TIOL-DDT 2634 · the untouched capture
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<p><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 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=23157"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2015_1.jpg" alt="DDT in Limca Book of Records - Third Time in a row" width="300" height="148" hspace="5" border="0" align="right" ></a></font></strong></font></strong></font></strong></font></strong></font></strong></s></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></s>TIOL-DDT 2634</font><br>
06 07 2015<br>
Monday</strong></font></p>
<p align="center"><font size="3" face="Georgia, Times New Roman, Times, serif"><strong><em><font color="#006600">A Model Show Cause Notice and Adjudication Order? Government loses 3 Crores Demand </font></em></strong></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">IN</font></strong><font size="2"> a case before the CESTAT recently, the Show Cause Notice stated, </font></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Whereas from the documents submitted by the party it appears that they have rendered the taxable services which may either be classified under "Management, Maintenance or Repair service' or 'Erection, Installation and Commissioning services' and other construction linked services as defined under the Finance Act, 1994"</em>. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Thus the Show Cause Notice alleged that the assessee must have rendered the taxable service which may be classified under: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <em>"Management, Maintenance or Repair service' or </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <em>'Erection, Installation and Commissioning services' and </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <em>Other construction linked services. </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Department was not sure as to what taxable service they rendered, but sure they were that some service was rendered, only they were not sure where to classify it. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the entirety of the show cause notice, there was not a single assertion proposing to levy and collect service tax on the basis of any specified taxable services allegedly rendered by the appellant except the several alternative taxable services speculated to have been proved and set out as above. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If this was the model Show Cause Notice, the adjudication was no better. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Adjudication Order </strong>: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal observed, “The impugned adjudication order is drafted in 32 paras spread over 22 printed pages. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <em>Paragraphs 1 to 17 reiterate almost verbatim, the contents of the show cause notice. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <em>Para 18 elaborates the response of the appellant and its several defences to the vague and incoherent allegations in the show cause notice. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <em>Para 19 sets out particulars of the personal hearing provided. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <em>Paras 20 to 31 purport to be part of discussion and findings of the Commissioner. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. <em>Para 20 is formal in nature and states to have considered the facts of the case, the records and as to providing personal hearing. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. <em>Para 21 identifies the issues involved in the case. The third sentence in para 21 onwards is a reproduction of para 7 of the show cause notice. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. <em>Paras 22 to 28 are reproduction of paras 8, 9, 11, 12, 14, 15, 16 and 17 of the show cause notice. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. <em>Paras 29 to 31 could alone be considered, if at all, the analysis by the learned Commissioner. Para 29 asserts that none of the contentions of the appellant are tenable since it failed to provide the required information to the Department during investigation. It is also observed that the appellant obtained service tax registration for Works Contract on 10/12/07 and was therefore aware of the applicable law. From this observation, the Commissioner infers that the appellant willfully suppressed the fact of earning/receiving taxable income and withheld information which led to evasion of service tax. In para 31, the impugned order records that though the appellant intentional and willfully suppressed the taxable value and failed to remit service tax, the facts came to light only during the process of audit. Para 31 abruptly jumps to the conclusion, without any preceding analysis nor a finding as to the specific taxable services provided by the appellant, that service tax of Rs. 1,53,14,782/- is recoverable under the proviso to Section 73 (1) of the Act alongwith interest, excluding penalty under Section 76. Para 32 records the operative portion of the order declaring the specified liability to service tax, interest and penalties. </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This is how many of the Show Cause Notices and adjudication orders are issued by the <em>learned </em> Revenue officers! </font></p>
<p align="justify"><font color="#FF0000" face="Verdana, Arial, Helvetica, sans-serif"><em><font size="3"><strong>Government loses 3 crores demand: </strong></font></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal observed, </font></p>
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<td valign="top" bgcolor="#CBFED2"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The show cause notice and the impugned adjudication order are vitiated by <strong>incoherence and vagueness. </strong></font></td>
