko and Shri K.K. Agarwal.…….." </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT Member took the matter to the Court pleading for an injunction commanding the ELT Editor to apologise, an injunction to restrain the editor from publishing any defamatory statement and a damage of Re. 1/-. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 9.1.2013, the City Civil Judge issued a temporary injunction restraining the ELT editor from publishing any defamatory statement or material calculated to defame the plaintiff - CESTAT Member. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Bablani Does It Again - But Time Runs Out </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> you wonder who Bablani is - Kishori Lal Bablani retired two years ago as Chief Commissioner in the Customs and Central Excise Department, which he joined as an appraiser in 1976. Normally appraisers don't become even Commissioners - but how did Bablani become a Chief Commissioner? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is the story. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">KL Bablani appeared for the I.A.S. and Allied Services examination in the year 1974. He passed that examination and was placed at S. No. 221 in Category III. Candidates up to S.No. 198 were accommodated in Class I service based on the available vacancies. Since Bablani was at S.No. 221, he was accommodated in Class II service in the Customs Department as appraiser. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With effect from 10-11-1976, he was working as Customs Appraiser (Class II) in the Bombay Customs House. In 1983, he made a representation to the effect that in 1974, when the Department of Customs and Excise has notified available vacancies to be filled in by the candidates who qualified at the I.A.S. and Allied Services examination, the number of vacancies was wrongly intimated. Initially, this Department had intimated 35 vacancies to be so filled in for Class I posts. This figure was finally revised to 40 vacancies. According to Bablani, 97 vacancies should have been so notified in Class I posts in 1974 and not 40. Had the vacancies been correctly notified, he would have been appointed to Class I post in this Department in 1974. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The representation, which was made in 1983, was rejected on 23-9-1985. He filed a writ petition in the High Court, which was transferred to the CAT, which allowed his claim by the order of the CAT in 1994. The Government took the matter to the Supreme Court, which dismissed the Government appeal and so Bablani got his seniority from 1974 and got all the promotions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 2004, another appraiser made a similar writ petition in the Delhi High Court and the High Court relying on the same Bablani case dismissed the petition. - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2008/2008-TIOL-409-HC-DEL-SERVICE.htm"><strong><font size="1">2008-TIOL-409-HC-DEL-SERVICE</font></strong></a>.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In 2010, Bablani was selected for appointment as a Member of the Settlement Commission and posted to Kolkata, which he was directed to join by 16.5.2010. Vide his letter dated 07.05.2010 while accepting the offer of the said appointment, he inter alia requested time to join the post up to 02.08.2010 as he was due to get his increment on 01.07.2010 which would make substantial enhancement to his retirement benefits. In response, the Government declined him the extension of time directing him to join on or before 31.05.2010. He submitted another representation that only two working days were left and his voluntary retirement would need time besides he had to arrange for shifting his family to Kolkata. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">His appointment was cancelled. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He approached the Central Administrative Tribunal(CAT) with a plea that the candidates selected along with him have been offered appointment even on 04.10.2010 whereas in his case not only the Government denied extension of time to join but also cancelled his appointment besides debarring him for a period of three years. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CAT found the cancellation order arbitrary and discriminatory and quashed it. The CAT directed the Government to issue a new offer of appointment preferably within four weeks from the date of CAT order dated 14.09.2011. The CAT also awarded him cost of Rs. 10,000/- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As usual, the Government kept quiet, but Bablani did not. After three months, he sought in an RTI application about the fate of the CAT order, which he could get only after approaching the Central Information Commission. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the meantime, the Union of India took the matter in appeal to the High Court. On 27.02.2012, the Delhi High Court stayed the CAT Order. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finally, three days ago, the Delhi High Court delivered its judgement upholding the order of the CAT. But alas! Time has run out - age has caught up with KL Bablani and even though he has won the case in the High Court, he cannot join the Settlement Commission, as he would have reached the upper age limit of 62 years. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=78&filename=legal/hc/2013/2013-TIOL-30-HC-DEL-SERVICE.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court Order</font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">The Alternative Minimum Tax Corrodes Both Tax System and Democratic Process - US Taxpayer Advocate </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CONTINUING</strong> with the US National Tax Payer Advocate's Report on 20 serious problems countered by US taxpayers:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The individual Alternative Minimum Tax (AMT)</strong> was originally enacted to ensure wealthy persons paid at least some tax. Because the AMT is not indexed for inflation, limited to high income taxpayers, or focused on tax loopholes, however, it increasingly penalizes middle income taxpayers for having children, getting married, or paying state and local taxes while allowing thousands of millionaires to pay no tax at all. The AMT is complicated and burdensome, even for those who are not subject to it. Many taxpayers must fill out the lengthy AMT form only to find they owe little or no AMT after all. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AMT requires taxpayers to compute their taxes twice - once under the regular tax rules and again under the AMT rules. If the "tentative" AMT liability exceeds the regular tax liability, the taxpayer pays the difference as AMT. Thus, the AMT reduces the transparency of the tax system, making it more difficult for nearly everyone to predict what they will owe. