TIOL-DDT 2288 · 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 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 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><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#006600"><strong><strong><strong><strong><strong><strong><strong><strong><strong><img width="115" height="125" border="0" align="right" src="image/ddt/10yearsDDT.jpg" alt="" /></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><strong><font color="#006600"><strong><strong><strong><strong><strong><strong><strong><strong><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17063"><img width="175" hspace="5" height="120" border="0" align="right" src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" /></a></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></font></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong></strong><font color="#663399" size="3">TIOL-DDT 2288 </font><br> 06.02.2014 <br> Thursday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Revenue Officers should remember we live in a State governed by Rule of Law - HC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> story is a classic example of the atrocities committed by Revenue in the name of tax recovery. For a change, it is the Income Tax Department which is hogging the limelight.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The assessee is the Maharashtra Housing and Area Development Authority (MHADA) - a statutory corporation established under the Maharashtra Area Housing and Development Act, 1976, and engaged in the activity of constructing and providing accommodations to economically weaker sections of the society.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On 18 March 2013, the Assessing Officer passed an assessment order and on the same day issued a demand notice for Rs. 199.82 Crores. Commissioner of Income Tax (Appeals) passed an order dismissing the appeal on 29 October 2013. On 11 November 2013, the Assessing Officer issued a recovery notice to the assessee calling upon to pay, by 15 November 2013, the outstanding demand. The assessee, by its letter to the Assessing Officer, pointed out that they have not yet received the order of the CIT(A) and they would be filing an appeal and stay application to the Tribunal. A certified copy of the order dated 29 October 2013 of CIT(A) was served upon the assessee only on 16 November 2013 (Saturday). The assessee preferred an appeal and stay application to the Tribunal on 18 November 2013 (within two days). The hearing of the above stay application was fixed on 22 November 2013 by the Tribunal. Immediately on filing of the above appeal and the stay application, the Assessing Officer was served with copies of the appeal and stay application and was also requested to refrain from taking any coercive action pending disposal of the stay application fixed on 22 November 2013 by the Tribunal.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the AO would not wait. On 18 November 2013, the Assessing Officer commenced the recovery proceeding from the assessee under Section 226(3) of the Act by attaching the bank account of the assessee for a sum of Rs.159.84 crores. On the same day, the aforesaid attached amount of Rs.159.84 crores was also withdrawn by the revenue.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal by its order dated 25 November 2013 <font size="1"><em><strong>[<a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE0Nzc=" target="_blank">2014-TIOL-23-ITAT-MUM</a>]</strong></em></font> directed the revenue to refund the entire amount of Rs.159.84 crores to the assessee within 10 days from the receipt of the order.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue did not like this order of the Tribunal and approached the High Court by filing a Writ petition.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court was not impressed and observed -</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The action of the revenue, in particular, the Assessing Officer was in defiance of the directions of this Court in <em>UTI Mutual Funds vs. ITO </em> wherein this Court had <em>inter alia </em> directed the revenue that no recovery of tax should be made before expiry of the time limit for filing an appeal before the higher forum.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The law declared by the High Court is binding on all authorities functioning within the State over which the High Court has jurisdiction.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The action on the part of the Assessing Officer was against the elementary principles of rule of law. The State is expected to act fairly. The undue haste on the part of the Assessing Officer in recovering a sum of Rs.159.84 crores was not only contrary to the binding decisions of this Court but also shocking to the judicial conscience.</font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">++ No appellate authority and much less the Tribunal can be a silent spectator to the arbitrary and illegal actions on the part of the Assessing Officer so as to frustrate the legal process provided under the Act.</font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The petitioner revenue and the Assessing Officer would do well to remember that we live in State, which is governed by Rule of law. It is primary obligation of the officers of the State that it follows the law laid down by the Courts in letter and spirit before taking any coercive action.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If this is the plight of a Corporation of the State Government, imagine what can happen to an ordinary citizen.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The problem is that there is no punishment for any amount of illegal harassment of an assessee - Officers are protected; citizens are not.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong> <font size="1"><em><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE5MzY=" target="_blank">2014-TIOL-154-HC-MUM-IT</a></em></font></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs - DRI directed to provide certified copies of documents seized in 2009 - HC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>WHATEVER</b> you give to the Government is like paint on a wall - you can only give; you can't get back. It is true for money, goods and documents. The Directorate of Revenue Intelligence (DRI) and other agencies often seize tons of documents and even computers and laptops. They must be spending a fortune for keeping this carcass safe, but you ask them to return the documents and your computers/laptops - they are very reluctant.