TIOL-DDT 2225 · 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 align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 2225 </font><br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>06.11.2013 <br> Wednesday <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 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></strong></font></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Stay order of the CESTAT - Appeal or Writ? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18974" target="_blank">DDT 2223 - 04 11 2013</a> </strong> raised the following issue: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>You are aggrieved by a Stay order of the Tribunal - suppose the Tribunal asked you to pre-deposit the duty and interest (as it has done in many cases recently). Now what is your remedy, especially if you have no money to deposit? </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Can you appeal to the High Court? Is the Tribunal's Order appealable? Remember you can appeal to the High Court against a CESTAT order only on a question of Law. What Question of Law can you frame against an interim order requiring pre-deposit? </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Can you approach the High Court on a writ petition? Is a writ maintainable if there is an alternate remedy? If appeal is possible, will writ be admitted? </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The response, mostly from consultants and lawyers, was almost equally divided. Dr.D D Rishi, Advocate, referred to a 1946 decision of the Bombay High Court, "<em>In perhaps the earliest reported case on the subject, it was held in KhurshedModi v. Rent Controller, Bombay; AIR <strong>1947 </strong>Bom 46 that the High Court would not refuse to issue a writ of certiorari merely because there was a right of appeal. Ordinarily a High Court would require the petitioner to have recourse to his ordinary remedies, but if it found that there had been a breach of fundamental principles of justice, the High Court should not hesitate to issue the writ of certiorari."</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a lot of confusion on the issue whether against a pre-deposit order of the Tribunal, one should file a writ or an appeal in the High Court. There seems to be no uniform procedure in the various High Courts and even within the same High Court. Some file writs and some file appeals. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This issue was decided in an exhaustive judgement by the Madras High Court recently on 30th October 2013, in a case in which the Who's Who of Madras Tax Bar extensively argued and in a judgement running into over 18,000 words, the High Court decided in favour of appeal rather than writ. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court had in <strong><em>Raj Kumar Shivare's </em></strong><em>case </em><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2010/2010-TIOL-29-SC-FEMA.htm" target="_blank"><strong><font size="1">2010-TIOL-29-SC-FEMA</font></strong></a>, held that <em>writ petition is not ordinarily maintainable to challenge an order of the Tribunal.</em> But this was a FEMA case. Is this decision applicable to decisions of the CESTAT? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the High Court, Senior CounselArvindDatar submitted:- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>For more than 25 years, till the decision was made in <strong>Raj Kumar Shivare's case, </strong>persons aggrieved by the orders passed under Section 35F/129 E viz., pre-deposit orders, have only filed writ petitions before the High Courts, as reference to the High Court was not maintainable. Even after the abolition of reference provision and introduction of appeal provision, writ petitions are being filed. The decision in <strong>Raj Kumar Shivhare's </strong>case was made in the context of FEMA, 1999. Pre-deposit orders are only interim orders not passed in appeal but in appeal proceedings. Section 35G(1) is the substantive right whereas Section 35G(2) is only the procedure. An order to be challenged before the High Court in appeal should be an order determining the final issues arising between the parties in the appeal before the appellate Tribunal. Therefore, an order passed under Section 35F is not a final determination. If remedy is not available under the Act, then the remedy under Article 226 of the Constitution of India has to be permitted. The term "every order" shall not include interim order under Section 35F. A decision made on one enactment cannot be applied to another enactment. Against an order made by the Commissioner of Appeals under Section 35F, no appeal would lie before the Tribunal under Section 35B. The same analogy is to be applied even in respect of the appeals to be filed before the High Court. The other High Courts, which followed Raj Kumar Shivhare's case, have not considered the scheme of the relevant Acts. There can be only one appeal under Section 35G or 130 and not many appeals at many points of time. It is impossible that any substantial question of law would arise out of an interlocutory order that deals only with prima facie nature of the case. A substantial question of law would arise only from the order, which finally decides the rights of the parties in controversy. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let's have a look at the relevant portion of Section 35G. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>"SECTION 35G. Appeal to High Court. - </em></strong></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) An appeal shall lie to the High Court <strong>from every order passed in appeal by the Appellate Tribunal </strong>on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a <strong>substantial question of law.</strong> </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) The Commissioner of Central Excise or the otherparty aggrieved by <strong>any order </strong>passed by the Appellate Tribunal may file an appeal to the High Court. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While sub-section (1) reads that an appeal shall lie to the High Court from" <strong>every order passed in appeal by the Appellate Tribunal"</strong>, sub-section (2) further contemplates that the Commissioner of Central Excise or the other party aggrieved may file an appeal to the High Court against" <strong>any order passed by the Appellate Tribunal"</strong>. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court noted a vital difference between sub-section (1) and sub- section (2). The words" <strong>in appeal"</strong> is conspicuously absent under sub-section (2). The legislature at its wisdom thought fit to enlarge the scope of appeal by providing sub-section (2) with a specific expression "any order passed by the Appellate Tribunal" Thus, it is crystal clear that even against the interim orders passed by the Appellate Tribunal, a remedy of filing of an appeal is always available under Section 35G and 130 of the respective Acts. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court observed,"it is clear that unless there is a specific bar in the statute itself against filing appeal against interlocutory orders or there is an express provision saying only a final order of the Tribunal is appealable, the scope of filing appeal contemplated under Section 35G and 130 cannot be narrowed down or restricted as contended by the petitioners by judicial interpretation. When the language of the statute is clear regarding the nature of the order from which right of appeal has been conferred, no statutory interpretation is warranted either to widen or restrict the same.” </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is the substantial question of law against a pre-deposit order </strong>? The High Court observed,"<em>The grievance of the petitioners herein is that no substantial question of law could be raised as against the pre-deposit order and therefore the appeal cannot be filed. We are unable to appreciate this contention. Even while passing the interim orders, the Tribunal would certainly go into the prima facie case and based on such factual consideration and also by taking note of the hardship pleaded and proved by the appellant as well as by considering the interests of the Revenue, it would pass orders on the waiver application. Therefore, if a party is aggrieved against such order passed by the Tribunal, it is always open to such party to challenge the same by filing an appeal. Whether a substantial question of law would arise in such cases or not would depend upon the facts and circumstances of each case and therefore, there cannot be any general or uniform presumption that no substantial question of law would arise in all pre-deposit orders. In any event, we do not think that such objection or contention can be made any more after the decision of the <strong>Raj Kumar Shivhare's </strong>case where also the Apex Court has considered the same issue and held that even as against interim orders of pre-deposit, the appeal alone is maintainable and not a writ petition.” </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>You have 180 days time to appeal to the High Court against a CESTAT Order, but normally only four to six weeks time is given by CESTAT to make pre-deposit. So even while there is time to appeal to the High Court, the order given by the CESTAT would lapse if pre-deposit is not made. Is this a contradiction?: </strong>The High Court was not impressed and observed, “pre-deposit is a condition precedent and not a condition to be followed. Therefore, once an order of pre-deposit is passed, it is for the party aggrieved either to comply with the said order within the time stipulated therein or to file an appeal before the High Court under Section 35G or Section 130. If a conditional order is made on pre-deposit application and when the same has not been complied with, it may result in dismissal of the appeal itself. Prescribing a period of limitation for filing an appeal does not mean or be construed that within such period of limitation, the said order cannot be put into operation unless a statutory bar is provided against doing so. Further, the party intends to file appeal need not wait till the last date of limitation to file appeal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Finally the High Court held,<em> "The order passed by the CESTAT in terms of Section 35F of the Central Excise Act, 1944 or Section 129-E of the Customs Act, 1962 is appealable in terms of Section 35G of the Excise Act, 1944 or Section 130 of the Customs Act, 1962."</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the writ petitions were dismissed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this order today. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see</strong> <strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTA1OTY=" target="_blank"><font size="1">2013-TIOL-865-HC-MAD-CESTAT</font></a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Contradicting decisions of High Courts - which one should the Tribunal follow? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>a recent judgement, the Ahmedabad Bench of the ITAT observed,<em> "one thing is apparent that divergent view have been expressed by the Hon'ble Courts …… Since, the Hon'ble High Courts have expressed different views, therefore, we have to apply a thumb rule in respect of the applicability of the precedents cited. A thumb rule is that a latest decision of the Hon'ble High Court is required to be followed to maintain the judicial discipline."</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now it is not the jurisdictional High Court but the latest High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the CESTAT recently took a different view. In the case before the CESTAT, there were two conflicting decisions - of the Rajasthan High Court and Orissa High Court. The assesse, the Adjudicating authority and the Commissioner (Appeals) were located within the territorial jurisdiction of the Rajasthan High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal located at New Delhi is neither within the territorial jurisdiction of the Orissa High Court nor the Rajasthan High Court and there is no decision on this issue from the Delhi High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Should the Tribunal follow Rajasthan or Orissa High Court? CESTAT held that the Rajasthan High Court decision would prevail. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see<strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17873" target="_blank"> DDT 2116 - 30.05.2013 </a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CVC Wants a COMMISSIONER </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>DOPT has called for suggestions of names of suitable persons for appointment as Vigilance Commissioner in the Central Vigilance Commission. Secretary Level officers of the Government of India and CMDs of PSUs are eligible. The Vigilance Commissioner is selected by a Committee consisting of the Prime Minister, the Home Minister and the Leader of Opposition in the LokSabha. They need the recommendations latest by 15 November 2013. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/vig051113.pdf"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DOPTD.ONo.399/13/2013-AVD-III, Dated: October 14 2013. </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC needs Under Secretaries and Technical Officers </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> seems 9 posts of Under Secretaries (US), 7 posts of Technical Officers (TO) and 12 posts of Senior Technical Officers (STO) are lying vacant in the CBEC. US and STO are in the grade of Deputy Commissioners and TO is in the grade of Assistant Commissioner. Board wants the Chief Commissioners to send in names of willing and eligible officers latest by 22.11.2013. An IRS officer should be proud to work in the Board/Government as an Under Secretary/Technical Officer, but obviously these days the field postings are more attractive and not many officers would like to work in the Board. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/brd-us-srTO-TO.pdf"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC F.No. A-35017/65/2013-Ad.II, Dated: November 04 2013. </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax - CAG Audit Objections - Strengthening the role of Supervisory Authorities </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> notes that it is a matter of concern that despite a comprehensive procedure prescribed through Instruction for action at different stages of Audit Objections, settlement track record is unsatisfactory and remedial action is delayed. There is also a need to provide that Internal Audit should normally precede Revenue Audit. It has, therefore, been' decided to fine tune the procedure and strengthen the role of supervisory authorities and CIT (Audit). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT has now specified the role of CCITs and CITs in dealing with CAG Audit objections. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT has issued similar instructions with regard to internal audit in Instruction No. 15/2013 dated 18.09.2013. Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=18884" target="_blank">DDT 2214 - 22 10 2013</a>.</strong> </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2013/instruct1316.htm" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT Instruction No. 16/2013, Dated: October 31 2013. </strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs detains Beauty's Crown </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/Crown.jpg" alt="" width="100" height="121" hspace="5" border="0" align="left"></font>INDIAN</STRONG> beauty Srishti Rana returned to Mumbai airport yesterday after being crowned Miss Asia Pacific World 2013. But the crown is now with the Customs! At the airport, she changed and wore the crown for photographers to click away the glorious crown. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs suspected the crown to contain diamonds and so the beauty queen had to go out of the airport without the crown. It seems the kind Customs allowed her to put on the crown and be photographed at the exit gate. The crown is now with Customs and she would be asked to pay a hefty duty if it really contains diamonds. </font></p> <p align="justify"> <strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=16337" target="_blank">DDT 1988 22.11.2012 </a></font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_airport.jpg" alt="" width="400" height="464" hspace="5" border="0" align="middle"></font></strong></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"> - Thursday's cases</font></strong></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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"></font><font color="#663399">Central Excise </font></strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Valuation - s.4A of CEA, 1944 - Appellant manufacturing and selling notified goods in retail packs through dealers/distributors by declaring MRP but assessing goods based on T.V u/s 4 of CEA, 1944 - Pre-deposit ordered of Rs.2 Crores: CESTAT </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> was noticed that the appellant were selling these goods in retail packs through dealers/distributors and were also declaring Maximum retail Price (MRP) on the goods but they were discharging duty liability on the goods on the transaction value u/s 4 of the CEA, 1944 even though the goods were notified for the purposes of assessment u/s 4A of the said Act. Nonetheless, the appellant had started discharging duty liability on the manufactured goods on MRP basis under section 4A with effect from 15/05/2008 onwards. </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 only a part of the housing project does not comply with approved size of the flats, Sec 80IB(10) benefits should be allowed on proportionate basis because it is a benevolent legislation - YES: ITAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issues before the Bench are - Whether when only a part of the housing project does not comply with the approved size of the flats, Sec 80IB(10) benefits should be allowed on proportionate basis because it is a benevolent legislation and Whether for the purpose of admeasuring the size of the flat, the approved valuer is warranted to follow the definition of built up area. And the verdict goes against the Revenue. </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">Import of hard disk, whether hazardous waste-Reports given by the officers of Customs are at variance -Officers who examined the goods are not experts in the field and have also not brought any evidence on record to prove that the goods are used or hazardous waste: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong> appellant imported 800 pieces of hard disk and filed bill of entry on 18.06.2012. The bill of entry was assessed and the appellant paid duty before clearance of the goods. 5% of the goods were examined. On examination, the goods were found to be hard disk, but the examination report indicated that the goods appeared to be <strong>old and used.</strong> Thereafter, the goods were re-examined on 100% basis. After 100% examination, the report indicated that the description and quantity tallies and the brand of the goods and model numbers were verified and the goods found to be <strong>old.</strong> Year of manufacture was found on the goods. The said report did not say that the goods were <strong>used.</strong> Thereafter, attempts were made to get the goods examined from some experts as also from different sources including an approved laboratory by the Maharashtra Pollution Control Board. However, there was no success.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our Columns Tomorrow for the judgements </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 align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a Nice Day. </strong></font></p> <p align="justify"><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">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>