TIOL-DDT 643 · the untouched capture
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<p><font size="3"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 643</font><font face="Verdana, Arial, Helvetica, sans-serif"></font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<strong>26.06.2007<br>
Tuesday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>Transfers in CBEC – CAG finds fault with </strong></font>
</p>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CAG in his Report No. 13/2007 to Parliament was not exactly happy with
the way transfer policy was implemented in the CBEC.<br>
<br>
The CAG observed,<br>
<br>
<font color="#663399">A significant contributor to the effectiveness of the administrative machinery
is a human resource development policy that offers opportunities for excellence
and career advancement through a proper placement strategy.<br>
<br>
In order to increase transparency and to provide better opportunities to
officers and a more planned approach to cadre planning, a transfer/placement
policy of Group ‘A’ officers was formulated as a part of reforms
in tax administration which came into effect from the 1st April 2005.</font><br>
<br>
A test check of the disposition list as on May 2006 of officers of Indian
Revenue Services (Customs and Central Excise) revealed that:-<br>
<br>
a) Paragraph 5.3 of the policy stipulates that the continuous stay of a
Group ‘A’ officer
should not exceed 6 years in a class ‘A’ station and four years
in a class ‘B’ station. It was, however, noticed that 75 officers
were yet to move out from a class ‘A’ station after 7 to 15 years
and 4 officers remained in class ‘B’ station for 8 to 10 years.<br>
<br>
b) Paragraph 6.1 and 6.2 of the policy classify all posts in the CBEC as
sensitive and non-sensitive posts and the tenure of an officer in a sensitive
post is ordinarily restricted to 2 to 3 years. Test check, however, revealed
that 7 officers were holding sensitive posts for 7 to 9 years.<br>
<br>
c) Paragraph 7.2 restricts the tenure of officers in the Directorates of
Revenue Intelligence, Central Excise Intelligence and Vigilance for 3 years
along with the condition that no officer shall spend more than 6 years in
these Directorates during their entire service career. 5 officers of the
CBEC were posted in these Directorates for 7 to 10 years.<br>
<br>
<font color="#FF6666"><b>There is more to transfers than mere policies.</b></font><br>
<br>
The CAG has recommended that <b>CBEC needs to implement the laid down policy
regarding transfer of its officers</b>.</font></p>
<p align="center"><b><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> CBDT
is no better </font></b></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
CAG found the CBDT no better.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Inadequate database at CBDT<br>
<br>
The CAG observed,<br>
<br>
<font color="#663399">The CBDT is the Cadre Controlling Authority of Indian
Revenue Service (IT) officers. The Board had formulated transfer/placement
policy in 2005 categorising all stations into three classes and prescribing
tenure of officers in different classes of station. The posts have also been
categorized as sensitive and non-sensitive. The tenure of an officer in a
sensitive post is to be restricted to two years at one stretch. Paragraph
2.6 of the transfer/placement policy stipulates that a correct and complete
database is a sine qua non for operationalisation of the policy. The Board
has to ensure that a database containing the profiles of all Group ‘A’ officers
is created and regularly updated.<br>
<br>
The disposition list of officers of the rank of Commissioner of Income
Tax prepared by CBDT indicated the stations of their posting. The list,
however, did not contain the date from which they were posted at a particular
station. The database of other Group ‘A’ officers was not maintained by
the Board. It was stated that this was being maintained by the field offices
located all over the country. In the absence of correct, complete and up
to date central database in CBDT, the implementation of transfer/placement
policy in respect of restricted stay of officers at class ‘A’ station,
their tenure in sensitive posts, etc. could not have been monitored by
the department nor could this aspect be examined by audit. Thus, the
main objective of the policy to bring about transparency in postings
and restricting tenure on sensitive posts/stations was not achieved.</font><br>
<br>
The Department stated (March 2007) that instructions had been issued to all
CCITs (CCAs) to ensure that officers do not get posted to sensitive posts
or stations in excess of the prescribed tenure. In the absence of central
control by CBDT, it is not clear how the policy will be enforced even in
future.<br>
<br>
The CAG recommended that <b>The Ministry should urgently complete and update
the central database so that the transfer/placement policy can be implemented
properly and overstayal in sensitive posts avoided.</b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Secret
Service Fund – How is it spent?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Revenue Departments are given a lot of un-accountable money called Secret
Service Funds – the
DRI, DGCEI, IT, all Commissionerates have these funds, which is meant
to be used for gathering intelligence. You know how the money is used. Here
are a few samples</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Money
spent on visits of senior officers, which cannot be accounted for.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
Dinners and tea (includes alcohol) parties when officers hold meetings</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Unauthorized
travel</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Unauthorized
travel by air of officers who are not entitled to it.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Any
expense not officially allowed.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++ Miscellaneous
expenditure that will not stand the scrutiny of Audit.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Most of the officers who spend this money illegally are honest and sincere
and will be appalled at the idea of being corrupt or misusing government
funds, but they have no qualms about misusing the Secret Funds. Since these
funds are not auditable, they have a feeling that they can use it as they
want. It has come to the notice of <b>DDT</b> recently of an instance of a very
honest officer of paying for the air ticket of another honest officer out
of the Secret funds. <b>Both of them had no feelings of guilt!</b><br>
<br>
<b>But the CAG is not exactly amused!<br>
<br>
The CAG’s report to Parliament stated, </b></font></p>
<p align="justify"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Secret Services: Inadequate monitoring</font></b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><br>
<br>
<font color="#663399">An expenditure of Rs. 15 crore (Revenue Department; Rs.
