TIOL-DDT 2553 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3"><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 2553</font><br> 09 03 2015 <br> Monday</strong></font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600">Special Provision For Avoiding Repetitive Appeals </font></strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AS</strong> per Section 158A of the Income Tax Act, if the question of law arising in any case before the AO or the appellate authority including the Tribunal, is identical with a question of law in his own case for another assessment year, the assessee can approach the AO or the appellate authority and these authorities will dispose the case without awaiting the final decision on the question of law in the other case. The assessee shall not be entitled to raise, in relation to the relevant case, such question of law in appeal before any appellate authority in appeal before the High Court or the Supreme Court. The AO or the appellate authority will decide whether the question of law is identical and this decision is final - there is no appeal against this. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When the question of law in the other case becomes final, it will be applied to this case and the AO/appellate authority may if necessary amend the order already passed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is supposed to be a facility to the assessee liberating him from the burden of pursuing appeals at various stages on the same issue - for different years. If he has the same issue pending before the AO, CIT, Tribunal, High Court and Supreme Court, he can pursue the litigation only in the Supreme Court and the final decision by the Apex Court will apply to all his cases in the lower forums. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this Budget this facility has been extended to the Department also. A new Section 158AA is proposed to be inserted in the Act with effect from the 1st day of June, 2015. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the new provision, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. a question of law in respect of an assessee is pending in the Supreme Court against an order of the High Court in favour of the assessee - that is a departmental appeal is pending in Supreme Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Same issue is decided by a Commissioner (Appeals) and the department wants to go in appeal to the Tribunal (obviously not happy with the Appellate Commissioner following the High Court decision). </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The assessee accepts that the question of law in this case and the one pending in the Supreme Court is identical; </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Then, instead of filing an appeal before the Tribunal, the Department can file an application stating that the appeal will be filed when the decision on the question of law becomes final in the other case. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If finally the Supreme Court decides the case in favour of the Department, they can file the appeal against the order of the Commissioner (Appeals) before the Tribunal within sixty days from the date on which the order of the Supreme Court in the other case is communicated to the Commissioner.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The whole idea (and the Chapter Heading says so) seems to be to avoid repetitive appeals on the same issue before several authorities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But this is only in relation to a particular assessee - why can't it be made applicable on issue basis? -That is if the same issue is pending in the High Court or Supreme Court in respect of any assessee, repetitive appeals should be avoided. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No appeal but Revenue is free to demand</strong>: There is a problem in Section 158A. Even though the same issue is pending in the Supreme Court and the assessee need not file repetitive appeals, the Department is not barred from adjudicating and enforcing the demand. Even if the assessee tells the AO or the appellate authority that his case is pending in the Supreme Court, the AO/Appellate Authority can pass the order and the department can enforce it, if not stayed. The Karnataka High Court in the case of Karnataka Chamber of Commerce held:<em> The declaration under section 158-A will not provide any immunity to the assessee from payment of tax due. There is no merit in the contention that once an application under section 158-A is accepted, the Assessing Officer should refrain from demanding the tax in terms of the orders of assessment</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If my case is pending in the Supreme Court and on the same issue, if I have to pay the tax for a subsequent period, what is the benefit I get if I don't appeal? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Awareness on Section 158A</strong>: Not many people seem to be aware of this provision. In a Discussion Paper released in 2013, FICCI recommended: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Section 158A provides an option to an assessee to agree to the application of the decision of a High Court / Supreme Court relating to an earlier year to the proceedings of the subsequent years where identical question of law is involved. Section 158A can be invoked at the assessment stage and upto the ITAT level. </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">General awareness about this provision should be increased. Further, the Assessing Officers should identify such cases and advise the respective assessee on the option available to them. This can help in avoiding repetitive appeals. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Why are similar provisions not incorporated into the Indirect Taxes</strong>? Shouldn't similar provisions find place in the Customs, Excise and Service Tax Statutes? After all there are hundreds of cases pending on identical issues in indirect taxes pending in several courts and the Department goes on merrily issuing notices and adjudication orders for subsequent periods, adding to the quantum of litigation in the country. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the Government is really serious about reducing the number of pending cases at various stages, they should have a relook at Section 158A of the Income Tax Act and import the revised provisions into the indirect taxes also. If they have the will, they can do it in this Finance Bill itself. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Unfortunately, there seems to be no coordination between CBEC and CBDT and the Revenue Secretary doesn't seem to be much of a bridge. More unfortunately, there is absolutely no coordination between the various wings in the CBEC. The latest amendments to the penalty provisions in Excise, Customs and Service Tax bear witness to this fact. Identical provisions are differently worded like in Customs, the notice has to be <strong>received</strong>, while in Central Excise, it is <strong>issued</strong> and in Service tax, it has to be service . (Please see our Budget article <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=23023" target="_blank"><strong>Be aware of - Notice Received in Customs, Issued in Excise and Served in ST</strong></a>).