TIOL-DDT 2195 · 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><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17063"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 2195</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> 23.09.2013<br> Monday </font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">AC wants to reject Rebate Claim because assessee did not follow principles of natural justice! - NACEN, What did you teach him? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WE</strong> came across a very interesting and rather appalling Show Cause Notice issued by an Assistant Commissioner who had just completed his probation and furbisher course in NACEN and is in the field - having a<strong> field</strong> day literally.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Assistant Commissioner proposes to reject a rebate claim on the ground that the assessee cleared the goods under ‘self export' and so it is not known as to what were the goods exported. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Read it in the learned Assistant Commissioner's words, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The goods were exported under 'self export' and further as per the relevant Shipping Bill Nos. (a) 3799084 dated 04-02-2013, (b) 4043000 dated 19-02-2013. (c) 5195411 dated 29-04-2013 and (d) 5532017-dated21-05-2013 the consignments were not opened for physical examination by Customs and hence it is not known what "goods" were exported by the Assessee."</font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And here is the priceless gem from the learned adjudicator; He charges the assessee, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Here you yourself have sealed goods and you yourself applying for rebate as beneficiary, thus you are becoming judge in your own case. This is against the principles of natural justice.” </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yes, he says the assessee's action in filing a rebate claim is against principles of natural justice.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is what he has learnt in NACEN on "principles of natural justice” and he will be practicing it for the next 35 years or so. Didn't somebody teach him that ‘principles of natural justice' are to be followed by the adjudicating authority, not the victim? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And he wants to reject the rebate because the goods were exported under ‘self export'. He does not say which provision of law stipulates that, but wants to rely on ‘the principles of natural justice'!</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The brilliance does not end here. The AC wants reply to his Show Cause Notice within two days, Yes TWO DAYS - mind you <strong>within</strong> two days - and this is natural justice! The Show Cause Notice is dated 20th September and he has fixed personal hearing on 24th - within four days - this is natural justice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is still to come. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He warns the assessee that if they do not appear for personal hearing, "<strong>the issue will be decided basing on</strong> <font color="#FF0000"><strong>the merits of the records available</strong></font>.” Maybe what he wanted to convey was, "<strong>the issue will be decided on</strong> <font color="#FF0000"><strong>merits</strong></font> <strong>basing on the the records available</strong>.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is going to be the future of this Department with this kind of Show Cause Notices? Unnatural Injustice? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board and the<strong> concerned</strong> Chief Commissioner should provide wise counsel to the budding officer who is out to tarnish the image of the Department. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Arrested for drinking tea suspiciously - <em>cutting chai</em> </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BE </strong>careful how you drink your tea; if a policeman finds it suspicious, he can arrest you. This is exactly want happened to Vijay Lahu Patil of Kolhapur who was arrested by a Police Sub Inspector around 11 AM on 22nd February 2013, when he was having tea at a roadside tea stall. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The unfortunate offender approached the Bombay High Court in writ claiming damages for illegal detention. </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court in its judgement dated 6.9.2013 observed,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/cutting _chai.jpg" alt="Legal Corner Icon" width="136" height="172" hspace="5" border="0" align="left"><em>"What is not in doubt, however, is that the only thing the Petitioner was doing in the late morning of 22nd February 2013 was having tea at a local tea-stall. The 4th Respondent (PSI) says there is no ‘satisfactory explanation' for this. This is bewildering. We were unaware that the law required anyone to give an explanation for having tea, whether in the morning, noon or night. One might take tea in a variety of ways, not all of them always elegant or delicate, some of them perhaps even noisy. But we know of no way to drink tea ‘suspiciously'. The ingestion of a cup that cheers demands no explanation. And while cutting chai is permissible, now even fashionable, cutting corners with the law is not.” </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However the High Court did not grant compensation having regard to a decision of the Supreme Court in <em>Rajinder Singh Pathania</em>, wherein the Supreme Court had observed, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Though the High Courts and this Court in exercise of their jurisdictions under Articles 226 and can award compensation for such violations but such a power should not be lightly exercised. These Articles cannot be used as a substitute for the enforcement of rights and obligations, which could be enforced efficaciously through the ordinary process of courts. Before awarding any compensation there must be a proper enquiry on the question of facts alleged in the complaint. The court may examine the report and determine the issue after giving opportunity of filing objections to rebut the same and hearing to the other side. Awarding of compensation is permissible in case the court