1.62 crore; Direct Taxes; Rs. 4.52 crore; Indirect taxes; Rs. 8.87 crore) was
incurred during the years 2003-06 on ‘secret services’. The expenditure
on secret services is to be monitored by the respective Head of the Office
through reports submitted by the officer designated for incurring
expenditure on secret services. Test check revealed that expenditure had not
been monitored and utilisation certificate of secret service expenditure was
not sent either to the office of the Accountant General or to the respective
Pay and Account Offices as required under the Ministry of Finance, Department
of Expenditure, standing orders. The department and the two Boards
did not thus exercise any control over the expenditure on secret services.<br>
<br>
The Department stated (March 2007) that necessary instructions had been issued
to all budgetary authorities under the Department of Revenue, CBEC and CBDT.</font><br>
<br>
The CAG recommended that <b>Strong monitoring mechanism is needed for ensuring
control over the functioning of attached/field/subordinate offices.</b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jairam
Ramesh praises Customs Commissioner</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Jairam Ramesh, Minister of
State for Commerce, launched a new initiative of the Spices Board in the
Karbi Anglong district of Assam, one of the most backward regions of the
state populated by the indigenous people belonging to the Karbi Tribe.
This initiative intends to start the organic cultivation of turmeric (haldi),
ginger (adrak) and chilli (mirchi) in the district on a large-scale and
to promote its processing and export as well.<br>
<br>
Two companies have been set up as producers’ companies under the Companies
Act, 1956 --Coinonya Farms Producers Company Limited for turmeric and Karbi
Farms Producer Company Limited for ginger and chilli. Producers’ Companies
is a new provision in the Companies Act which give primary producers the
flexibility to organize themselves as a normal company but on the basis of
a one man-one vote principle which is the essence of a cooperative institution.
Producers’ Company combines the economic advantage
of a corporate entity with the social benefits of a cooperative.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The two companies are located in Paroli and Rongmanpi in the Hamren sub-division
of Karbi Anglong district. Each company has a full-time chairman and managing
director. The Spices Board owns 49% of each company and its equity stake is
Rs 1 crore in each company. Local tribal farmers, mostly small and marginal,
traditionally practicing jhum cultivation own 51% in each company. Land owned
by these farmers have been transferred to these two companies as their contribution
to equity. 600 farmers own 51% of Coinonya Farms Producer Company Limited and
400 farmers own 51% of Karbi Farms Producer Company Limited. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Each company will initially have a plantation area of 500 hectares which will
be cultivated over a five year period, with 175 hectares being taken up in
the first year itself. MOUs are being signed with private companies for processing
and marketing. The first such MOU has already been signed by Coinonya Farms
with Arjuna Natural Extracts for extraction and marketing of turmeric products.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Jairam Ramesh congratulated <b>Donald Ingty, Commissioner of Customs, Kochi who
spearheaded this project for the benefit of the community to which he belongs
and who sought out the support of the Spices Board in this venture.</b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Financial
Inclusion – The Indian Experience</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One
common measure of FI is the percentage of adult population having bank accounts.