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<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. There cannot be a best judgment assessment regarding the specific taxable service provided. There can be no best judgment, for instance as to whether the tax liability is for income tax, sales tax, excise duty, customs duty, service tax or professional tax. </font><font color="#FFFF00"> </font></td>
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<td valign="top" bgcolor="#CBFED2"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. A conclusion as to the taxable event and the liability to tax under the appropriate fiscal legislation authorizing the levy and collection of such tax is a matter for <strong>determination with precision and clarity and not by a process of guess-work or speculation </strong>. </font></td>
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<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Neither the show cause notice dated 21/10/11 nor the impugned adjudication order dated 18/1/13 record any assertion/ conclusion whatsoever as to which particular or specific taxable service the appellant had provided. </font></td>
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<td valign="top" bgcolor="#CBFED2"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. In the absence of an allegation of having provided a specific taxable service in the show cause notice and in view of the failure in the adjudication order as well, neither the show cause notice nor the consequent adjudication order could be sustained. </font></td>
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<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The Act provides ample powers including of search under Section 82 of the Act to obtain information necessary to pass a proper, disciplined and legally sustainable adjudication order. </font></td>
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<td valign="top" bgcolor="#CBFED2"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. <strong>The disinclination to employ the ample investigatory powers conferred by the Act is illustrative of gross Departmental failure </strong> and cannot afford justification for passing an incoherent and vague adjudication order. </font></td>
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<td valign="top"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. <strong>The failure to gather relevant facts for issuing a proper show cause notice cannot provide justification for a vague and incoherent show cause notice</strong>, which has resulted in a serious transgression of the due process of law. </font></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Tribunal held that the show cause notice dated 21/10/11 and the consequent impugned adjudication order dated 18/1/13 are unsustainable and quashed the same. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=24029" target="_blank">Breaking News</a> </strong> and <strong><a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTA0Mzgw" target="_blank">2015-TIOL-1339-CESTAT-DEL</a> </strong></font></p>
<p align="center"><font color="#009900" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#006600" size="3"><strong>Show Cause Notice - NACEN Lesson </strong></font></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A</strong> Study Material issued by NACEN states, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The Show Cause Notice is more than a notice. It gives an opportunity to the Department of leading evidence in support of its allegations and equally it gives an opportunity to the person/firm/company charged with, to make representation and adduce evidence against the allegations or charges made out against them. </em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The Show Cause Notice should be issued only after proper inquiry/investigation i.e. when the facts used are ascertained and allegations are justified. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The Show Cause Notice should be in writing (not oral). The date of issue of Show Cause Notice should be clearly written.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 3. The Show Cause Notice should not be an exercise in deliberate ambiguity. It should be specific and unambiguous. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. It should be clear on facts and legal provisions. Violation of the provisions of law should be clearly brought out in the Show Cause Notice.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 5. The charges should be specific. They should not be vague/or contradictory. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The provisions for imposing penalty and reasons and conclusion for the same be clearly mentioned.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 7. Copies of the relied upon documents should be listed in seriatim as per the references made in the Show Cause Notice and given as Annexures to the Notice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. The duty amount needs to be quantified and explained in a chart as to how the same was arrived at. The duty demanded should be manifestly specified in the notice itself. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. When mis-statement or suppression of facts is alleged in the Show Cause Notice, these expressions must be preceded by the word ‘willful'. Likewise, when the allegation is that of contravention of the provisions of the Act or the rules, the same must be followed by the expression ‘with intent to evade payment of duty'. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. If the time limit to reply is provided in Law, it should be adhered to, otherwise, adequate time should be given for filing a written reply.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> 11. The Show Cause Notice should clearly mention whether the noticee(s) wishes to be heard in person, apart from filing a written representation, in the matter. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">12. The authority to which the Show Cause Notice is answerable should be specifically stated along with the postal address. </font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Obviously these things are not taken seriously. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em> </em></font></p>
