TIOL-DDT 2469 · 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"><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 2469</font><font size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br> 05.11.2014<br> Wednesday</font></strong></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Splitting up of rebate claims to avoid pre-audit- CBEC Instructions</font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>INSTANCES</strong> have been brought to the notice of the Board where the assesses have submitted rebate claims by splitting up the amounts of rebate claims so as to keep each individual claim below Rs. 5 lakhs to avoid pre-audit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the wise Board directs: </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rebate sanctioning authorities may note that they may order pre-audit by clubbing such claims where such claims are artificially split and there is need for pre-audit. Such exercise of powers shall be discretionary and used more as an exception than rule . </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Why would an assessee split up a refund claim? The pre audit is an internal (illegal) matter of the Department and many assessees are not even aware of the existence of pre-audit. It came into prominence only in recent times when the pre-audit section also started demanding money for sanction of refunds. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Sanctioning a refund is an adjudication function of the Assistant Commissioner and no audit can interfere in that work as is being done now in patent violations of all tenets of law and procedure. When an Assistant Commissioner decides to grant a refund can another Assistant Commissioner(Audit) tell him not to grant it? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is unfortunate that the Board is continuing with this illegal illogical procedure. But now with Assistant Commissioners all around, at least to provide them with some work, they have to continue with pre audit or even make it more complicated. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2014/instruction14_007.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC Letter in F. No. 206/05/2014-CX.6, Dated: November 3, 2014 </font></strong></a></p> <p align="center"><font face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600" size="3">Pre-Audit Patently Illegal </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> <a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=ODM3Ng=="><strong>DDT 1022 - 31.12.2008</strong></a>, I wrote,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span"><em>"Board had issued detailed instructions on sanction of refunds of Customs Duty by Circular No. 24/2007-Cus dated 02.07.2007. It was instructed that all applications involving a refund of duty and/or interest of Rs. 5 lakh or more shall be subjected to pre-audit as per the existing practice.</em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Board further clarified,</font></em></p> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Pre-audit of all refund claims will be conducted by the Assistant/Deputy Commissioner (Audit), in the Commissionerate Headquarters Office. Thereafter, the Assistant/Deputy Commissioner of Group/Division will pass an order-in-original in respect of the claim. Thereafter, the orders-in-original passed in this regard shall be subjected to review by the Commissioner concerned. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Why all this complication? One AC receives the refund application and sends it to another AC for pre-audit - waits for the report from that AC and then he should pass an adjudication order. Is he bound by the observations of the Audit AC? What happens if the Audit AC is junior to him? (This is not a small problem - government runs on seniority ego). </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Now what happens if the refund AC takes a different view? Is he supposed to allow the refund or not? Why can't the AC (refunds) simply process the claim and decide and then the Commissioner can review the order if he wants to? </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">In some Commissionerates, as there is only one AC in the Head Quarters and he cannot pre-audit his own files of refund, the pre-audit is conducted by the Additional/ Joint Commissioners. Can any AC pass adjudication orders against the views of his senior officers? Is it not gross interference into quasi judicial functions of the AC? </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Is the pre-audit another channel for slush money? Even the assessees are clever; they file refund claims of less than Rs. 5 lakhs to avoid pre-audit and sometimes the refund section officers advise them to bifurcate or trifurcate refund claims so that each claim is for less than Rs. 5 lakhs and need not go for pre-audit. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Recently it has come to our notice that an AC issued a SCN to an assessee that it has filed five refund claims to avoid pre-audit and add to his work. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Actually there is no need for this Audit - pre or post. We now have a perfect review system in place where invariably every order of the lower Authority is reviewed by the staff of the Commissioner, which is actually much better than the pre and post Audit. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">What happened is a historical confusion. All payments made by the Department are subject to audit and every Commissionerate has a CAO and PAO for the job. The PAO is from the Principal Chief Controller of Accounts and is the guardian of the government funds and all payments including duty refunds were audited by him from an Auditor's point of view. Somewhere down the line they thought that this Audit has to be done by the AC (Audit) in the Commissionerate and the PAO got eliminated and the AC (Audit) took his place, though they are expected to perform different kinds of audit. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">This pre-audit by the AC(Audit) is patently illegal as held by the Bombay High Court in Bombay Chemicals Ltd vs Union of India - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=33&filename=legal/hc/2005/2005-TIOL-236-HC-MUM-CX.htm" target="_blank"><strong><font size="1">2005-TIOL-236-HC-MUM-CX</font></strong></a>. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif" style="background-color:#FFFF00" span="span">Any continuation of such practice would attract contempt proceedings. We had suggested so in <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4679" target="_blank"><strong>TIOL-DDT 512 - 14.12.2006</strong></a>."</font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is more than nine years since the Bombay High Court passed the order and the Board is merrily continuing with this illegal unnecessary system which only breeds corruption and is in no way useful to the Government. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yet another blow to Modi's Governance - Maybe the Prime Minister has more opponents in the Government than in politics who are out to tarnish his image and reputation. Will somebody tell the FM or PM to do away with such outlandish procedures? </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Harmonisation of Rules, Formats and Fees in Special Economic Zones </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> is observed that there is a variance in implementation of Rules, formats and fees in the Special Economic Zones. Therefore, in order to harmonize the Rules, formats and fees in all SEZs, formats for the following procedures have been standardized for adaption in all Zones: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a) For utilization of the goods by the Developer/Co-Developer (Certificate of Chartered Engineer) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b) For obtaining approval of material for authorized operations by the Developer/ Co-Developer (Certificate of Chartered Engineer) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c) Information required for renewal of LoA for 5 years. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d) Lease Deed </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e) Annual Performance Report of the Unit </font></p> </blockquote> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=289&filename=sez/sez_misc/SEZ_harmonization_rules.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MoC Dept of Commerce, SEZ Division Letter in D.12/25/2012-SEZ, Dated October 28, 2014 </font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Digitization of applications/permissions by SEZ Units/Developers </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> part of <em>"Ease of Doing Business"</em> initiative of Department of Commerce, following transactions were identified by DoC as important applications made by SEZ units and Developers to Development Commissioner's office and DoC for various Approvals/intimations/reporting. DoChad requested NDML to develop and deploy online submission process for the same. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For Developer</font></strong></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Extension of the validity period of Forma Letter of Approval (Form C1) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Extension of the validity period of in-principle Letter of Approval(Form C2) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Approval of authorized operations (Form C7) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Quarterly/half yearly returns (Form E) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Approval of Job-work (sub-contracting) </font></p> </blockquote> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">List of applications for Developer/Unit: </font></strong></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Application for setting up units in SEZs </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Application for Renewal of LoA </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Request for extension of LoA </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Annual Performance Report (APR) </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Intimation of Jewellery exhibitions abroad </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Permission of Jewellery exhibitions abroad. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Permission for setting up a DR/BCP centre by IT units </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Permission for movement of data backup tape by IT units</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. Application for grant of exit permission (in-principle approval) from SEZ ?scheme </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. Approval of Job-work (sub-contracting)</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. Intimation of date of commencement of production </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. Grievance form (this is available for all entities) </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This process has started from 1st November 2014. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=289&filename=sez/sez_misc/SEZ_digitization_applications.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">MoC Dept of Commerce, SEZ Division Letter in D.12/25/2012-SEZ, Dated October 28, 2014</font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">AAdhar Number in Service Books of Babus </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EVERY</strong> step in a Government servants' official life must be recorded in his Service Book and each entry attested by the Head Of Office. Heads of Offices are to obtain the signatures of the Government servants in token of their having inspected their Service Books annually. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Service Books at present contains details of bio data, posting details, qualifying service, security details, HBA, CGHS, CGEGIS, LTC, etc. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government has decided to include the respective Aadhaar numbers also of all Government servants in their Service Books. The e-Service Book format already provides fields for Aadhaar number of the Government servant. </font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=70&filename=pitara/sernews/empanelment/Memorandum_Aadhaar.htm" target="_blank">DoPT Office Memorandum No.2-20025/9/2014-Estt.