TIOL-DDT 2559 · 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><strong><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></strong><font color="#663399" size="3">TIOL-DDT 2559 </font><br> 17 03 2015 <br> Tuesday </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> </em></font></p> <p align="center"><font color="#006600" face="Georgia, Times New Roman, Times, serif"><strong><em><font size="3">Show Cause Notice cannot be read as a legislative enactment, which is to point, precise and required to show exceptional lucidity </font></em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> great litigation industry in the Revenue Department starts with the Show Cause Notice and somehow this is given the least importance. Often the euphoria at the time of detection of the case does not remain till the issue of Show Cause Notice. Show Cause Notices are hurriedly drafted callously and carelessly without clearly explaining the charges levelled and often ignoring statutory provisions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Usually the Judiciary is kind to Revenue for such badly and defectively drafted notices. But in <em>ITC Ltd vs Commissioner of Service Tax </em> - <strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODk4OTU=" target="_blank">2013-TIOL-1394-CESTAT-DEL</a> </strong>, Revenue had a shock when the Show Cause Notice and the consequential adjudication order were quashed as the notice was vague and not specific as to under what head the revenue proposed to demand the service tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CESTAT observed, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The show cause notices in the present case before us, were issued on the basis of a prima facie assumption by Revenue that the assessee was assessable to levy of service tax for providing BAS. The reasons for such prima facie assumption of Revenue were however not specified in the show cause notices. Mere extraction of the entire provisions of Section 65(19) of the Act does not fulfill the requirement. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Onthe aforesaid analysis, the show cause notices dated 21.4.2010 and 20.4.2011 are invalid. <strong>This infirmity is incurable</strong>; these show cause notices are therefore quashed. Since the adjudication order is the consequence of the invalid show cause notices, it is also quashed. </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While reporting the case, we observed, "<em>It is very easy to issue Show Cause Notice in service tax cases. All you have to do is reproduce the provisions of the definition of a particular service and raise a demand on the income asking the assessee to show cause as to why the service tax should not be demanded with interest and penalties, preferably under extended period, when the normal period is over. But in this case, the Tribunal was not kind enough to take such notice into cognizance and quashed the same</em>."</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue took the matter in appeal to the Delhi High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court in a landmark judgement reported in <strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTAwNzUw" target="_blank">2014-TIOL-2511-HC-DEL-ST</a></strong> allowed the Revenue Appeal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court made some remarkable observations. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>We do not think, that the Tribunal was right in quashing the show cause notices itself, observing that there was violation of principles of natural justice. It is not a case wherein, the respondent-assessee was taken by a surprise, as relevant facts on which, the Commissioner relied and provisions of Section 65(19) invoked, were set out and mentioned in the show cause notices itself. Further, personal hearing was given in which the question whether the services were covered and could be treated as 'Business Auxiliary Service' was discussed. In case, the assessee wanted to file further reply or wanted further time to explain and put forth their point of view, they could have asked for an adjournment or further time before the Commissioner of Service Tax </em>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The object and purpose of issue of show cause notice is to inform the assessee so that reply or submissions can be made and relevant facts which are in the knowledge of the assessee can be brought on record. After examining and consideration of the show cause notices, we feel that the assessee was informed and made aware of the contention of the revenue and their stand and stance. </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>When we examine the Show Cause Notice, we have to take into consideration that the object and purpose is to inform the recipient of the allegations against him so that he can meet them effectively and is not prejudiced by manifestly vague notice which leaves him confused and unable to answer/reply. The assessee must be given a reasonable and real opportunity and made aware as to what he has to meet. But, <font color="#FF0000">the notice cannot be read as a legislative enactment which is to the point, precise and required to show exceptional lucidity. </font>What is required to be seen is whether the allegations made have been conveyed and set forth, to enable the recipient/assessee to get an opportunity to defend himself against the charges. Notice should not suffer from obscurity and unintelligibility as to deny a fair and adequate chance to the recipient/assessee to get himself fully exonerated and avoid incidence of tax. What transpired after the notice was served, conduct of the parties thereafter, hearing given, are all factors that have to be examined to ascertain as to any prejudice was caused resulting in an arbitrary and unjust decision. Principle of prejudice resulting from vagueness and uncertainty has to be examined in pragmatic and a reasonable manner. </em></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the High Court had allowed the revenue appeal and remanded the case to the Tribunal to decide the issue afresh. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This time it was the turn of the assessee to appeal - to the Supreme Court. The assessee did not succeed in the Apex Court. The Supreme Court in a one line order simply dismissed the SLP of the assessee. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, it is back to the Tribunal - where the vague SCN is not an issue at all. </font></p> <p align="center"><strong><font color="#006600" size="3" face="Georgia, Times New Roman, Times, serif"><em>CBDT Notifies Rollback Provision in APA </em></font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> para 204 of his 2014 Budget Speech, the Finance Minister Mr. Jaitley said, </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>An Advance Pricing Agreement (APA) scheme was introduced in the year 2012. It has received good response. I propose to strengthen the administrative set up of APA to expedite disposal of applications. Further, I propose to introduce a “Roll Back” provision in the APA scheme so that an APA entered into for future transactions may also be applied to international transactions undertaken in previous four years in specified circumstances</em>. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"Rollback year" </em>is defined as any previous year, falling within the period not exceeding four previous years, preceding the first of the previous years. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The rollback provision stipulates that the agreement may provide for determining the arm's length price or specify the manner in which arm's length price shall be determined in relation to the international transaction entered into by the person during the rollback year. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Maybe an exercise in 'ease of doing business in India' - at least some certainty in taxation. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTc3OTk=" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT Notification No. 23/2015,Dated: March 14 2015</strong></font></a></p> <p align="center"><font face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600" size="3"><em>Cadre Review - Car Review - 701 more cars for babus</em></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> cost of cadre review in the revenue Departments, is slowly sinking in. CBDT has sanctioned hiring of 701 additional vehicles for the new offices created consequent to cadre restructuring. Now, NADT (National Academy of direct Taxes) is allotted 46 vehicles. The hiring of each vehicle costs Rs. 40,000/- per month. The additional vehicles will cost the Nation about Rs. 300 crores in a year! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, CBEC has to follow. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Direct Taxes Department is going to cost us Rs.5408.56 crores, while indirect taxes department will spend Rs. 5664.60 crores in the next financial year. Of course they are credited with collecting lakhs of crores. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/pdfdocs/wnew/DIT_letter.pdf" target="_blank"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT DIT letter., Dated: March 13, 2015</strong></font> </a></p> <p align="center"><font face="Georgia, Times New Roman, Times, serif"><strong><font color="#006600" size="3"><em>In this cloudy global horizon, India is a bright spot - IMF MD </em></font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SPEAKING </strong>in New Delhi yesterday, Ms. Christine Lagarde, Managing Director, International Monetary Fund, said, </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In this cloudy global horizon, <strong>India is a bright spot</strong>. Recent policy reforms and improved business confidence have provided a booster shot to economic activity. Using India's new GDP series, the IMF expects growth to pick up to <strong>7.2 percent </strong>this fiscal year and accelerate further to <strong>7.5 percent </strong>next year-making <strong>India the fastest growing <em>large </em>economy in the world. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Indeed, a brighter future is being forged right before your eyes. By 2019, the economy will <strong><em>more than double </em>in size </strong>compared to 2009. When adjusting for differences in purchase prices between economies, <strong>India's GDP will exceed that of Japan and Germany combined </strong>. Indian output will also exceed the combined output of the three next largest emerging market economies-Russia, Brazil, and Indonesia. So clearly India's weight among the group of emerging markets will increase. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>By 2030, India is expected to have the largest labor force in the world </strong>. At more than <strong>one billion people of working age</strong>, India's labor force will be larger than the combined labor force in the United States, the Euro Area, and Indonesia. The potential benefits to be reaped from your collective work efforts could be enormous. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So we know <strong>India can run </strong>-judging by your cricket record! <strong><em>Can it fly? </em>I believe it can</strong>. As India grows and takes its rightful place in the global economy, the focus should remain on sound policies and inclusive institutions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>There is already a lot that the world can learn from India</strong>. The Economist's Global Microscope ranks India very highly for creating an enabling financial environment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is not surprising. Under the Prime Minister's <em>Jan Dhan Yojana </em>, financial services have been extended to more than <strong>125 million previously unbanked individuals </strong>- an impressive achievement in such a short span of time! And India also <strong>expanded basic insurance coverage </strong>so people's lives become more secure. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What makes these achievements even more remarkable is that this financial inclusion approach is embedded in a <strong>broader strategy </strong>to use these accounts to provide cash transfers to those who need them. Programs in other countries such as Mexico's <em>Prospera </em>also capitalize on the <strong>link between financial inclusion and targeted transfers</strong>. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Many of the projects were delayed due to <strong>regulatory uncertainty and bureaucratic holdups</strong>. Much needs to be done in easing land acquisition, expediting clearances, and establishing a stable regulatory regime so that the private sector can invest. These issues are on the radar of policymakers, which is promising, they must be on the action list. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">At the current juncture, <strong>the world needs a vibrant India and India needs the world</strong>! As one of the <strong>largest commodity importers </strong>in the world, an open and transparent <strong>multilateral system for trade and financial flows </strong>will be essential to support India's vibrant economy. With growing economic size and power come greater leadership expectations. <strong>We look forward to seeing India becoming even more active on the global stage </strong>- in fora such as the G-20 and the IMF. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The IMF is a global multilateral institution where countries like India deserve a bigger say. We are working precisely on that-on implementing <strong>reforms that would lift India to the top 10 shareholders at the IMF. </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">I would also like to acknowledge the <strong>many talented Indian staff at the Fund </strong>and the contribution they have made over the years. Your very own central bank governor, Raghuram Rajan, was one of our most distinguished economic counselors! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is an old Indian proverb that says: "<em>Yesterday is but a dream, tomorrow but a vision. But today well lived makes every yesterday a dream of happiness, and every tomorrow a vision of hope. Look well, therefore, to this day."</em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today, the elements are all aligned to make India a global powerhouse. <strong>This is India's moment. Seize it</strong>.<font color="#FF0000"> <strong><em>Chak De India</em></strong></font><strong>! </strong></font></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 size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6666">Have a nice day. </font></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@tiol.in"><strong>vijaywrite@tiol.in</strong></a></font></p> </body> </html>