TIOL-DDT 2487 · the untouched capture
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<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><strong><strong><font color="#663399"><s><strong><strong><strong><strong><strong><font color="#663399"><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></strong></strong></strong></strong></s></font></strong></strong></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 2487 </font><br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>02.12.2014 <br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Tuesday </strong></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>Customs/Excise - 11 Prosecution Cases involving Rs. 1.82 lakh pending in various Courts </em></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CAG in its latest report to Parliament finds that under CBEC, </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Eleven cases from 5 Commissionerates involving meagre amount of Rs. 1.82 lakh are under prosecution in various Courts for periods exceeding 30 years. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Audit could not identify the pendency period in 43 prosecution cases having a revenue implication of Rs. 31.50 crore as department was not able to provide details of date of filing of complaint. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In 138 prosecution cases in 27 Commissionerates, the sending of investigation reports suffered delays ranging from a month to <strong>over 10 years </strong> to obtain the mandatory sanction of the Chief Commissioner to launch prosecution. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. In 61 cases under 12 Commissionerates and in four cases under DGCEI Mumbai Audit could not verify whether the investigation reports were submitted within the stipulated time or not due to non-availability of records in the concerned files. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. In 175 cases relating to 37 Commissionerates and DGCEI, Delhi there was delay of a month to <strong>15 years </strong>in filing complaints with the Courts of Law. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Out of 46 selected Commissionerates, 30 Commissionerates reported that they are not doing any review on pending prosecution cases. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Instances of delay in Court proceeding due to lack of proper attention by the departmental officers were noticed </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. In 19 cases where prosecution was initiated, none of the accused persons had been informed separately in writing about the offer of compounding. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. In 24 Commissionerates no remarks were found in the Director General (Inspection) reports pertaining to prosecution cases. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. The department is not reviewing the prosecution cases for withdrawal as per Board's Circular dated 4 April 1994. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAG Recommends: </strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Ministry may ensure that all long-pending prosecution cases are reviewed at periodic intervals by Chief Commissioners at field level to ensure adequacy of action taken to satisfy the Court about existence of sufficient grounds for permitting withdrawal of complaint where warranted. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Board may strengthen its monitoring mechanism at the Chief Commissionerate level through the MIS/Monthly Technical Reports it receives from its various field formations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The Ministry may consider discussing the pendency of prosecutions during monthly Monitoring Committee meetings to be convened by Commissioners. As on date, such meetings are being convened regularly at all Commissionerates to discuss internal audit findings. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The Board may consider having a specially trained group of personnel to handle issues relating to prosecution cases and courts to have an efficient monitoring over its cases and its revenue. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The Board needs to examine critically the reasons as to why the adjudicating authorities are not explicitly concluding whether a case is fit for prosecution or not and take corrective action accordingly. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The Board may consider issuing comprehensive instructions on the approvals issued for prosecution and its follow up by the subordinate field formations in the case of both DGCEI and the Chief Commissioners of Central Excise. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Source: CAG Report No.29 of 2014 </em></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>What is Prosecution? </em></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>CAG explains: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Prosecution is the commencement of a criminal proceeding, where the Government exhibits before a Court of Law the formal charges against a person accused of an offense and seeks to impose on such person a suitable punishment and penalty. Thus, in Central Excise, prosecution sets in motion a legal process by which Government seeks to ensure punishment of companies and persons concerned with evasion of Central Excise duty. </font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600"><em>Overanxious Prosecution - Addl Sessions Judge slams ST Department - trivial and frivolous Litigation </em></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>this bizarre case, one Surender Pal Singh Chadha stood a surety for Rs. 10 lakhs to an accused in a Service Tax prosecution case. The accused absconded and the surety is now responsible. His liability was Rs. 10 lakhs. However due to his old age and non-earning, he requested for some leniency and the Court asked him to deposit a penalty of Rs. 8 lakhs instead of the surety amount of Rs. 10 lakhs. He deposited Rs. 5 lakhs immediately and requested for some time to deposit the balance. In the next hearing he pleaded for some more leniency and the CMM reduced the penalty to Rs. 7 lakhs instead of Rs. 8 lakhs. