TIOL-DDT 824 · the untouched capture
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<div align="justify"><font color="#663399" size="3" face="Verdana, Arial, Helvetica, sans-serif"><strong>TIOL-DDT
824 <br>
</strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>13.
03. 2008<br>
Thursday</strong></font></div>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Joint
Commissioner = Additional Commissioner: Central Excise adjudication</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What
about Service Tax?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6852" target="_blank">DDT
809 – 21.02.2008</a>
asked the above question and observed,</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">As
per CBEC Circular No. 752/2003 dated 1.10.2003, Joint Commissioners can
adjudicate cases involving duty above Rs. 5 Lakhs and up to Rs. 20 Lakhs.
Additional Commissioners can adjudicate cases above 20 Lakhs and up to Rs.
50 Lakhs.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">In
a Department in which HR planning is totally absent, there seems to be a scarcity
of Additional Commissioners and so the 20 to 50 lakhs cases are held up for
adjudication. </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">So
now the Board has made the Joint Commissioners equal to the Additional Commissioners.
That is Joint Commissioner can adjudicate cases involving duty up to Rs. 50
Lakhs. A Deputy Commissioner who can adjudicate up to Rs. 5 Lakhs, on promotion
gets power to adjudicate ten times that amount. Anyway this tinkering does not
make much of a difference for the assessee as all these officers work overtime
to give the consultants a large number of appeals.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
the Board wants Commissioners to distribute the adjudication work among their
JCs and ADCs and issue necessary corrigendum notices and transfer the relevant
files – all within 15 days. 15 days from when? Board has not clarified
that. It should be assumed that it would be 15 days from the receipt of the
Board Circular by the Commissioners. Many of them will not receive it till another
month!</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">And
as usual Board has forgotten that there is a similar circular 80/1/2005- ST,
Dated: August 10, 2005 for Service Tax where identical powers are </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF0000">wasted</font></strong></font> <font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">on
the JC and Additional Commissioner. Board has not amended that Circular. Hopefully
it will come in the next few days.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It
took the Board nearly 20 days to realise this mistake after we pointed out the
lapse and now they have corrected it. Now in Service Tax also, Joint Commissioners
can adjudicate cases up to Rs. 50 Lakhs! A responsive Board is always a responsible
Board!</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=41&filename=notification/servicetax/2008/sercir99.htm" target="_blank">CBEC
Circular No. 99/2/2008-Service Tax Dated 11th March, 2008</a><strong> and </strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2008/stnot08_016.htm" target="_blank">Notification No.
16/2008 – Service Tax Dated 11th March, 2008</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Quasi
Judicial orders – accountability – disciplinary proceedings</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Duli Chand case is noticed by the Central Vigilance Commissioner. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If
you remember, we had carried many stories on the ZB Nagarkar and Duli Chand
cases regarding disciplinary action against quasi judicial authorities for
the orders passed by them. In fact I had the shock of my life when Duli
Chand once called me and said, “I am Duli Chand”. For me “UOI
Vs Duli Chand” - </font><strong><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2006/2006-TIOL-78-SC-MISC-LB.htm">2006-TIOL-78-SC-MISC-LB</a></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">was
another case and I never in my wildest imagination thought that a character
from a case would actually call me up. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now
the CVC has taken note of the case and suggested that the CVOs, while sending
the case to the Commission for advice against the lapses of officials exercising
quasi-judicial powers, should examine critically whether any of the criteria
listed below as per the Supreme Court judgement, was attracted or not.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i)
Where the officer had acted in a manner as would reflect on his reputation for
integrity or good faith or devotion to duty.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii)
If there is prima facie material to show recklessness or misconduct in the discharge
of his duty;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii)
If he has acted in a manner which is unbecoming of a Government Servant; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv)
If he had acted negligently or that he omitted the prescribed conditions which
are essential for the exercise of the statutory powers;</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v)
If he had acted in order to unduly favour a party; </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) If
he had actuated by corrupt motive, however, small the bribe may be because Lord
Coke said long ago "though the bribe may be small, yet the fault is great.</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/cvccir01.htm" target="_blank">CVC’s
F.No.007/MISC/Legal/04(Pt.) Dated : November 1, 2007</a></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Reporting
of fraud cases to police/State CIDs/Economic Offences Wing of State police by
public sector banks – CVC instructions </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
CVC directs that </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i)
cases of financial frauds of the value of Rs. 1,00,000 and above, which involve
outsiders (private parties) & bank staff, should be reported by the Regional
Head of the bank concerned to a senior officer of the State CID/Economic Offences
Wing of the State concerned. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii)
For cases of financial frauds below the value of Rs.1,00,000, but above Rs.
