TIOL-DDT 2033 · 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 2033</font><br>
29.01.2013<br>
Tuesday</strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue Secretary calls for tax administration free of corruption, bias or favouritism </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>REVENUE</strong> Secretary Sumit Bose is deeply concerned with the recent searches of CBDT and CBEC offices by CBI. Revenue Secretary is worried that incidents of this nature have the potential of eroding the confidence of the taxpaying community and public at large in the Department. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a letter addressed to the Chief Commissioners, DGs, Chairmen and Members of CBDT and CBEC, the Revenue Secretary emphasised that the Government Servants are expected to discharge their official functions with utmost devotion and integrity. The Vigilance wings of both the Boards have the prime responsibility to expeditiously conclude case(s) of charged officers. While the innocent must be protected, those found indulging in gross misconduct must be subjected to strict punitive action as per extant rules/instructions expeditiously. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue Secretary further told the senior officers: </font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Preventive Vigilance is critical for any organization. Senior officers must regularly inspect the work of their subordinates. Periodical meetings with Taxpayers, Tax Bar, Chartered Accountants Association, Trade Associations etc. will serve as a good feed back mechanism. Personal counselling, especially of the younger officers is also a mode of correcting instances of inadvertent infringement of Conduct Rules, etc. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The general reputation of an officer is also an important input for the Administration before taking a view about transfers/postings. The Administration Division in CBDT and CBEC and the field formations must be sensitized about the criticality of rotation of officers between sensitive and non-sensitive assignments. Besides facilitating exposure to all areas of work, this also prevents the possibility of officers developing any vested interest, which in turn adversely impacts objective official functioning. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Our work environment must maintain zero Tolerance towards malpractices and corruption. An onerous responsibility is cast on the Senior Officers to lead by example. It is expected that all the vulnerable areas will be secured effectively to eliminate any possible misuse, exploitation or unintended abuse. Not only is personal integrity necessary, it is incumbent upon the supervisory cadre to promote good and ethical behaviour in their subordinate officers. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT and CBEC being the most important revenue generating agencies of the Central Government, the revenue mobilization endeavour must be premised on the Departmental personnel exhibiting complete objectivity, integrity and sincerity in their conduct. </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Chief commissioners/ Directors General are advised to sensitize the field formations suitably and reiterate the Government's resolve to provide a tax administration that is free of corruption, bias or favouritism . </font></em></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The letter of the RS is a good Moral Science lesson - but what is the effect? Look at the practical side. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. He wants<em> Personal counselling, especially of the younger officers</em> - <font color="#FF0000">With what face can senior officers counsel the young officers, when they themselves are corrupt - the recent visits by CBI was to the Apex offices of the CBDT and CBEC.</font> </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <em>The general reputation of an officer is also an important input for the Administration before taking a view about transfers/postings.</em>- <font color="#FF0000">There is a general opinion in the field that transfers in both the Boards are major annual commercial activities involving Crores of rupees. The same is replicated in the field postings of junior officers.Yes, the general reputation of an officer is an important input for transfers - if he is fairly honest and reasonable, he should not be given a sensitive post, as an opportunity is wasted. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <em>An onerous responsibility is cast on the Senior Officers to lead by example. Not only is personal integrity necessary, it is incumbent upon the supervisory cadre to promote good and ethical behaviour in their subordinate officers. </em>- <font color="#FF0000">Sir, the example that many senior officers provide is one of corruption and absolute disrespect to law, courts and superior authority. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <em>Revenue mobilization endeavour must be premised on the Departmental personnel exhibiting complete objectivity, integrity and sincerity in their conduct.</em> -<font color="#FF0000"> Sir, if you really believe this, please withdraw the New Year Circular of the CBEC for arrears recovery. </font></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.<em> Provide a tax administration that is free of corruption, bias or favouritism.</em> -<font color="#FF0000"> Ha Ha.. Sir, if you want to achieve this, make the administration more of laws and less of officers - ensure that your tax departments run on simple laws that leave little room for corruption, bias and favouritism, but so far every simplification has resulted in more opportunities for all these evils. Earlier corruption in the Departments were in hundreds and thousands but today it is in lakhs and crores because your officers can kill productive industries and make life miserable for the assessees, which they do with unbridled licence! </font></font></p>