Going by the available data on the number of savings bank accounts and assuming
that one person has only one account, (which assumption may not be correct
as many persons could have more than one bank account) we find that on an
all India basis 59 per cent of adult population in the country have bank
accounts – in other words 41 per cent of the population
is unbanked. In rural areas the coverage is 39 per cent against 60 per
cent in urban areas. The unbanked population is higher in the North Eastern
and Eastern regions.<br>
<strong><br>
Who are the excluded?</strong><br>
<br>
The financially excluded sections largely comprise marginal farmers, landless
labourers, oral lessees, self employed and unorganised sector enterprises,
urban slum dwellers, migrants, ethnic minorities and socially excluded groups,
senior citizens and women. While there are pockets of large excluded population
in all parts of the country, the North East, Eastern and Central regions
contain most of the financially excluded population. <br>
<br>
<strong>Reasons for financial exclusion</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In remote, hilly and sparsely populated areas with poor infrastructure, physical
access itself acts as a deterrent. From the demand side, lack of awareness,
low incomes/assets, social exclusion, illiteracy act as barriers. From the
supply side, distance from branch, branch timings, cumbersome documentation
and procedures, unsuitable products, language, staff attitudes are common reasons
for exclusion. All these result in higher transaction cost apart from procedural
hassles. On the other hand, the ease of availability of informal credit sources
makes these popular even if costlier. The requirements of independent documentary
proof of identity and address can be a very important barrier in having a bank
account especially for migrants and slum dwellers.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <br>
<strong>Recent initiatives by Reserve Bank of India</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reserve Bank has
undertaken a number of measures with the objective of attracting the financially
excluded population into the structured financial system. In November 2005,
banks were advised to make available a basic banking ‘no-frills’ account
with low or nil minimum balances as well as charges to expand the outreach
of such accounts to vast sections of the population. Banks are required to
make available all printed material used by retail customers in the concerned
regional language.<br>
<br>
In order to ensure that persons belonging to low income group, both in urban
and rural areas do not encounter difficulties in opening bank accounts, the
know your customer (KYC) procedures for opening accounts has been simplified
for those persons with balances not exceeding Rs 50000/- and credits in the
accounts not exceeding Rs.100000/- in a year. The simplified procedure allows
introduction by a customer on whom full KYC drill has been followed. <br>
<br>
Banks have been asked to consider introduction of a General purpose Credit
Card (GCC) facility up to Rs. 25000/- at their rural and semi urban braches.
The credit facility is in the nature of revolving credit entitling the holder
to withdraw upto the limit sanctioned. Based on assessment of household cash
flows, the limits are sanctioned without insistence on security or purpose.
Interest rate on the facility is completely deregulated.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A simplified mechanism for one-time settlement of overdue loans up to Rs.25,000/-
has been suggested for adoption. Banks have been specifically advised that
borrowers with loans settled under the one time settlement scheme will be eligible
to re-access the formal financial system for fresh credit.<br>
<br>
In January 2006, banks were permitted to utilise the services of non-governmental
organisations (NGOs/SHGs), micro-finance institutions and other civil society
organisations as intermediaries in providing financial and banking services
through the use of business facilitator and business correspondent (BC)
models. The BC model allows banks to do ‘cash in - cash out’ transactions
at the location of the BC and allows branchless banking.<br>
<br>
Other measures include setting up pilots for credit counselling and financial
education. A multilingual website in 13 Indian languages on all matters concerning
banking and the common person has been launched by the Reserve Bank on 18
June 2007.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Huge increase in no frills accounts</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The outcome of the efforts made is reflected in the increase of 6 million
new ‘no frills’ bank accounts opened between March 2006 and
2007. In view of their vast branch network (45000 rural and semi urban
branches) public sector banks and the regional rural banks have been able
to scale up their efforts by merely leveraging on the existing capacity.
FI is being viewed by these banks as a huge business opportunity in an
overall environment that facilitates enterprise and growth. It provides
them a competitive advantage and defines a clear niche for their growth.<br>
<br>
<font color="#663399">From the speech by Smt. Usha Thorat, Deputy Governor, Reserve Bank of India
at the HMT-DFID Financial Inclusion Conference 2007, Whitehall Place, London,
UK on June 19, 2007.</font></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600"> From our Legal Corner – tomorrow’s cases</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><b><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_31.gif" alt="Legal Corner Icon" width="191" height="160" hspace="5" border="0" align="left"></b></b></b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#FF0000"><strong>Income Tax</strong></font><strong><br>
<br>
<font color="#663399">Tax paid on self-assessment basis : Interest on refund cannot be denied :
Madras HC</font><br>
<br>
<font color="#FF0000">Evidence</font><br>
<font color="#663399"><br>
Evidence Act - photocopies cannot be received as secondary evidence - Secondary
evidence, as general rule is admissible only in absence of primary evidence
- If original itself is found to be inadmissible, same party is not entitled
to introduce secondary evidence of its content : SC</font></strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000"> Central Excise</font><br>
<br>
<font color="#663399">AC sits in judgement over Tribunal's orders - Order set aside - Refund ordered
with interest - AC's contumacious Order - Had SDR not pleaded for mercy on
his behalf, we would have recommended stringent action against the officer
: Tribunal<br>
<br>
<font color="#FF6666">Obeying CESTAT orders is not a favourite trait in the field. Even after appearing
before the Tribunal and admitting his mistake, an AC flouted the orders of
the Tribunal and it was left to the DR to beg for mercy on the errant AC<br>
</font><br>
See our columns tomorrow for the judgements</font></strong><br>
<br>
<font color="#FF6666">Until Tomorrow with more DDT</font></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="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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