<p align="center"><font color="#006600" size="3" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>CESTAT Single Member Cases - Information Sought from Lawyers </strong></em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> CESTAT Registrar notes that, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Consequent to Finance Act, 2013, the monetary limit of Single Member case was raised from Rs.10 lakh to Rs. 50 lakh, where the issue does not involve classification/valuation or interpretation of a notification. Steps have already been taken to transfer such matter to the Single Member Bench Registry for listing such matters before the Hon'ble Single Member Bench for disposal. In spite of best efforts by the Registry some of the matters are still left with respective division Benches</em>. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, he requests Advocates, Consultants and AR's Office to provide detailed list of cases where the issue does not involve classification/valuation or interpretation of a Notification and the amount of duty/penalty involved is less than Rs. 50 lakhs, so as to list such cases before the Single Member Bench. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MTgyNzU=" target="_blank">CESTAT F.No.01/04/Circular/CESTAT/2014., Dated: June 29, 2015</a></strong></font></p>
<p align="center"><font color="#006600" size="3" face="Verdana, Arial, Helvetica, sans-serif"><strong><em>CESTAT - Posting Problems? </em></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> is not about posting of cases; this is about posting of Members. It seems there is deep dissatisfaction among some Members of the CESTAT about their place of posting. It is heard that a Member has even resigned. It seems for one Bench in Ahmedabad, there are three Members, while there are not enough Members in Delhi. Of Course the Cause List states that a new Member is joining today. It is heard that a retired officer selected for the post of Member is not joining as he is posted to a place he doesn't want. Members of the CESTAT are almost equal to High Court judges and most of the technical members join at the age of 58 plus. Can't they be adjusted in their places of choice in the last few years of their service? Should they be also subject to the rigours of transfer as any other employee? Does the Revenue Department want to show their authority? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the meanwhile a Circuit Bench will function in Allahabad from today. The High Court had directed that a Bench should start function from Allahabad. </font></p>
<p align="center"><font color="#006600" size="3" face="Verdana, Arial, Helvetica, sans-serif"><em><strong>From IRS to IAS </strong></em></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> IAS topper this year is IRS probationer Ira Singhal. The Revenue Secretary Shaktikanta Das tweeted, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Congratulations to IAS topper Ira Sehgal. Her performance in Customs and Excise training academy was impressive. Great determination. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>It's Ira Singhal. Makes every Indian feel proud. Feel very happy for the Customs and Excise IRS officer. Congratulations to her parents. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Third rank holder in UPSC exams Nidhi Gupta. Also from Excise and Customs. Congratulations to her. </em></font></p>
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The 5th rank holder Suharsha Bhagat, the first among men, is currently serving as an IRS (Income-Tax) officer. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Preeti Mishra, daughter of retired Superintendent of Central Excise PN Mishra of Uttarakhand has secured 526th rank. She will get a Central Service. </font></p>
<p><strong><font color="#0033CC" size="2" face="Verdana, Arial, Helvetica, sans-serif">Congrats to the winners. </font></strong></p>
<p align="center"><font color="#006600"><strong><font size="3" face="Verdana, Arial, Helvetica, sans-serif"><em>GST will accelerate investment - FM </em></font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FINANCE</STRONG> Minister Arun Jaitley in a Facebook post said, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>There is an ambitious program to increase public investment in roads, railways, rural infrastructure and connectivity (the SECC shows, for example, that mobile penetration is only about a quarter in rural Chattisgarh). </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>At the same time, the government is creating the conditions for greater private investment: implementing the GST and creating a common market, reforming the land law, easing the costs of doing business, and unblocking stalled projects are all measures that will improve the conditions for investment. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The latest data suggest that the investment cycle is slowly turning around and stalled projects are being unblocked at a faster pace. Passing the GST and reforming the land law will accelerate this investment turnaround. </em></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><strong><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day.</font></strong></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@tiol.in"><strong>vijaywrite@tiol.in</strong></a></font></p>
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