<p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/oms/office_memorandum_1_2013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Department of Revenue O.M in F. No.C.14014/2/2013-Vig, Dated: January 22 2013 </font></strong></a></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service
Tax Dues - Attachment of Property - Notice to Wrong Person </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WITH</strong> arrears collection and attachment being popular activities of the CE Department now, indiscriminate notices are being issued to the first available victim. In a case before the Madras High Court, a former actress challenged the attachment of a flat by the Service Tax department. Her plea is that she is not the owner of the flat as it was transferred to her minor daughter who after attaining majority had sold it to a third party. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the High Court could not give her any relief, as she was not the owner of the property. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed, "<em>It is not open to the petitioner to challenge the notice of attachment of immovable property as she is not the owner of the property as per her claim. If the notice has been wrongly issued to the petitioner, it is open to the petitioner to give a representation to the respondent authority setting out the details of the transaction that has taken place as above. If any action is proposed to be taken as against the petitioner, thereafter the petitioner can defend such action as per law. At this stage, no relief as sought for can be granted. The petitioner, however, is directed to give a reply to the respondent authority explaining the facts as above so as to enable the department to take appropriate action as per law. It is made clear that this Court has not expressed any opinion on the merits of the case</em>.” </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see</strong> </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=43&filename=legal/hc/2013/2013-TIOL-66-HC-MAD-ST.htm" target="_blank">2013-TIOL-66- HC-MAD-ST</a></strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Draconian Circular - Departmental Officers don High Court's Role </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is not lawyers alone that benefitted from CBEC's New Year Circular on arrears recovery. Immediately after the circular was issued, the Departmental officers started sending letter missiles to the assessees threatening attachment and sale if the demands of duty were not paid up immediately. Worried assessees are running around Central Excise officers and those of consultants. The department does not really have the machinery to attach and sell the property of every assessee. So there is an element of discretion --- and the consequential benefits. It seems that this circular is a bundle of opportunity to make money for some Central Excise Officers. Already bribes are being demanded for not giving the attachment notices and not enforcing them and many such officers are grateful to the Board for the benevolent circular. The plea is that you have to spend a couple of lakhs to pursue the matter in the High Court - instead of paying the lawyers, pay us - we will give you a stay that the High Court gives. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Not a paisa to the State but there are several beneficiaries! </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Bench
not working at full strength - Appeals involving less than Rs 3 Cr tax
not be granted early hearing </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CBEC vide its Circulars mentioned below had advised the field formations to file Miscellaneous Applications in terms of Rule 28C read with Rule 28A of the CESTAT (Procedure) Rules, 1982 in deserving cases (read high revenue stakes) for out of turn hearing of appeals pending before CESTAT. </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>++ <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/1999/excircular496.htm" target="_blank">Circular 496/62/99-CX dated 29.11.1999</a></strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2001/excircular597.htm" target="_blank">Circular no. 597/34/2001-CX dated 05.11.2001</a></font></strong></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2003/excircular746.htm" target="_blank">Circular no. 746/62/2003-CX dated 22.09.2003</a></font></strong></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Normally, if the duty involved is Rs.1 Crore or more the CESTAT entertains such applications for early hearing. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the case of <em>Ambika Waste Management</em> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2011/2011-TIOL-1063-CESTAT-MUM.htm" target="_blank"><font size="1">(2011-TIOL-1063-CESTAT-MUM)</font></a></strong>, the Bench had held - </font></p>
<blockquote>
<p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">3. We have gone through the contents of the application for early hearing and found that the duty involved is Rs.85,16,415/- which is <strong>less than Rs.1 Crore.</strong> As this Bench of the Tribunal is burden with more than <strong>16000</strong> appeals as on date and is running in the <strong>year 2003/2004</strong>. Therefore, we do not find this matter can be listed on priority basis. In view of the above observations, the application for early hearing of the appeal is dismissed. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In a recent case, the Revenue had filed an application for early hearing of the appeal on the ground that the revenue involved is about Rs.1.13 Crores. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed - </font></p>