</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If three persons working in the same Board drafting three laws cannot consult each other, what coordination can be expected from two powerful Boards? Who suffers - the Law - and ultimately the <a></a>Citizens? </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">CENVAT Management? </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>WHAT</strong> is your CENVAT Management? Have you heard about this management? This is the new mantra of the Revenue bosses. From Board down to Assistant Commissioners, all the officers ask their subordinates about their CENVAT management. This in simple terms means, how the CENVAT credit utilisation is being restricted/controlled/denied by persuasion and coercion. In the last month of the fiscal, as they are far behind their targets, senior officers expect their subordinates to garner revenue by any means - anything is fair and one of the methods is to force the assessees to refrain from utilising their CENVAT credit for payment of duty/tax. Similarly there are refund management and advance management that is collecting next year's tax this year. Other management techniques will also be invented in the next few weeks. </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><em><strong><font color="#006600">Indian Service Tax Enforcement Abroad? </font></strong></em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>CBEC seems to be on a foreign trip - they want to enforce their rules abroad. As part of the Budget exercises they have inserted a new definition in the Service Tax Rules: </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"aggregator" means a person, who owns and manages a web based software application, and by means of the application and a communication device, enables a potential customer to connect with persons providing service of a particular kind under the brand name or trade name of the aggregator </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In relation to service provided or agreed to be provided by a person involving an aggregator in any manner, the Service Tax is to be paid by: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. the aggregator </em></font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. if the aggregator does not have a physical presence in the taxable territory, any person representing the aggregator for any purpose in the taxable territory. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. if the aggregator does not have a physical presence or does not have a representative for any purpose in the taxable territory, the aggregator <strong>shall appoint a person</strong> in the taxable territory <strong>for the purpose of paying service tax</strong>.</font></em><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, if Uber or some other aggregator does not have a representative in India, it is required to appoint a person in India for the purpose of paying Service Tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Can the Board enforce this? What will happen if an aggregator refuses to appoint a person in India for the <em><strong>purpose of paying service tax</strong></em>? Will service Tax officers go abroad with Show Cause Notices? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The TRU letter is silent on this issue. The letter in para 11.1 states, </font></p> <blockquote> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In respect of any service provided under aggregator model, the aggregator, or any of his representative office located in India, is being made liable to pay Service Tax if the service is so provided using the brand name of the aggregator in any manner. If an aggregator does not have any presence, including that by way of a representative, in such a case any agent appointed by the aggregator shall pay the tax on behalf of the aggregator. </font></em></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These provisions are already in force! </font></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Customs - New Exchange Rates from 6th March </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC </strong>has notified new exchange rates for Imported Goods and for Export Goods with effect from 6th March 2015. The US Dollar remains at 62.80 rupees for imports and 61.80 rupees for exports. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc3Nzc=" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No.28/2015 - Cus.,(N.T.), Dated: March 05, 2015 </font></strong></a></p> <p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">Can Customs ask for passwords in your computer? </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> these days of terror and hi-tech smuggling, the Customs officers at airports are believed to have all kinds of powers to search passengers and their baggage including computers. Is a passenger bound to tell the Customs officers the passwords for his computer and the various kinds of data stored in it? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The New Zealand Customs is proposing to amend the law to provide for this. In a discussion paper released last week, the Customs said, </font></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">When Customs does examine a person's electronic device, the owner is not legally obliged to provide us with a password or encryption key to access the device. We have found that it is relatively uncommon for someone to refuse to provide this, but if they do refuse it can mean we have no way of uncovering evidence of criminal offending even when we know the device does hold this evidence. </font></em></p> <p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If a person refuses to provide access, it is likely that Customs will seize the device for forensic examination and not return it immediately to the owner (unless there is nothing to suggest the device contains prohibited material). However, some devices cannot be accessed and examined by our Electronic Forensics Unit without password or encryption access. If Customs cannot require access to an electronic device, it is not possible to treat the device in the same way that we treat the examination of accompanying baggage. This undermines the purpose of examining electronic devices and is a barrier to us effectively investigating and prosecuting criminal offending.</font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, the Customs wants the Laws to be amended to stipulate "<em>A person has a legal obligation to provide Customs with access to their electronic device if required by Customs (an explicit power in the Customs and Excise Act)"</em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Commenting on the move, The New Zealand Herald editorially commented today, "<em>Ministers of law enforcement agencies will receive many requests for legislated powers to make their job easier. Ministers should look at all such requests and ask themselves two questions: is this an invasion of people's privacy or human rights? And if so, is it really necessary</em>?"</font></p> <p align="justify"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">May be the Indian Finance Minister should also ask these questions when he gets proposals from the two Revenue Boards. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF6666">Until Tomorrow with more <strong>DDT</strong></font></font></p> <p align="justify"><strong><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></font></strong></p> <p align="justify"><font color="#FF6666"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@tiol.in"><strong>vijaywrite@tiol.in</strong></a></font></p> </body> </html>