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Service Tax Department was greatly aggrieved and filed a revision petition with the Additional Sessions Judge on the ground that the CMM had no jurisdiction or power to review and/or recall his own order. (wisdom acquired from appeals in the Tribunal). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Additional Sessions Judge noted that the Magistrate has powers to remit portion of penalty under the bond even after passing the final order and before recovery of total amount and he dismissed the revision petition. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However before parting with the case, he observed his anguish and serious concern over the ST Department's over anxious behaviour in moving frequently to higher courts on <strong>trivial and frivolous issues.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He observed that by filing such frivolous and vexatious petitions, the precious time of the court and money of the common people of the nation had been wasted. Though on this action of the petitioner, refrained from imposing costs upon the petitioner, he warned the petitioner to refrain itself from involving in such litigations with the individuals in future failing which heavy costs/penalties shall be imposed upon it. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this case, the accused was charged with collecting and not paying to the Department Service Tax to the tune of Rs. 9 crores. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department is after the surety and that too for a paltry sum of one lakh rupees. How much money and time did they waste on this trivial trial? And this happened right under the nose of the Board in Delhi. </font></p>
<p align="center"><font color="#006600"><strong><font size="3" face="Georgia, Times New Roman, Times, serif"><em>FTP - Deferment in the date of effect of the procedure for export of certified organic products </em></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>procedure for export of certified organic products notified vide <a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTcyNzg=" target="_blank">Public Notice No. 73 (RE-2013)/2009-2014</a> dated 18.11.2014 became effective from the date of issue of public notice i.e. 18.11.2014. (Please see <strong><a href="http://www.taxindiaonline.com/RC2/NewsDesc.php?MpoQSrPnM=MjIwMDU=" target="_blank">DDT 2478-19.11.2014</a></strong>) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now it has been decided to grant some transition time to make the <a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTcyNzg=" target="_blank">Public Notice No. 73 (RE-2013)/2009-2014</a> dated 18.11.2014 effective. Accordingly, the procedure notified vide <a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTcyNzg=" target="_blank">Public Notice No. 73 (RE-2013)/2009-2014</a> dated 18.11.2014 would come into effect from 18/12/2014 </font></p>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTczMTM=" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DGFT Public Notice No. 77 (RE-2013)/2009-2014, Dated: December 01, 2014 </strong></font></a></p>
<p align="center"><strong><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><em>Income Tax Advance Ruling - Fee </em></font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT</strong> has amended the Income Tax Rules inter alia to fix the following fees for advance ruling </font></p>
<table width="90%" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Category of applicant </em></font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Category of case </em></font></div></td>
<td><div align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Fee</em></font></div></td>
</tr>
<tr>
<td rowspan="3"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>An applicant referred to in sub-clauses (i) or (ii) or (iia) of clause (b) of section 245N </em></font></td>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Amount of one or more transaction, entered into or proposed to be undertaken, in respect of which ruling is sought does not exceed Rs. 100 crore. </em></font></p></td>
<td> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Rs. 2 lacs </em> </font></td>
</tr>
<tr>
<td><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Amount of one or more transaction, entered into or proposed to be undertaken, in respect of which ruling is sought exceeds Rs. 100 crore but does not exceed Rs. 300 crore. </em></font></p></td>
<td> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Rs. 5 lacs </em> </font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Amount of one or more transaction, entered into or proposed to be undertaken, in respect of which ruling is sought exceeds Rs. 300 crore. </em></font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Rs. 10 lacs </em></font></td>
</tr>
<tr>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Any other applicant </em></font></td>
<td> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In all cases </em> </font></td>
<td> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Rs. 10000 </em> </font></td>
</tr>
</table>
<p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTczMTQ=" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax Notification 74 of 2014, dated November 28, 2014</strong></font></a></p>