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this case, the DRI had seized documents in July 2009. The party had, in October, 2009 requested that the documents be released or certified copies be provided. Nothing happened. After waiting for more than three years, they approached the High Court.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court has directed the Assistant Director of DRI to provide the Petitioner with certified photocopies of the documents.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Let us hope the party gets this at least.</font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <font size="1"><em><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE5Mzc=" target="_blank">2014-TIOL-155-HC-MUM-CUS</a></em></font></font></strong></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT Issues 'Broad' Guidelines for Media Interaction </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>GENERALLY</strong>, the two Revenue Boards, CBEC and CBDT are media shy. Their undesirable activities get undue coverage (without their help) and their good deeds rarely get any coverage. Many officers in the two departments do not consider even TIOL as media, with which information can be shared. One of the Boards used to send us all the notifications and circulars, but one day the Revenue Secretary asked them, <em>"How is it that our notifications and circulars are published in TIOL much before we carry them in our website?" </em>The solution they found was - they stopped sending us the notifications. I called up several officers and was told that the Revenue Secretary had banned supply of notifications to TIOL. I rang up the Revenue Secretary and asked him - WHY? He told me that all that he wanted was the notifications to be carried in the departmental website and because they could not do so, they stopped giving us those notifications.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even now, the CBDT website does not carry the latest notifications and circulars which are available only on a private web site. Important communications are concealed in the web site <a href="http://irsofficersonline.gov.in/">http://irsofficersonline.gov.in/ </a> which is a password protected site.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In these days of RTI and transparency, why should the Revenue Boards be shy of sharing information with the public? Are they afraid of criticism, which, after all, helps them in improving?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the CBDT has released 'Broad' Guidelines for Media Interaction for the benefit of its officers.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Some of the important <em>broad </em>guidelines:</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Telephonic or other informal communication with media must not be made, as the authenticity and accuracy of such interactions remains unverifiable.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ All the press releases shall be issued by the Official Spokesperson and Media-Coordinator, CBDT with the approval of the Chairperson, CBDT.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Chairperson and the Members of the Board may participate in the Panel Discussions/Talk Shows etc. on the Television and Radio Channels to present the views of the Government. They may also hold the Press Conferences/Press Briefings, whenever needed.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The Chairperson, CBDT shall be the Competent Authority to authorise an officer having the expertise and knowledge of the given subject to participate in the Panel Discussions/Talk Shows etc. on the Television and Radio channels and to present the views of the Government in such discussions.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The CIT (M&TP) shall go through the <strong><em>important newspapers </em></strong> every day and give a briefing to the Chairperson, CBDT on important issues. <font color="#FF0000">(Does the Board not believe in websites?) </font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The CIT (M&TP) shall issue the press releases with the approval of the Competent Authority.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT should first of all try to make its notifications/circulars /instructions available to the public as soon as they are released.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even this Circular dated 31st January 2014 is carried on the website <a href="http://irsofficersonline.gov.in/">http://irsofficersonline.gov.in/ </a> on 5th February and is a closely guarded secret from the media.</font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Hopefully, these "<strong><em>broad </em></strong>" guidelines would be also be picked up by the sister Board CBEC and made <strong><em>narrower </em></strong>! Or have they already issued one and kept it away from the prying eyes of the media? </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=19685" target="_blank"> THE CO(WEB)</a></strong></font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/cbdt_media_policy_guidelines.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT F. No. M&TP/CBDT/2013-14/55., Dated: January 31, 2014</strong></font></a></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Order of remand merely makes obvious position sanctioned by statute - no mistake apparent on record - ROM application dismissed: CESTAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>the matter of the appeal filed by the assessee, the CESTAT had passed the following order -</font></p> <blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"Therefore, in the interest of equity and justice, the matter needs to go back to the original adjudicating authority for verification of the fact whether the input services which were indicated in the invoices were actually received in the manufacturing premises of the appellant at Panvel and if they were so received, whether there is a nexus with the manufacturing activity undertaken by the appellant."