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We have a law that grants popular tax benefits (the regular tax code), another law (the AMT) that eliminates the benefits, and then another law that undoes the elimination of benefits (the patches), usually at the last minute - a legislative <strong>Rube Goldberg contraption</strong> of unnecessary complexity.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">AMT corrodes the both the tax system and the democratic process </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tax Payer Advocate has recommended, "<strong>Permanently repeal the AMT</strong>. </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2022_1.jpg" alt="Legal Corner Icon" width="631" height="35" hspace="5" border="0" align="center"></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> <img src="http://www.taxindiaonline.com/RC2/image/stories/budget_2013.jpg" alt="Legal Corner Icon" width="555" height="57" hspace="5" border="0" align="center"></font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> Finance Minister Chidambaram is likely to present the 2013 BUDGET on 28 February 2013. We will start our "BUDGET RUN UP" soon - Please send in your suggestions to <a href="mailto:editor@taxindiaonline.com"><strong>editor@taxindiaonline.com</strong></a>. </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will tell the FM what <strong>you</strong> want in <strong>his</strong> budget. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT Cartoon</strong></font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a></a><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_2022_cartoon.png" alt="Legal Corner Icon" width="424" height="479" hspace="5" border="0" align="center"></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><strong><font color="#663399" 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">NDPS</font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Accused is to be informed of his right to be searched before Gazetted Officer or Magistrate - Non-compliance vitiated entire proceedings including conviction and sentence - Accused released from jail: SC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is imperative on the part of the officer to apprise the person intended to be searched of his right under Section 50 of the NDPS Act, to be searched before a Gazetted Officer or a Magistrate. It is mandatory on the part of the authorized officer to make the accused aware of the existence of his right to be searched before a Gazetted Officer or a Magistrate, if so required by him and this mandatory provision requires strict compliance. The suspect may or may not choose to exercise the right provided to him under the said provision, but so far as the officer concerned, an obligation is cast on him under Section 50 of the NDPS Act to apprise the person of his right to be searched before a Gazetted Officer or a Magistrate. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Ignorance of Law: "ignorantiajurisnon excusat":</strong> Ignorance does not normally afford any defence under the criminal law, since a person is presumed to know the law. Undisputedly ignorance of law often in reality exists, though as a general proposition, it is true, that knowledge of law must be imputed to every person. But it must be too much to impute knowledge in certain situations, for example, we cannot expect a rustic villager, totally illiterate, a poor man on the street, to be aware of the various law laid down in this country i.e. leave aside the NDPS Act. This fact is also within the knowledge of the legislature, possibly for that reason the legislature in its wisdom imposed an obligation on the authorized officer acting under Section 50 of the NDPS Act to inform the suspect of his right under Section 50 to be searched in the presence of a Gazetted Officer or a Magistrate warranting strict compliance of that procedure </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 when Revenue finds FDR receipts in names of employees of assessee company, showing sum as advance during search, and assessee admits on confrontation, no fault can be found with additions made u/s 69 - YES: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Income Tax Department carried out search operations u/s 132 of the Act on 28-11-1996 in the business premises of the assessee company as well as the residential premises of the Managing Director, Sri G.V.K.Rao. Apart from the books of account, documents, materials etc., the officers also found fixed deposit receipts issued by the associate company HHL in favour of various persons numbering about hundred (100) in all. Sri G.V.K.Rao, when confronted with all the material seized by the department, conceded before the officers of the Revenue in his sworn statement that the deposits found in the names of over hundred persons represented by the certificates found at the time of search actually belonged to the assessee company and offered Rs.30.00 lakhs as undisclosed income apart from offering it to tax for the block period. The issue before the Bench is - Whether when the Revenue finds FDR receipts in the names of employees of the assessee company, showing the sum as advance during a search, and the assessee admits on confrontation, no fault can be found with additions made u/s 69. And the answer goes against 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">S. 4A - P & P Medicines - there is no provision under Notf. 2/2005-CE(NT) that abatement is to be taken from the retail sale price excluding duty - appellant working under self assessment procedure and it is their duty to compute correct AV and pay correct CE duty - non-mentioning of correct AV in letter addressed to Asstt. Commr. is willful misstatement by appellants. Extended period rightly invoked - Order upheld and appeal rejected: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants are manufacturers of P & P Medicines which are assessed under the provisions of Section 4A of the Central Excise Act 1944 based on maximum retail price less abatement of 35% /40%. It was noticed that the appellants are not discharging the duty liability correctly under Sec.4A of the Central Excise Act and on verification of the documents it was seen that the appellants had paid duty on the basis of lower value arrived at under Sec.4A of the Central Excise Act. For the purpose of central excise duty, they had calculated the assessable value after deducting central excise duty element from maximum retail price and thereafter claimed the deduction under Notification 2/05-CE(NT) and they had not paid the duty on the value arrived at by deducting abatement from maximum retail price. </font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Monday for the judgements </font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more<strong> DDT</strong></font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Weekend </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"><strong><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font></p> </body> </html>