TIOL-DDT 797 · the untouched capture
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<p><font size="2"><strong><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif">TIOL-DDT 797 </font><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"></font><font face="Verdana, Arial, Helvetica, sans-serif"><br>
05.02.2008 <br>
Tuesday </font></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Pass speaking orders - Supreme Court tells High Courts </font></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>If Supreme Court can pass one line orders, can't High Courts do the same? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A High Court passed an order as follows: </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“Heard, Dismissed, reasons to follow”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The matter is in appeal before the Supreme Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court referred to some of its earlier orders. More than two decades ago, in State of Punjab v. Jagdev Singh Talwandi , the Court had observed, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. It is desirable that the final order which the High Court intends to pass should not be announced until a reasoned judgment is ready for pronouncement. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Suppose, for example, that a final order without a reasoned judgment is announced by the High Court that a house shall be demolished, or that the custody of a child shall be handed over to one parent as against the order, or that a person accused of a serious charge is acquitted, or that a statute is unconstitutional or, as in the instant case, that a detenu be released from detention. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. If the object of passing such orders is to ensure speedy compliance with them, that object is more often defeated by the aggrieved party filing a special leave petition in this Court against the order passed by the High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. That places this Court in a predicament because, without the benefit of the reasoning of the High Court, it is difficult for this Court to allow the bare order to be implemented. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The result inevitably is that the operation of the order passed by the High Court has to be stayed pending delivery of the reasoned judgment. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>If Supreme Court can pass such one line orders, can't the High Courts do the same? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>‘No', said the Supreme Court, because </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The Supreme Court is the final Court in the hierarchy of our courts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The orders passed by this Court are final and no appeal lies against them. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Besides, orders without a reasoned judgment are passed by this Court very rarely, under exceptional circumstances. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Orders passed by the High Court are subject to the appellate jurisdiction of this Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. One of the main reasons for disclosing and discussing the grounds in support of a judgment is to enable a higher court to examine the same in case of a challenge. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. It is, of course, desirable to assign reasons for every order or judgment, but the requirement is not imperative in the case of this Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. It is, therefore, futile to suggest that if this Court has issued an order which apparently seems to be similar to the impugned order, the High Court can also do so </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So the matter was remanded to the High Court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though, we thought that this judgement need not be covered by us, many netizens called up and asked about the judgement. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2008/2008-TIOL-14-SC-MISC.htm" target="_blank"><strong>2008-TIOL-14-SC-MISC</strong></a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What are ‘speaking orders'? </strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Long ago in a social gathering of Central Excise officers, I conducted a survey as to what <em>speaking orders </em>were. These are some of the answers I received </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. They are other than adjudication orders </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. They are given when there is no offence case </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. They are orders relating to refunds. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. They are orders when no SCN is issued </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. They are issued when demanded by the party </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>And they are orders that speak for themselves. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In simple terms, a speaking order is an order that speaks for itself. The order should stand the test of legality, fairness and reason at all the higher appellate forums. That is, the order should contain all the details of the issue, clear findings and a reasoned order. Such an order that speaks for itself is called a speaking order. Even the courts are required to give speaking orders except perhaps when the appeal is dismissed as the court agrees with the lower court. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Speaking orders are necessary if judicial review is to be effective. One basis of this requirement is to exclude or minimise arbitrariness. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Justice Mathew said, “The judicial method cannot be disinterested. To call it to be ‘reasoned' means little for ‘reason' is a tool not an end. The results of a process of reasoning depend entirely upon what premises are used in that process. Although reason is not the life of law, it surely is a part of law”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So when I say that a particular rule is applicable, I should also say why it is applicable. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If reason is absent, the appellant forum is in the dark. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Speaking orders are orders, which tell their own story. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Speaking Orders as a concept was not given much importance in India , in the early years of our independence, when the officialdom was not often questioned. (Perhaps then their actions were not much questionable also) It was justice Bhagavathi , in Express Newspapers v UOI , who first expressed the need for Speaking Orders. In Siemens Engg & manufacturing Company V UOI the Supreme Court held that “where an authority in exercise of a quasi judicial function, makes an order, it must record its reasons. In the same case the court observed, “In fact it would be desirable that in cases arising under Customs and Excise laws, an independent quasi judicial tribunal .. is set up which would finally dispose of appeals and Revision applications under these laws, instead of leaving those appeals to the Government of India. An independent quasi-judicial tribunal would definitely inspire greater confidence in the public mind. And perhaps that is how the CEGAT ( CESTAT ) was born. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Law Commission in its Fourteenth report ( Vol.II , P.694 , ch.31 ) suggested, “in the case of administrative decisions, provision should be made that they should be accompanied by reasons.” </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In USA , The Administrative Procedure Act, Section 8 stipulates a speaking order. It reads, “All <em> decisions (including initial, recommended and tentative decisions) shall include a statement of findings and conclusions and the reasons or basis thereof, on all material issues of fact, law or discretion presented on the record </em>”. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Well, perhaps nobody could have expressed it better than the American Law. Incidentally the US law distinguishes between adjudication and order. “Order means the whole or any part of the final disposition (whether affirmative or declaratory in form) in any matter other than rule making but including licensing. Adjudication means the process for the formulation of an order. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though there is no specific law in India on this, including in Central Excise and Customs, the courts have made speaking orders mandatory. In Customs and Excise, we have provisions for issue of Show Cause Notices, but the law specifically does not require the adjudicating or appellate authorities to give speaking orders. But whether it is provided in the Acts or not, an adjudication order has to be a speaking order even if it relates to a simple thing like waiver of pre- deposit. The Supreme Court has now made the position absolutely clear even for High Courts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT Extends Due Date For Tds Quarterly Returns </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The CBDT has extended the due date for filing of quarterly statements of Tax Deducted at Source ( TDS ) and Tax Collected at Source ( TCS ) for the quarter ending 30th September 2007 of financial year 2007-08 to 29th February 2008. This is in view of the difficulties being faced by the tax deductors / collectors in filing statements with the correct PAN data mandatorily required to be furnished to the extent of at least 90% in the cases of salaried deductees and 70% in the cases of other deductees . </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For and from the quarter ending 30.9.2007, in addition to government offices and companies, filing of TDS / TCS returns in electronic form has been made mandatory for </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) deductors / collectors required to get their accounts audited under section 44AB of the Income-tax Act in the immediately preceding financial year, and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) where the number of deductees ' / collectees ' records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cbdt_extension.htm" target="_blank">CBDT Press release No.402 /92/2006-MC (07 of 2008) dated the 4th February 2008. </a></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font> <font color="#FF6633" size="5">tiol</font> <font color="#006600">– Tomorrow's cases </font><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 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"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><strong><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></strong></b></font></b></font></b></font></b></font></b></font></b></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NDPS </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Conviction under NDPS Act – presence of a gazetted officer is required for searching a person, not a house – Supreme Court </strong></font></p>
<p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">In
the first place, there is no question in this case, of any such right of
the accused. The right of the search being taken only in presence of a
Magistrate or a gazetted officer is restricted where the search is to be
taken of a 'person' of the accused. In this case the search was of a house
and, therefore, all that the investigating officer had to follow was the
conditions under Section 42 of the Act read with Section 100 Code of Criminal
Procedure, 1973. Therefore,
the argument that the accused had any right in respect of the aforementioned
search and that right has been breached is wholly incorrect.
<o:p></o:p>
</font></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Prosecution launched before application in Settlement Commission – no immunity from prosecution – petitioner could have still opted for compounding: Delhi High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is no doubt that the provision for settlements introduced in statutes like the one in Customs Act regarding filing of applications by evaders of customs duty etc. before the Settlement Commission for settlement of the disputes regarding the amount of evaded duty are meant for ensuring that proceedings before the criminal courts are avoided and the Government is also not put to financial loss. However, as noticed already and which position was not disputed even by the learned senior counsel for the petitioners, the remedy of seeking immunity from prosecution from the Settlement Commission is available only before the initiation of prosecution proceedings by the Customs Department. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Relief for Eicher Ltd; ITAT holds change of opinion cannot form the basis permitting Assessing Officer or his successor to reopen assessment </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE assessee company is engaged in the business of manufacture and sale of tractors, engines, motor cycles, gears their spares and components. It was noticed by the AO that the appellant company to expand its product range has incurred expenses on inspection and testing, component development expenses of various nature and professional consultancy expenses totalling to Rs. 1,56,62,632/-. The AO held that expenditure to be of capital in nature. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The present case is a case of reassessment. The original assessment u/s 143(3) was completed vide order dated 28.3.2002 u/s 143(3) of the Act. The said assessment was reopened by issue of notice dated 18.3.2004 u/s 148 of the I.T. Act and reassessment is completed vide the impugned assessment order dated 28.2.2005 passed u/s 148/143(3) of the Act wherein disallowance of above-mentioned amount of Rs. 1 ,56,62,632 /- was made. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Input Services - Canteen or Catering services provided to employees may be obligatory as per Factories Act but it cannot automatically lead to conclusion that the same relates to business activity – Credit not available : Tribunal </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CONSISTENCY requires you to be as ignorant today as you were a year ago. – Bernard Berenson , Notebook, 1892. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A few days ago, a set of appeals filed by the Revenue [ CCE , Nashik ] came up before the Tribunal challenging the propriety of the order of the Commissioner (A) in extending the benefit of Cenvat Credit in respect of Service tax paid on Catering Services provided in the company canteens. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">However, this time around, the same Single Member Bench that had pronounced its decision in the case of Manikgarh Cement (supra) took a diagonally opposite view unpalatable to the bon vivant by adopting the following rationale – </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“The catering/canteen services are neither used in or in relation to the manufacture or clearance of final products nor can it be said to be an activity relating to business. The illustration of activities relating to business viz. accounting, auditing, financing etc. are all connected with the business of manufacture. Catering service cannot be treated as an activity relating to business and even if it is obligatory on the part of the assessees/respondents as per the requirements of the Factories Act, 1948, to provide a canteen, this does not automatically lead to the conclusion that a catering service relates to business activity. It is in the nature of welfare activity and not an activity relating to business.” </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Tomorrow for the judgements </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more DDT </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p>
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