reaches the same conclusion on a re-appreciation of the evidence adduced at the enquiry. Award of monetary compensation in such an eventuality is permissible when that is the only practicable mode of redress available for the contravention made by the State or its servants in the purported exercise of their powers." </font></em></p> </blockquote> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">I-T - Compulsory Manual Selection of Cases for Scrutiny - CBDT Modifies Instruction </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> had issued Instruction <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2013/instruct1310.htm"><strong>No. 10/2013 dated 5.8.2013</strong> </a>laying down instructions on procedure and criteria for manual selection of returns/cases for scrutiny during the financial-year 2013-2014: 9 categories of cases/returns were prescribed for compulsory scrutiny: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the Board has revised the instruction to add two more categories, namely: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Cases where registration u/s 12AA of the IT Act has not been granted or has been cancelled by the CIT/DIT and the assessee has been found claiming tax-exemption under section 11 of the IT Act. However, the cases where such order of CIT(DIT has been reversed / set-aside in appellate proceedings will not be picked up for scrutiny under this clause. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Cases where order denying the approval u/s 10(23C) of the IT Act or withdrawing the approval already granted has been passed by the Competent-Authority and the assessee has been found claiming tax-exemption under the aforesaid provision of the IT Act. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These instructions were a closely guarded secret of the Department for sometime until the Delhi High Court in the <em>Joginder Pal Gulati</em> case reported in <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODc4MzQ="><strong>2013-TIOL-303-HC-DEL-RTI</strong> </a>directed the Income Tax Department to upload the guidelines with regard to scrutiny on their website. </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTYwODg=" target="_blank">CBDT Instruction No.13/2013, Dated: September 20, 2013 </a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Can you get out of LTU? </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>LARGE</strong> Taxpayer Unit (LTU) welcomes you with promises of a single window of woes instead of multiple ones. But can you go out of the LTU? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In India ‘exit' is often more difficult than entry - look at the lakhs of Service Tax Registrants who are afraid to approach the Department for cancellation of their registrations! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is a classic case of a mega corporate entity like IBM trying to get out of the LTU. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 28.2.2013, they sent a notice to the LTU authorities that they would opt out of the LTU with effect from 1.4.2013. Instead of acting on the request, the authorities called upon the assessees to disclose the reasons for opting out of the LTU. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee approached the Karnataka High Court and a single judge of the High Court gave an interim order, "All proceedings pending before the LTU and all proceedings that may be initiated and processed before the Officer having jurisdiction other than LTU will be subject to the result of this petition.” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Against this, the assessee approached a Division Bench of the High Court in writ appeal. The Division Bench was not inclined to entertain the writ appeal only for the purpose of granting interim order. So it dismissed the writ appeal leaving the appellant option to move the Single Judge for disposal of the writ petition expeditiously. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">IBM is again before the Single Judge seeking for a direction to the authorities to allow the petitioner to exit from the LTU Scheme with effect from 1.4.2013 and to notify to it of the new/regular jurisdiction to which records, pending proceedings under Income Tax Act, Customs Act, and Service Tax would be transferred. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This time the Single Judge of the High Court directed the Chief Commissioner, LTU to pass appropriate orders within three weeks. The High Court order was delivered on 10.9.2013 and most probably, the LTU Chief Commissioner is yet to get a copy of the order. It will take some more time before IBM gets to know whether they can get out of the LTU. After six months and three writs, they are not sure when they can get out of the LTU! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government should seriously ponder over why assessees want to get out of LTU. </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODk5MjU=" target="_blank"><font size="1">2013-TIOL-712-HC-KAR-MISC</font></a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Right to occupy flat includes right to transfer - SC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> shareholders of the Company were allowed to use and occupy the flats in a building owned by the Company. One of the shareholders mortgaged a flat to a Bank and on default of payment, the Bank attached the flat. The Company filed a suit before the Bombay High Court contending that the shareholder of the Company has only a right to occupy the flat and has no right to mortgage the same to the Bank without permission of the Company. The High Court was not impressed and so the Company is before the Supreme Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court observed, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"The right, title, interest over a flat conveyed is a species of property, whether that right has been accrued under the provisions of the Articles of Association of a Company or through the bye-laws of a Cooperative Society. The people in this country, especially in urban cities and towns are now accustomed to flat culture, especially due to paucity of land. Multi-storeyed flats are being constructed and sold by Companies registered under the Companies Act as well as the Cooperative Societies registered under the Registration of Cooperative