TIOL-DDT 2397 · 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 color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><s><strong><font size="2"><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=20079"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2014_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="250" height="123" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font></strong></s>TIOL-DDT 2397</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> 16.07.2014<br> Wednesday</font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Extension of Stay - Whether CESTAT can grant extension beyond 365 days - Matter referred to Larger Bench </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> had reported on 07 07 2014 - <strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjA4NDY=" target="_blank">DDT 2390</a></strong> that the issue has been referred to a Larger Bench of the CESTAT. Today we bring you that order of the Tribunal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Rajasthan State Industrial Development & Investment Corporation Limited case</em> - <strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTQ3NjY=" target="_blank"><font size="1">2014-TIOL-1218-CESTAT-DEL</font></a></strong>, a Division Bench of the CESTAT consisting of the President and Technical Member Mr.R K Singh, held that <em>CESTAT had no jurisdiction to extend operation of a stay beyond the period of 365 days of the initial grant, in view of provisions of the 3rd proviso to Section 35C(2A) of the Central Excise Act, 1944</em> and rejected the application for extension of stay. The bench relied on the decisions of the High Courts of Karnataka and Delhi in <em>Commissioner of Income Tax, Bangalore vs. Ecom Gill Coffee Trading Pvt. Ltd</em>. - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=38&filename=legal/hc/2012/2012-TIOL-514-HC-KAR-IT.htm" target="_blank"><font size="1">2012-TIOL-514-HC-KAR-IT</font></a></strong> and <em>CIT-II vs. Maruti Suzuki Limited</em> -<strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTIzMjY=" target="_blank"><font size="1"> 2014-TIOL-246-HC-DEL-IT</font></a></strong>, respectively in coming to the conclusion. The same Bench had rejected extension of Stay in two other cases, while some other Benches had been routinely extending the Stay beyond one year. In fact the Bangalore Bench gave a General Order stipulating guidelines applicable to all cases -<font size="1"><strong> <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTQ3MzQ=" target="_blank">2014-TIOL-1204-CESTAT-BANG</a></strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTQ3MzQ="></a></font> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, the issue is before the same Bench of the President and the same Technical Member in another application.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was submitted that the third proviso to Section 254(2A) of the Income Tax Act, 1961, as amended by the Finance Act, 2008 w.e.f. 01.05.2008 and the third proviso to Section 35C (2A) of the Central Excise Act, 1944, as amended w.e.f. 10.05.2013 are not identical; that the expression "even if the delay in disposing of the appeal is not attributable to the assessee", occurring in the third proviso to Section 254(2A) of the Income Tax Act does not find place in the third proviso to Section35C(2A) of the 1944 Act, and that this difference in the phraseology of the two provisions has clear legal consequences, relying on the judgment of the Bombay High Court in <em>Narang Overseas (P) Limited vs. ITAT- </em><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=38&filename=legal/hc/2007/2007-TIOL-487-HC-MUM-IT.htm" target="_blank"><font size="1">2007-TIOL-487-HC-MUM-IT</font></a></strong>. It was urged that the third proviso to Section 254(2A) of the Income Tax Act as amended by the Finance Act, 2007 (a provision which is in <em>pari materia</em> provisions of the third proviso to Section 35C(2A) of the 1944 Act) was considered by the Bombay High Court and the Court ruled that the principle enunciated by the Supreme Court in <em>Commissioner of Central Excise, Ahmedabad vs. Kumar Cotton Mills Pvt. Ltd.-</em> <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=26&filename=legal/sc/2005/2005-TIOL-42-SC-CESTAT.htm" target="_blank"><font size="1">2005-TIOL-42-SC-CESTAT</font></a></strong> would continue to be applicable and the Tribunal (ITAT) is not denuded the power to grant extension of stay after the sunset period enacted in the third proviso to Section 254 (2A) of the 1961 Act. It is also contended that judgments of the Karnataka and the Delhi High Courts in Ecom Gill Coffee Trading Pvt. Ltd. (supra) and Maruti Suzuki Limited (supra)</em> do not provide appropriate guidance for interpretation of the distinct provision of Section 35C (2A) of the 1944 Act as amended in 2013.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These arguments appealed to the Bench and it found <em>prima-facie</em> case warranting reconsideration of the conclusion recorded in <em>Rajasthan State Industrial Development & Investment Corporation Limited case</em> - <strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTQ3NjY=" target="_blank"><font size="1">2014-TIOL-1218-CESTAT-DEL</font></a></strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the Tribunal referred the following issue for consideration to a Larger Bench:</font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether the third proviso to Section 35C(2A) of the Central Excise Act, 1944 disables CESTAT of the power to grant extension of stay beyond 365 days from the initial grant of an order of stay, notwithstanding that the delay in disposal of a appeal is occasioned not on account of any conduct of the appellant? </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue DR took strong objection to reconsideration of the earlier order in <em>Rajasthan State Industrial Development & Investment Corporation</em> but the Bench was not impressed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Since the matter is referred to a Larger Bench and since the referring Bench discerned a strong <em>prima-facie</em> case in support of the proposition that the Tribunal has the power to grant extension of stay beyond the period of 365 days from the initial grant of stay, Revenue was directed not to take any steps to realize the stayed demands. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what will happen? Will the other Benches of the Tribunal routinely extend the Stay beyond 365 days or will they bar the Revenue from recovering the demands? And what will be the effect of the amendments proposed in the recent Finance Bill? </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Can't the Government give a direction to its officers that once CESTAT grants Stay till the disposal of the appeal, it means TILL DISPOSAL and not 365 days? The officers should be directed not to take any coercive action for recovery till the appeal is finally disposed of. Otherwise the CESTAT Benches will be fully engaged in dealing with Stay and extension of Stay matters for the next few years. </font></p> <p><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see</font><strong><font size="1" face="Verdana, Arial, Helvetica, sans-serif"> <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTQ5MTY=" target="_blank">2014-TIOL-1260-CESTAT-DEL</a></font></strong></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty - No Resurrection - Retrospective extension held illegal - HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHAT</strong> DDT has been shouting from the rooftop for the last nine years has been heard - not by the Board, but by the High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By Notification No. 6/2014-Cus (ADD) dated 23.01.2014, the Government extended by one year the anti dumping duty on Acrylonitrile Butadiene Rubber imposed by Notification No. 1/2009-Cus dated 02.01.2009 which expired on 1.1.2014.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT then reported, <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTk2MDI=" target="_blank"><strong>(DDT 2280)</strong></a></font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">RESURRECTION of dead notifications is a regular practice with the CBEC and this is one practice in which DDT has miserably failed to wake up the babus before the expiry of anti dumping notifications. The anti dumping duty on Acrylonitrile Butadiene Rubber imposed by Notification No. 1/2009-Cus dated 02.01.2009, had expired on 01.01.2014 and now they have extended it till 01.01.2015 after being dead for 23 days. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Such blatant illegal actions of the Board cannot go unquestioned till eternity. Recently some importers challenged such retrospective extension by Notification and the Delhi High Court last week struck down No. 6/2014-Cus (ADD) dated 23.01.2014 as illegal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court held that <em>the levy of anti-dumping duty ended on 01-01-2014, with the lapse of the original notification. The second proviso to Section 9A (5) precluded the Central Government from continuing the levy beyond that period or date, except to the extent its conditions were fulfilled, i.e. if the levy of the duty were to have been notified before such date. In such cases, the power under the second proviso to Section 9A(5), after expiry of the date of the original notification, is unavailable</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Court finally held: <em>the levy of anti-dumping duty through the impugned notification of 23-01-2014 is without authority of law. The said notification is declared illegal and hereby set aside. The petitioners are entitled to refund of the amounts paid till date</em>. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Now what happens - Most probably the Government will not concede a mistake or a defeat and will gladly waste the taxpayers' money in taking this matter to the Supreme Court. After all, the Revenue Department works on the policy that if they make a mistake, you pay for it; if they forget to do what they are expected to do, you are punished. Whichever party comes to power, the babus know how to terrorise the taxpayer. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBEC need not have faced the embarrassment of having its notification declared illegal by the High Court. Board very well knew this situation. In Circular No. 28/2011-Cus, dated: 8.7 2011, the Board had clarified that: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On a plain reading of Section 9A (5) of the Customs Act, 1975, it is evident that definitive/final anti-dumping duty can be collected only for a period of five years from the date of its imposition. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Generally, the anti dumping levy notified in pursuance of final findings of the Director General (AD) is effective from the date of imposition of provisional duty and therefore the period of five years is to be computed from such date. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Collection beyond that period is permissible only when the said levy is extended by a notification either for further period of five years (in pursuance of the final findings of the Designated Authority in a Sun Set Review) or for one year (during the pendency of Sun Set Review). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus, a definitive/final anti-dumping duty can be collected beyond the stipulated period only when a notification extending the levy has been issued, <strong>before the expiry of the parent notification</strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Unless such revalidation or extension is carried out by a fresh notification, the collection of final anti-dumping duty should cease on the completion of five years. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif" span="span" style="background-color:#D1D1E7">Where the findings in a review are notified after the lapse of the parent notification, the notification in such cases would be effective prospectively from the date of issue of such notification. </font></strong></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">In <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MTI3NjE=" target="_blank"><strong>DDT 1649</strong></a>, we praised the Board and said,</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For the last six years, <strong>DDT</strong> has been relentlessly pointing out the fact that the Government had been with routine regularity extending the validity of dead anti dumping notifications and we had been questioning as to what would be the position during the period between lapsing of an anti dumping notification and its resurrection. We have been told by several Customs officers that despite lapsing of the notifications, they would collect the anti dumping duty, on the assumption that Government would resurrect them and at that point of time, it would be impossible to collect the differential duty. <strong>DDT</strong> is extremely happy to report that Board has reacted favourably. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board deserves all praise for this very logical and reasonable clarification. So, now for the failure of the Board, the importer will not be punished. </font></p> </blockquote> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">But the notification factory in the Board has no respect even for the Board. They flout Board instructions with scant respect and expect the field to follow them. After the Board issued the above mentioned Circular, they resurrected 35 Notifications. In this year alone, in the last six months, they resurrected six dead notifications. This is how the Board works. Now all those notifications, at least the recent ones can be challenged in the High Courts and litigation can continue merrily for the next decade or so after which they will persuade a brilliant Finance Minister to get their mistakes retrospectively rectified. That's it; retrospective legislation is all about rectifying the mistakes of the draftsmen - retrospectively - ULTIMATELY WE PAY! </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">We bring you this latest order of the High Court today. Please see </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=20979" target="_blank">BREAKING NEWS</a></strong>. </font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - VKGUY benefit on Skimmed Milk Powder has been withdrawn</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT</strong> has amended the Handbook of Procedures (Vol. I) (Appendices and Aayat Niryat Forms) 2009-2014, to withdraw VKGUY benefit on Skimmed Milk Powder. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">VKGUY - Vishesh Krishi and Gram Udyog Yojana has the objective to compensate high transport costs and offset other disadvantages to promote exports of the following products : </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) Agricultural Produce and their value added products; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Minor Forest Produce and their value added variants; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Gram Udyog Products; </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Forest Based Products; and </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) Other Products, as notified from time to time. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Products listed in Appendix 37A of HBPv1, shall be entitled for Duty Credit Scrip equivalent to 5 % of FOB value of exports (in free foreign exchange) for export made from 27.8.2009 onwards, unless a specific date of export/period is specified by a public notice/notification. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Skimmed Milk Powder was added to the Appendix 37A of HBPv1 by PN. No. 4/2012 dated 8.6.2012 and now it is deleted. </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2013/dgft13pn067.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice 67/(RE: 2013) /2009-2014, Dated: July 15, 2014</font></strong></a></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><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><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">Service Tax </strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Appellant absent in hearing - Requests for remand without pre-deposit as an earlier remand is pending with Commissioner - Pre-deposit of Rs. Six Crore ordered: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellants had requested that the matter may be kept pending till the original adjudicating authority passes an order in a similar matter remanded by the Tribunal vide Final Order No. 25372 dated 29.05.2013. The Tribunal was unable to appreciate the logic behind this request. It is also not known as to the reasons for delay in adjudication of the remanded matter. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As an alternative prayer appellant has requested that the matter may be remanded without insisting on a pre-deposit. Since Tribunal had already considered the issue earlier and considered it appropriate that appellant should deposit roughly 50% of the amount demanded, Tribunal did not see any reason why it should change the norms and pass a different order. </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 if Revenue declines to grant exemption u/s 10(23C)(vi), such denial automatically leads to refusal of registration u/s 12AA - NO: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a Society registered under the Societies Registration Act since 1991. It was also registered u/s 12A and claimed exemption u/s 10 (23C) (vi) on the income for the AYs 2004-05 to 2006-07 & 2007-08 to 2009-10 on the ground that the Society was imparting education. The said claim had been rejected by the Chief Commissioner of Income Tax, Allahabad vide order dated 25.3.2008. Against the said order, Writ Petition No. 1210 of 2009 had been rejected and the order of the Chief Commissioner of Income Tax, Allahabad had become final. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE issues before the bench are - Whether if the exemption under Section 10 (23C)(vi) is declined, it would amount to refusal of registration under Section 12AA and Whether registration u/s 12A can be denied without recording the reasons for satisfaction that the activities of assessee are not genuine or are not being carried out in accordance with the objects of the trust or the institution. And the verdict goes against the Revenue. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Central Excise </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Imported cosmetics before being cleared into DTA are labeled/relabeled and affixed with MRP - appellant discharging CVD on MRP - CCE demanding CE duty alleging manufacture - appellant contention that entire exercise is revenue neutral not looked into by adjudicating authority - matter remanded: CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is their fortune that the new provisions of section 35F of CEA, 1944 are yet to see the light of the day. Else they would have been required to make a total pre-deposit of almost Rs.4crores for their appeals to be heard by the CESTAT. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And now the appeals were allowed by way of remand without pre-deposit and the Bench also directed the Registry to mark a copy of the order to the Chief Commissioner of Central Excise, the reason - <em>for issue of necessary directions in this regard so that avoidable litigation need not be perpetuated without any gain for anybody</em>. </font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements </font></strong></p> <p><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>