(AL) Dated: November 03, 2014 </a></font></strong></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600">Folded Case Files Retiring from Madras HC</font></strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/legal_paper.jpg" alt="Legal Corner Icon" width="300" height="125" hspace="5" border="0" align="left"><strong>IN</strong> many High Courts, the case dockets consist of 'LEGAL' size papers folded at the centre vertically and tying them up with strings. Whoever invented this system must have had a good enough reason. But this age old procedure is retired from the Madras High Court with effect from 3 rd November 2014. Now they have introduced the Flat filing system, which was partly in vogue for more than a year in respect of writ appeals. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See the picture how the folded files are stored in our courts - now they will be flat! </font></p> <p align="center"><strong><em><font color="#006600" size="3" face="Verdana, Arial, Helvetica, sans-serif">Sexual Intercourse - Forceful not forcible - Not Rape </font></em></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> person was convicted on the charge of rape and murder of a 65-70 year old woman. On appeal, the Delhi High Court observed, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The deceased was aged around 65-70 years, thus beyond the age of menopause. We find force in the contention of the learned counsel for the appellant that even if the sexual intercourse was forceful it was not forcible and contrary to the wishes and consent of the deceased. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The forceful penetration is evident from the injuries on the vaginal orifices. However, besides the injuries on the vagina there is no other injury mark on the body of the deceased or on the appellant to show that there was any protest by the deceased. Hence we are of the opinion that it has not been proved beyond reasonable doubt that the appellant committed sexual intercourse with the deceased contrary to her wishes or her consent . </font></em></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><strong><font color="#006600">Jurispruden</font></strong></strong></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><em><font color="#FF6633" size="4">tiol<font color="#006600" size="3">-</font></font></em></strong></font></strong></font><em><strong><strong><font color="#006600">Friday's cases</font></strong></strong></em></font></p> <p align="justify"><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">ST - Demand of service tax in respect of same transaction on ground that deposit of service tax was under different category whereas different category of service has been provided cannot be held to be justifiable - Appeal allowed: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> appellant entered into an agreement with <em>KPH Dream Cricket Pvt. Ltd</em>. for sponsoring the cricket team Kings XI Punjab. On the said contractual consideration, a service tax of Rs.37,08,000/- was collected by M/s KPH from the appellant and deposited with the Central Government under the category of Business Auxiliary Service. This is the factual position and there is no dispute. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nonetheless, at a later date, the Revenue entertained a view that the agreement between the appellant and M/s KPH was falling under the category of "Sponsorship Service" and, as such, the tax liability falls on the appellant on reverse charge basis. </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 assessee is under investigation, Revenue is legally right in collecting cheque payments towards future tax demand in order to protect its own interest - NO: HC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a trading company. The assessee filed the present petition on the ground that the Revenue without passing any assessment order and ordering a definite tax demand, had recovered three cheques totalling to Rs.3,08,50,688 from the assessee. The Counsel of the assessee urged the court to direct the Revenue to return the said cheques to the assessee. Whereas the Counsel of the Revenue submitted that the adjudication proceedings were already initiated and show-cause notices were also issued, thus to protect the interest of the Revenue, it had found on investigation that the assessees would be liable to pay the amount of Rs.3,08,50,688/- including the penalty. Therefore, in the larger public interest, the cheques were recovered. However, there was no final assessment order or provisional assessment order passed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether when the assessee is under investigation, Revenue is legally right in collecting cheque payments towards future tax demand in order to protect its own interest. NO is the verdict. </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">Appeals filed by Revenue on basis of an invalid Review authorization deserve to be dismissed as not maintainable: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is a Revenue appeal against the order passed by <em>Commissioner of Central Excise Ahmedabad-II </em> dropping the allegations levelled in the show cause notice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The primary ground taken by the Revenue is that <em> adjudicating authority has only commented on the aspect of what ought to have been done by the investigation rather than appreciating the evidences available on record. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The respondent submitted that in the Cross objections they had raised the preliminary objection that the appeals filed by the Revenue are not maintainable as the competent Committee of Chief Commissioners signing the authorization is not the Committee as constituted by the Central Government in terms of Notification No.24/2005-CE(NT), dt.13.05.2005. The case was also argued on merits with the help of various case laws to support the view taken by the adjudicating authority. </font></p> <p><strong><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow is a holiday - Guru Nanak Birthday</font></strong></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Friday for the judgements</font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Friday 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><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@tiol.in">vijaywrite@tiol.in </a></font></strong></p> </body> </html>