Societies Act, etc. Flats are being purchased by people by either becoming members of the Cooperative Society or shareholders of the Company and the flat owners have an independent right as well as the collective right over the flat complex. Flat owners' right to dispose of its flat is also well recognized, and one can sell, donate, leave by will or let out or hypothecate his right. These rights are even statutorily recognized by many State Legislatures by enacting Apartment Ownership Acts.” </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court held, <em>"<strong>The right or interest to occupy any such flat is a species of property and hence has a stamp of transferability.” </strong></em></font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODk5MjM=" target="_blank">2013-TIOL-45-SC-MISC</a></font></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Removal of Pre Shipment Inspection Agency </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has delisted Geo-Chem Far East Pte Ltd, Singapore from Appendix-5 (List of Inspection and Certification Agencies) of Handbook of Procedures Vol. I (Appendices and Aayaat Niryaat Forms) 2009-2014. They are now made ineligible to issue Pre-Shipment Inspection Certificate. Incidentally, they were notified as PSIA vide Public Notice 27/19.10.2012 & their area of operation was widened vide PN 38/18.12.2012. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2013/dgft13pn026.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 26/2009-2014 (RE-2013), Dated: September 20 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Grounds on which condonation is sought appears to be an afterthought as it lacks conviction & is not convincing </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AGAINST</strong> an O-in-A dated 07/10/2012, the appellant filed an appeal before the CESTAT along with an application seeking <font color="#FF0000">condonation of delay</font> and an application for <font color="#FF0000">early hearing! </font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant submitted that the delay of about 74 days in filing the appeal occurred as they were consistently in contact with the Advocate for holding a conference and the Advocate sought certain records for drafting of the appeal, which were not readily available with them; that the documents could be retrieved only by 15/02/2013 and thereafter, after having <em>several rounds of discussion</em> with the Advocate, the appeal could be filed only by 23/04/2013. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench asked the appellant to show the documentary evidence by way of correspondence indicating that the appellant sought conference with the Advocate and the Advocate sought for the records. To this question, the appellant replied - that everything was oral and there is no record of these so-called activities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed that there was no record as to when and where the "several rounds of discussions” took place. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Holding that in the absence of evidence, the plea taken by the appellant is only an afterthought and the explanation given lacks conviction and not convincing, the Bench rejected the COD application and along with it the Stay application and appeal. </font></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODk5MjQ=">2013-TIOL-1406-CESTAT-MUM</a></font></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"> – Tuesday'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">Exemption to Education Cesses on goods cleared from Jammu and Kashmir under Notification No 56/2002 CE - Whether matter needs to be referred to Larger bench - NO - CESTAT by majority. </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GOODS</strong> manufactured in Jammu and Kashmir are exempted under Notification No 56/2002 CE dated 14.11.2002. The exemption is provided by way of refunding the duty paid other than from CENVAT credit account. The dispute is whether Education Cess and Secondary Education Cess are also to be treated as exempted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When a matter is to be referred to Larger Bench, matter is required to be put up before President for decision - When a Bench presided over by the President has taken a decision on one issue not to refer it to a Larger Bench, same issue in other appellant's cases is not required to be referred to Larger Bench. </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 an employer is competent to determine the allowances, which are exempt from tax - NO: Allahabad HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ASSESSEES, </strong>Development Officers, are employees of LIC of India. They were informed by their employer that TDS was to be deducted on conveyance or additional conveyance allowance to be paid to them. Protesting the same the assessees went in writ. The issues before the Bench are - Whether perquisites are excluded from purview of Sec 10(14); Whether conveyance or additional conveyance allowance is covered by the expression 'perquisite' and the same is taxable and Whether an employer is competent to determine the allowances, which are exempt from tax. And the verdict goes against the assessees. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Commercial Training or Coaching Services - Assessee who had already deposited Rs. 29 Crores for earlier period directed to deposit another Rs. 25 Crores: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per the first proviso to Section 35F of the Central Excise Act, pre-deposit of the duty demanded or penalty levied can be waived where the Appellate Tribunal is of the opinion that such deposit would cause undue hardship to the applicant. The condition of pre-deposit of Rs.25 Crores was imposed on proper exercise of the discretion vested in the Appellate Tribunal and on proper appreciation of the facts and circumstances of the case. Therefore, the impugned order which cannot be treated either arbitrary or irrational, warrants no interference on any ground whatsoever. Petitioner to remit the pre-deposit amount of Rs.25 Crores in two instalments </font></p> <p align="justify"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements </font></strong></font></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"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>