TIOL-DDT 2041 · 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 2041</font><br> 08.02.2013<br> Friday</strong></font></p> <p align="center"><font color="#006600"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Draconian Circular - Recovery Action without mentioning Circular - Recovery Stayed: HC </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the last one month or so, several High Courts have directed stay of the recovery initiated as per Board's New Year Circular 967/01/2013-CX. It is easy to submit to the Court that the Circular is draconian, arbitrary and illegal and in High Courts were Stay of recovery is already granted, all that a lawyer has to do is just mention that this is the Circular case and immediately the Bench understands and stay of recovery is instantly granted and the advocates (including the Government's) smile all the way to the bank. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Commissioner came up with a brilliant idea to thwart this. His officers started issuing recovery notices threatening attachment and attendant consequences if the demands confirmed were not immediately paid up, if there were no stay orders or if the stay orders have lapsed (after 180 days). They made no mention of the 1st January Circular of the Board, assuming that the Department always had the draconian powers and a duty to harass the assessees with or without the Circular. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Andhra Pradesh High Court granted stay of recovery even in such cases, in a batch of writ petitions. The writ petitions consisted of </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Central Excise Cases</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Service Tax cases</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Appeals (with stay petitions) against Orders in Original</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Appeals (with stay petitions) against Orders in Appeal</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In some of the writ petitions the Circular dated 1-1-2013 issued by the Central Board of Excise and Customs has been challenged, where under a generic directive is issued to Revenue to initiate recovery proceedings 30 days after filing of the appeal, if no stay were granted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Having heard the respective parties and in the context of the current ineffectual functioning of the Tribunal, a fact not disputed by the Revenue, the High Court considered it appropriate to dispose of the writ petitions directing the respondents not to initiate any coercive measures for recovery of the Central Excise liability or Service Tax liability or interest and penalties, as the case may be, as assessed in the Orders-in-Original or as confirmed in the appeals, as the case may be, pending disposal of the applications filed by the petitioners for waiver of pre-deposit and wherever filed, the applications for stay of the Central Excise or Service Tax, interest and penalties, as the case may be. The liability of the petitioners to remit the tax, interest and penalties, as assessed or confirmed, as the case may be, shall be subject to orders to be passed by the Tribunal in the interlocutory applications preferred by the petitioners.</font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2013/2013-TIOL-102-HC-AP-CX.htm"><font size="1" face="Verdana, Arial, Helvetica, sans-serif">2013-TIOL-102-HC-AP-CX</font></a></strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">GDP Growth at 5% - Lowest in Decade! India is not shining </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INDIA</strong> is passing through a deep economic crisis. The Central Statistics Office (CSO) has released the Advance Estimates of GDP for 2012-13. Growth of GDP for 2012-13 is placed at 5 per cent and this is even less than RBI's projection of 5.5 per cent. And less than the 6.2 per cent growth of 2011-12. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At the sectoral level, the growth rate is 1.8 per cent for Agriculture and Allied sectors, 3.1 per cent for Industry sector and 6.6 per cent for Services sector. (This growth was 3.6 per cent, 3.5 per cent and 8.2 per cent respectively for these sectors in 2011-12). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Ministry clarifies that reduction in growth in Agriculture and Allied sectors has been on account of rainfall being lower than normal, particularly in the months of June-July. In the industry sector, growth has been lower mainly on account of a reduction in growth of manufacturing sector from 2.7 per cent in 2011-12 to 1.9 per cent in the current year. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Ministry hoped that we would end the year on a better note. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Planning Commission Deputy Chairman Montek Singh Ahluwalia is not unduly worried. He even doubts the figures; “I am not certain they have done it in a correct way”, he said. He said that CSO does not have even full data and it is not a reliable way of looking at the situation. From his reliable ways, Ahluwalia had come to the conclusion that all you need to keep yourself above poverty was about Rs. 30 per day! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Well, this is bad news for the tax assessees. While they would be reeling under the economic strain, the tax officers will make their lives miserable in the next two months, armed with draconian circulars. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">New Exchange Rates from Today </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC</strong> has notified the Exchange Rates for imported goods and export goods with effect from 08.02.2013. The last exchange rates notified were with effect from 17.01.2013 </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=24&filename=notification/custom/2013/cnt13_020.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Notification No. 20/2013-Cus.,(N.T.), Dated: February 07, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appeal file weeded out by CESTAT Registry but appeal pending - Recovery by Revenue stayed</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> New Year Circular 967 has some plus points too. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is a case where an appeal was filed in the year 1991. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All these years the Revenue never bothered to check up with the fate of the appeal filed by the assessee and which apparently was shown as pending in their “Arrears recovery/appeals filed” report. The assessee too did not show any concern. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The moment this Circular dated 01.01.2013 landed in the Central Excise office, the Revenue authorities initiated recovery proceeding. The appellant pleaded that their appeal has still not been heard by the CESTAT and that they had already paid Rs.2 lakhs at the time of adjudication. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When these pleadings went un-noticed, the assessee made a mention of the same before the CESTAT. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">More surprises lay in store here. </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Registry informed - "<font color="#FF0000"><em><strong>Appeal papers weeded out on 01.08.2000. Appeal file to be reconstructed</strong></em></font>."</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Bench observed -</font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"3. In view of the above, the Registry is directed to place the matter before the Hon'ble Vice President/HOD for approval for the reconstruction of the appeal file. The Revenue is also directed that till such time not to take coercive steps to recover the proceedings against the impugned order. On getting approval from the Hon'ble Vice President/HOD for reconstruction of the appeal file, the Counsel shall be intimated to provide all the relevant papers and thereafter the matter be fixed for final hearing."</font></em></p> </blockquote> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(See <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2013/2013-TIOL-248-CESTAT-MUM.htm" target="_blank"><font size="1">2013-TIOL-248-CESTAT-MUM</font></a>)</font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT Cartoon</font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/FAIRDEMAND.jpg" alt="Legal Corner Icon" width="424" height="479" hspace="5" border="0" align="center"><br> </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">Customs </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Reward - grant of reward by Union Government to informers is not matter of right - Reasons which weighed with Apex Reward Committee in declining to grant reward cannot be re-appreciated by substituting opinion of Court for that of authority - reasons which have been communicated while denying the reward cannot be regarded as being extraneous or suffering from any perversity - Petition dismissed: HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> Petitioners are a retired Deputy Director of DRI and an informer and they have sought to challenge a decision taken by the Apex Reward Committee of rejecting their claim to the grant of a reward. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The case of the Petitioners is that upon information furnished by the Second Petitioner to the First Petitioner in regard to under valuation of thoroughbred mares/horses imported into India by various stud farms to the extent of Rs.7.00 crores, the information was recorded and action taken to the logical end. </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 an employer reimburses its employees and their family members for travelling and accommodation under holiday home scheme and pays FBT on same, any TDS obligation arises in such a case - NO: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>APPELLANT</strong> had a “Holiday Home Scheme” for the benefit of its employees under which holiday homes were to be created at certain designated places for rest and recreation of appellant's employees. Till the time of creation of holiday homes, as interim measure, subsidy was provided to employees and their family members when they availed of holiday home assistance under the scheme. The employees were entitled to visit any place in India or abroad for holiday with family once in block of two calendar years for maximum of 10 days or every year for maximum of five days. Under the scheme, employees were granted reimbursement at the rate of full daily allowance for self and entitled members of family and paying guest charges as admissible irrespective of fact that whether they stayed in hotel or made own arrangement of stay. ACIT (TDS) was of the view that the payment under Holiday Home Scheme was purely for non-official and private purpose and was in the nature of salary of the employee taxable u/s 17(1)(iv). </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">CENVAT Credit on Input Services (GTA) availed after two years - Adjudicating authority applying rules in respect of “Inputs” whereas dispute is in respect of “Input service” - there is no bar of taking credit subsequent to payment for consideration of input service - <em>prima facie</em> strong case in favour - Pre-deposit waived and Stay granted: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ONLY</strong> recently we reported the CESTAT decision <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=34&filename=legal/cestat/2013/2013-TIOL-216-CESTAT-MUM.htm"><strong><font size="1">2013-TIOL-216-CESTAT-MUM</font></strong> </a>where the Bench while setting aside the order of the lower authority had held that there is no time limit in the CEVNAT Credit Rules for taking credit on “Inputs” & if a manufacturer does not take credit as soon as inputs are received in factory, word 'immediately' in rule 4(1) does not mean nor is it intended to mean that benefit would be denied. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, the lower authorities have extrapolated this allegation to “input services” too and sought to deny the CENVAT credit availed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The applicant has been denied the CENVAT Credit of approximately Rs.47 lakhs availed in respect of GTA service and imposed with interest and penalty on the ground that the same has been availed after two years from the date of receipt of the service and not <strong> IMMEDIATELY</strong>.</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><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 <strong>Nice Weekend</strong></font></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> </body> </html>