</em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The appellant feels that this order may give some extra powers to the Revenue.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, they have filed a ROM application.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is submitted that the SCN proposed to deny CENVAT credit on the ground that the invoices were issued in the name of the head office whereas the credit is taken at the factory.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And that since the SCN did not raise any issue relating to nexus between the receipt of service and its utilization in the manufacture, this direction contained in the order, regarding verification of the nexus between the receipt and manufacturing activity is an error apparent on the face of the record, and, therefore, the words "<em>if they were so received, whether there is a nexus with the manufacturing activity undertaken by the appellant</em>" should be deleted.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed -</font></p> <blockquote> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"3. I have perused the impugned order. The order does not propose anything which is not sanctioned by the statute. Credit can be availed on receipt of services and services so received are utilized in relation to the manufacture of final products. The order merely makes obvious this position. Therefore, I do not find any mistake in the impugned order…."</em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Holding so, the application for rectification of mistake was dismissed as devoid of merits.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See <em><font size="1"><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTE5Mzk=" target="_blank">2014-TIOL-189-CESTAT-MUM</a></font></em></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"> - Friday'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>CENVAT - Removal of inputs as such - Appellant not reversing the CENVAT credit at the time of removal - interest demanded - since assessee has paid duty in terms of rule 8 of the CER, 2002 it cannot be said that there has been delay in payment of duty so as to invoke Section 11AB of the CEA, 1944 - Revenue appeal rejected: HC</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DURING</strong> the period from April 2003 to March 2004, the assessee removed CENVATTED inputs as such, but the credit was not reversed on the date of removal. This led to a SCN being issued to the assessee demanding interest of Rs.67,349/- u/s 11AB of the CEA, 1944.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the allegation in the SCN was confirmed the assessee preferred an appeal before the Commissioner (Appeals) and he held that the duty liability having been paid prior to the issuance of SCN, the question of imposing penalty or demanding interest does not arise. As against this order, the Department preferred appeal to the Tribunal and this appeal was dismissed on the ground that there is no enabling provision in the Statute for recovering interest.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, now the Revenue is in appeal before the High Court.</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"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Whether Sec 40A(3) mandates assessee not to make payment in cash in excess of Rs 20,000 even at cost of delay and loss to its business - NO: ITAT</strong></font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> assessee is involved in the business of distribution of mobile and recharge vouchers of Tata Teleservices Limited (Company) acting as their authorized channel partners. The assessee would make payment to the company for purchase of recharge vouchers. The assessee made such payment through account payee cheques till 22nd August 2005, when a circular was issued by the Company not only to the assessee but to all other distributors in the State stating that the distributors will pay only through demand draft drawn on nationalized bank or through bank deposit slips and where the distributor had a bank account with cooperative bank, the payment should be made in cash. Since the assessee had a bank account with cooperative bank, it was required to deposit cash at the company's office at Surat. During scrutiny assessment the AO observed that had made a total payment of Rs. 33,10,194/ during the year under consideration to the Company by cash on different dates and such payment exceeded Rs. 20,000/ each. The AO issued a notice to the assessee that such payments would be hit by section 40A(3) and therefore cannot be allowed as expenditure.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether section 40A(3) mandates assessee not to make payment in cash in excess of Rs 20,000/- even at the cost of delay and loss to its business. And the answer goes in favour of the assessee.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs</strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Refund - Claim of an individual, whose amounts are retained without authority of law, to seek refund or restitution cannot be rejected merely on the application of Section 27 of Customs Act, 1962 - Writ Petition allowed: High Court</font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> petitioner imported a consignment of Palm Fatty Acid Distillate from Malaysia and Sri Lanka and landed them at ICD, Tughlakabad. Alleging undervaluation, the DRI conducted raids at the petitioner's factory and premises on 21.11.2006 and drew samples. Provisional release of the goods was sought by the petitioner and in the meantime they had deposited a total amount of Rs. 47,14,188/- through demand drafts on 12.11.2007. Suffice to say that a SCN was issued demanding duty of Rs.73,92,399/- and this was confirmed by the adjudicating authority.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT held in the appellant's favour on 06.07.2011 holding that there was no evidence to show that the importer/petitioner had undervalued the goods.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A claim was filed seeking refund of the amounts deposited.</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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6666">Until tomorrow with more DDT</font></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"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>