TIOL-DDT 508 · the untouched capture
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<p align="justify"><b><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT
508</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><br>
08.12.2006<br>
Friday</b></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Can
an opportunity to commit a crime be used as a claim for immunity?</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Government
servants are protected against vexatious and frivolous prosecution against acts
discharged by them in their official capacities. Before taking cognizance of
an “offence” by a government servant in discharge of his official duties, the
court has to ensure that sanction has been given by the appropriate authority.</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A DRI
sleuth beats up a person summoned by him.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A police
officer rapes a woman arrested by him.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A commissioner
takes a bribe to pass an order.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ A minister
abuses his position to cheat the treasury.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Are the
above cases covered under the immunity granted to government servants from prosecution?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section
40 of the Central Excise Act, Section 155 of the Customs Act and Section 293
of the Income Tax Act grants immunity from prosecution for any bona fide acts
done under the Acts. The IPC and The Prevention of Corruption Act have similar
provisions. Now does it cover rape, Bribe, and pure unadulterated third degree
torture? The Supreme Court day before yesterday held that they do not.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In matters
concerning important politicians like Prakash Singh Badal, LaluYadav and their
respective wives and the Kerala patriarch Karunakaran, the <st1:Street>Apex
Court</st1:Street> held that illegal activities were not covered under the immunity.
And our news hungry TV channels went to town with the news. They said it was
bad news for the politicians and corrupt officers. But this was always the position.
The Supreme Court had only reiterated the position. Nobody can claim that taking
bribe was part of discharging official duties! Or that beating up people was
part of investigation. The Supreme Court had a nice way of explaining the situation
when it observed,</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Where
a criminal act is performed under the colour of authority but which in reality
is for the public servant's own pleasure or benefit then such acts shall not
be protected under the doctrine of State immunity.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ The
Section does not extend its protective cover to every act or omission done
by a public servant in service but restricts its scope of operation to only
those acts or omissions which are done by a public servant in discharge of
official duty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ official
status only provides an opportunity for commission of the offence.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So obviously
a policeman who rapes a suspect or a revenue officer who beats up a summoned
person cannot take shelter under state immunity. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To our friends
in the DRI and other investigating agencies who have made it a hobby to beat
up people to extract nonsensical statements, DDT has an unsolicited advice –
please don’t. You have no immunity against prosecution and if a complaint is
made against you in a court, you will be the accused and the State will be against
you. The State will support the person who has made the complaint against you
and you will have to defend your case in your individual capacity. And you will
lose your job if you are found guilty. Is it worth taking such huge risks for
the fun of beating up people?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today we
are carrying the three Supreme Court judgements pertaining to Badal, Lalu and
Karunakaran. In tune with its traditions, TIOL is proud to bring you these Supreme
Court judgements delivered just day before yesterday. We are indeed fast and
the first to bring you the latest. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4654">
<u>Badal</u></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4656">
<u>Lalu</u></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <u><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4655">Karunakaran</a></u></font></p>
<p align=center><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600">Audit
based Show Cause Notices</font></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In DDT 474,
the Board’s direction that the government should not take two different stands
before appellate authorities and Audit was covered. Today a netizen writes to
us with the following questions.</font></p>
<blockquote>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>1.
Why the direction to issue Show Cause Notice is there in the first place?
Does it presume that CERA is mostly correct and the Revenue is mostly wrong?
</strong></font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">2.
Is not issuing a Show Cause Notice itself a <i>quasi judicial</i> function?
Can it be directed for issue generally? </font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">3.
What if the Audit objection is accepted by the Ministry? Is the Adjudicating
Authority to fall in line or he is free to decide? </font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">4.
What if the Audit objection is not accepted by the Ministry but accepted by
the Adjudicating Authority? Which one survives? </font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">5.
How long it will take to reach a conclusion? For the Ministry or PAC or who
ever it is? What happens to the uncertainity, both for the Revenue and the
Tax payer? </font></strong></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">6.
What is the fate of such SCNs all along? Are the SCNs Wherever the Ministry
of Finance differed with the CAG’s Audit Objectionto sleep permanentlyin Call
Book? Is it still a grey area? </font></strong></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. No sir,
the presumption is not that CERA is correct. Most often, the presumption is
that CERA is not correct, but the “protective” Show Cause Notices are issued
as a “save your skin” technology. If finally the CERA objection survives and
then demands are hit by time bar, there would be another objection that huge
amounts were lost because Show Cause Notices were not issued on time.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Issue
of Show Cause Notice is certainly not a quasi judicial function; if it is held
so, there has to be a notice as to why a notice cannot be issued and that notice
has to be preceded by another similar notice and that by another one – meaning
there can be no notice at all.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The adjudicating
authority is certainly not required to fall in line with the Board’s acceptance
of the Audit objection, but if the Board issues directions on the issue, the
Adjudicating Authority is bound by them, but the whole problem is – this is
not the way the Board works. The section that deals with Audit objections is
different from the one that gives clarifications – <b>And the twain shall never
meet.</b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. If the
Audit objection is accepted by the Adjudicating authority and not accepted by
the Ministry, the lawyers make money. Litigation can go on merrily. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. There
is absolutely no time limit. There are objections which are <b>live</b> for
more than two decades. Even the PAC is not the final authority. Litigation can
be unending.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The ghosts
are sometimes resurrected from the call books and assessees suddenly find themselves
stuck with Show Cause Notices on issues which they had forgotten long ago. Fortunately
in many offices, call books are not traceable. In fact the CAG once conducted
a special audit on call book cases.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There was
an Audit objection that Show Cause Notices are pending for adjudication for
more than ten years involving huge revenue running into Crores of rupees. Why
were the Show Cause Notices kept pending? Because of an audit objection which
was yet to be resolved!</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Of late,
even the department has started emulating the CAG’s Audit. Frivolous issues
are raised by overzealous Audit teams and the department is issuing Show Cause
Notices. There are cases where the same Commissioner has given a clarification
and later given a Show Cause Notice on the same issue, because his Audit team
raised an objection. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>What
is the solution? </b>A clever assessee told us, “When the auditors come, give
them good food and treat them well but as far as possible, don’t give them any
records” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Food for
thought?</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
Monday with more DDT </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice week end. </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@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></span></font></p>
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