<p align="center"><strong><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><em>Income Tax - Jayalalithaa - compounding- 18 year old case likely to end </em></font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THERE</strong> is a long pending prosecution case against former Tamil Nadu Chief Minister Jayalalithaa and her friend Sasikala. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is reported that the Income Tax authorities have agreed to compound the offence and these ladies have already paid up two crores of rupees. The 18 year old case is likely to be withdrawn now. </font></p>
<p align="center"><font color="#006600" face="Georgia, Times New Roman, Times, serif"><strong><font size="3"> <em>DDT is Grateful - touching the Everest </em></font></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/ddt/Everest_001.jpg" alt="Legal Corner Icon" width="645" height="285" hspace="5" border="0" align="center"></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/ddt/Everest_002.jpg" alt="Legal Corner Icon" width="257" height="152" hspace="5" border="0" align="left"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDT</strong> is grateful to the large number of Departmental officers, lawyers, professionals, leaders of trade and friends who took time off to send wonderful mails on the occasion of DDT completing 10 years. Most of the mails contained embarrassingly high accolades. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One Netizen said it was the Everest. Incidentally yesterday I was flying in a mountain aircraft and I had a close view of the magnificent Mount Everest from the Pilot's cockpit. Really the height of heights. They say,<em> "I couldn't climb Mt Everest, but I could touch it with my heart."</em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT is made by fools like me - only God can make an Everest (with apologies to Joyce Kilmer who wrote, <em>"Poems are made by fools like me but only God can make a tree."</em>) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DDT is Grateful. </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" face="Georgia, Times New Roman, Times, serif"><em><font size="3">Jurispruden</font></em></font><font size="3" face="Georgia, Times New Roman, Times, serif"><em><font color="#FF6633" size="4">tiol</font><font color="#006600">-Wednesday's cases</font></em></font></strong></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"><strong><font color="#663399">Service Tax </font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>ST - Levy of Development fee has been struck down by apex court as not being service - no service tax payable - from May, 2012 what has been collected as ST has been paid - prima facie case - stay granted: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> applicants are responsible for managing the entire operations of CSI Airport at Mumbai. Apart from other charges the applicant charges development fee @ Rs.100/- from the departing domestic passenger and Rs.600/- from the passenger travelling abroad. The fee charged by the applicants is for the development of the airport in future. As the development fee charged by the applicants is in nature of service to be provided, therefore, the Revenue was of the view that on these development fees, the applicant is required to pay service tax under the category of “Airport services”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Various SCNs were issued for the period April 2009 to February 2013 to the applicant demanding service tax and they were all confirmed along with interest and penalties by the CST, Mumbai. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether compensation received from insurance company on account of destruction of a capital asset can be taxed u/s 50 - NO, says High Court </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee company is engaged in the business of manufacturing of petrochemicals and job work. The assessee had filed its return disclosing total income at Rs. 1,95,54,060/-. Subsequently, it had filed revised return and disclosed revised income at Rs. 2,23,68,340/-. The AO however, assessed the total income of the assessee at Rs. 5,69,39,830/-. On appeal, the CIT(A) partly allowed the appeal of assessee but sustained the addition made by the AO though on different ground. On further appeal, the Tribunal confirmed the addition made by the CIT(A). On appeal before the High Court, the counsel for assessee submitted that the Tribunal had erred in law in holding that the compensation received by the assessee on account of depreciation of Wind Mill from the Insurance Company was fully taxable u/s 50. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue before the Bench is - Whether compensation received from an insurance company on account of destruction of a capital asset can be taxed u/s 50. NO is the answer. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>There was no need to pay any duty when the goods were being returned to the original supplier - By the above process, accumulated CENVAT credit got shifted from the applicant to the supplier's unit - Pre-deposit ordered of 7.5% of duty in cash: CESTAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> applicant is a 100% EOU. For manufacturing their final products, they are procuring certain inputs from the domestic manufacturers free of excise duty. After receiving the said inputs, they are testing and at times such consignments are rejected and returned to the supplier. However, while returning the goods to the supplier, they were paying excise duty by debiting the duty amount in the accumulated CENVAT credit available with them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue smelt a rat in this uncanny procedure adopted by the applicant. An objection was raised that under Rule 3(4) of the CCR, 2004, CENVAT credit can be utilized for payment of duty in the specified circumstances. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements </font></strong></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">Have a nice day.</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@tiol.in"><strong>vijaywrite@tiol.in</strong></a></font></p>
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