10,000, the cases should be reported to the local police station by the bank
branch concerned. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii)
All fraud cases of value below Rs. 10,000, involving bank officials, should
be referred to the Regional Head of the bank, who would scrutinize each case
and then direct the bank branch concerned on whether it should be reported to
the local police station for further legal action.</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/cvccir01.htm" target="_blank">CV
No.007/VGL/050 Dated : January 3, 2008</a></font></p>
<p align="justify"><font color="#993300"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today
we bring you another interesting capsule of the budget through an interesting
powerpoint prepared by Bimal Jain – <a href="http://www.taxindiaonline.com/RC2/pdfdocs/budget_2008.ppt">Click Here
for the presentation.</a></font></strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Jurispruden</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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"><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"><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"><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"><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></strong></font></strong></font></strong></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></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></font></strong></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Sales
Tax </strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Amortisation
under Central Excise law is not applicable to Sales Tax – Supreme Court</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tomorrow
we bring you a landmark judgement of the Supreme Court on valuation –
in Central Excise and Sales Tax. </font></p>
<p align="justify"><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Supreme Court, in a scholarly judgement with crystal clear understanding of
the concepts of amortisation and valuation under Central Excise and Sales Tax,
has explained the subtle difference between the valuation in Central Excise
and Sales Tax, thereby once again proving that our Supreme Court is really SUPREME
in understanding the complexities of tax laws, which even the experienced taxmen
find confusing. In a world of falling standards, our Supreme Court stands outstanding
as a classic example of excellence.</font></p>
<p align="justify"><font color="#000000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">The
question is whether the concept of amortisation known to Central Excise Valuation
can be applied to U.P. Trade Tax Act, 1948.?</font></strong> Valuation is a matter
of principle. Under Section 4 of the Central Excise Act, the basis of valuation
is the transaction value for each removal. Section 4 lays down the method for
arriving at the assessable value for levying excise duty. It refers to taxing
the value. Therefore, Section 3 of the Act is the charging section which
creates the liability to pay excise duty whereas Section 4 deals with assessment
or quantification of liability ad valorem. Under Section 4, duty of excise is
chargeable with reference to the value of excisable goods and "value"
is defined by Section 4. The price charged by the manufacturer on sale by him
represents the measure of that value, therefore, prices and sale are related
concepts. Therefore, Section 4 of the 1944 Act requires the Department to find
out the real value of the excisable article. Excise is a tax on value. <strong><font color="#FF6633">This
is the most important distinction between the excise law and the sales tax law.</font></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#993300">Cost
is a fact</font></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font color="#993300"><strong>Price
is a policy</strong></font></font></p>
<p align="center"><font color="#993300"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Profit
is a projection</font></strong></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>Income
Tax – expenditure on abandoned project - disallowed since there is no
corresponding credit either by way of contract receipts or in the least equivalent
amount of work in progress : ITAT</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">THE
assessee is in appeal agitating the order of the CIT (A) raising the following
grounds mainly on two issues:</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"A.
Cost of Projects - Rs. 6,64,01,149/-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a)
That the learned DCIT erred in disallowing the sum of Rs. 6,64,01,149/- towards
the Amarkantak Thermal Power Project in Madhya Pradesh.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b)
That the learned DCIT erred in stating that expenditure on a project cannot
be merely allowed as an expenditure unless there is a corresponding credit in
the form of contract receipt or work in progress.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c)
That he ought to have observed that the Madhya Pradesh Electricity Board had
arbitrarily terminated the project and accordingly the expenditure incurred
on the project would be an allowable expenditure under the Income-tax Act, 1961.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central
Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Remission
of excise duty on goods destroyed in fire – no body invites a fire accident
– CESTAT sets aside ingenious findings of Commissioner in not allowing
remission </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">IT</font></strong>
is erring on revenue side at its best. When it is decided that no benefit is
to be extended, the orders are given by adopting novel ways and innovative findings.
In this case, an assessee sought remission of excise duty on goods destroyed
in fire. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Their
insurance claim was settled by the insurers by holding that it was a case of
fire accident. The report of the forensic laboratory analysed the cause of fire
as due to short circuit and on that basis the investigation by the police department
stands concluded. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">NDPS
</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Conviction
– small quantity and accused is only a carrier and not a kingpin - quantity
of narcotic drug or psychotropic substance found in mixture, relevant for the
purpose of imposition of punishment – sentence reduced to six years :
Supreme Court</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On
5.3.2001, the Intelligence Officer was informed that two persons with certain
drugs would be arriving by a Tamil Nadu Transport Corporation Bus at Thiruvananthapuram
Bus Stand. The Officer along with other persons and the informant went to the
bus stand and waited for the bus. At about 9.00 a .m., the two accused alighted
from the Tamil Nadu Transport Corporation bus. They were identified by the informant.
They were intercepted by the officials. The officials disclosed their identity
and the accused were searched. When asked about possession of narcotic drugs,
it was admitted by the accused that they were carrying 4 kgs. of heroin and
they handed over the bag to the Officer. The bag contained two packets wrapped
in Tamil newspapers secured with brown adhesive tape in which light grey powder
was found. Two samples of 5 gms. each from both the drug packets were packed,
sealed and sent for testing to the Laboratory. The accused were arrested, but
the second accused escaped while on the way to produce them before the Magistrate.
On 26.3.2001, the Customs House Laboratory, Cochin sent a report confirming
the samples as answering to the test of crude heroin, a narcotic drug covered
under the NDPS Act. The report further said that the Laboratory was not equipped
to conduct a quantitative test. Thus, the samples were sent for quantitative
test. On 22.2.2002, a quantitative test was done in the Customs Laboratory,
Chennai where the purity was tested.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See
our columns tomorrow for the judgements</font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
tomorrow with more DDT</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="mailto:vijaywrite@taxindiaonline.com" target="_blank">vijaywrite@taxindiaonline.com</a></font></p>
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