<blockquote>
<p align="justify"><em><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">"3. Considering that this bench of the Tribunal is already burdened with more than <strong>18000</strong> appeals and as we are not working at full strength, and further we consider that the appeals filed in the year <strong>2004</strong> are yet to come on board for hearing, therefore, we consider that appeals having revenue involved <strong>less than Rs.3 crore</strong> would not be considered for early hearing. Therefore, we dismiss the application for early hearing.” </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> hopes that the Bench is strengthened at the earliest! When will they ever clear all these appeals? </font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2013/2013-TIOL-174-CESTAT-MUM.htm" target="_blank">2013-TIOL-174-CESTAT-MUM</a>.</font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Cheating Case against Chidambaram and Shinde </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> local Court in Hyderabad yesterday directed the Police to investigate a cheating charge levelled against the Union Home Minister Shinde and the former Home Minister Chidambaram under Section 420 (cheating) of the IPC. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The complainant alleged that the two Union Ministers had cheated the people of Telangana. The Court has directed the police to file a Status Report by February 14. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> – Wednesday's cases</font></strong></font></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"><strong><font color="#663399">Central Excise</font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Processed Textile Fabrics - although HASITPACD Rules, 1998 have been held to be ultra vires of section 3A of the Act, yet manufacturer is liable to pay duty u/s 3 of CEA, 1944 in respect of dutiable goods cleared without payment of duty - pre-deposit ordered: CESTAT</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>applicants are engaged in the manufacture of processed textile fabrics falling under Chapters 54 & 55 of the CETA, 1985. The annual capacity of the stenters of the applicant under the provisions of the Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 was determined by the Commissioner of Central Excise vide order dated 29.6.1999. As per the determination, the applicant was required to deposit the duty as determined, at the end of each month. However, the applicant failed to do so, therefore periodical show cause notices were issued and the adjudicating authority confirmed the demand of Rs. 11,86,006/-, interest and penalty. </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 merely because assessee receives sponsorship exceeding Rs 10 lakh on motor car races, its otherwise charitable object of general public utility becomes non-charitable and it warrants cancellation of registration u/s 12A - NO: ITAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a registered society and had registration u/s 12A(a) since 1977. Objects of the assessee, inter alia, were to promote sports of motorcar and motorcycle and conduct motor races, competitions, etc. During the scrutiny proceedings, for A.Y 2009-10, the A.O. sent a proposal to the DIT(E) recommending cancellation of registration granted to assessee u/s 12A(a). In the opinion of DIT(E), the motor sports were for the purpose of promotion of business of sponsors. The sponsorship proceeds were commercial receipts in the hands of the assessee. The DIT(E) was of the opinion that assessee was hit by proviso to Section 2(15) inserted from 1.4.2009. Therefore, according to him, the objects and activities of the assessee could no more be considered charitable in nature.In this view of the matter, he cancelled registration granted to the assessee u/s 12A(a). </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">DRI case - Refund - it is not disputed that appellant has paid amount during course of investigation but there is no adjudication order and no confirmation of demand as on today against appellant - in this circumstances, order rejecting refund as pre-mature is set aside and appeal allowed with consequential relief - refund to be granted within 30 days: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>appellant had imported SAP software from SAP AG, a German corporation. There was a dispute regarding the valuation of the goods; therefore, the DRI, Bangalore initiated an inquiry against the appellant. During the course of investigation, one of the officials of the appellant admitted the undervaluation of the software. Pursuant to the enquiry, the appellant paid an amount of Rs.70,19,299/- (duty of Rs.53,04,000/- and rest is interest) without prejudice to their contention, in December, 2008. The appellant waited for the show cause notice for some time. Probably they lost their patience so in the month of June, 2009 they filed a refund claim in respect of the amount so deposited by them. Two months later a SCN dated 31.08.2009 was issued to the appellant and adjudication of the said SCN is still pending. Incidentally, the refund claim was rejected on the premise that the same was pre-mature. As the lower appellate authority upheld this view, the appellant is before the CESTAT. </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"> <strong><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></strong></font></p>
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