TIOL-DDT 881 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 881 </font><br>
06.06.2008 <br>
Friday </strong></font></p>
<div align="center"><font size="2"><strong><font color="#006600" face="Verdana, Arial, Helvetica, sans-serif">Indian Austerity Service </font></strong></font>
</div>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Babus asked to tighten belts – Austerity in Administration </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government is feeling the heat and when the heat is more fiscal than political, it is for the Finance Minister to provide the coolant. Close on the heels of the PM's call for austerity and cut in foreign trips, the Finance Ministry, Department of Expenditure has issued fresh guidelines on Expenditure Management. Obviously, the Expenditure Department is not to spend money, but to ensure that money is not spent – at least not spent unwisely. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Highlights of the new Guidelines: </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Additional expenditure over and above the prescribed approved ceiling for existing schemes will not be permitted and any amendment to a scheme is to be accompanied with matching savings. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. every Ministry/Department is to effect a mandatory 10% cut in non-Plan expenditure under the heads </font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) Overtime Allowance (except in the case of industrial establishments where OTA is granted due to statutory obligations) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) Domestic and Foreign Travel expenses </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) Publications </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(d) Professional Services </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(e) Advertising and Publicity </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(f) Office expenses </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(g) Petroleum –Oil-Lubricants ( POL ) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(h) Other administrative expenses </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. The remaining portions of non-plan expenditure, excluding interest payment, repayment of debt, Defence capital, salaries, pension and the Finance Commission grants to the States, will be subjected to a mandatory 5% cut. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. a 10% cut in the budgetary allocation for seminars and conferences has been imposed. The practice of holding meetings and conferences at five star hotels is to be discontinued. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. take advantage of the increasing competition in air travel schemes offering discounts to contain expenditure on air travel. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Observance of discipline in fiscal transfers to States, Public Sector Undertakings and Autonomous bodies at Centre, State and local levels and ensuring a balanced pace of expenditure. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">To ensure effective monitoring of the implementation of the instructions, the Cabinet Secretary will hold a meeting with the Secretary of defaulting Ministry/Department every quarter. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will all these really help or rather who is going to follow this? More meetings will be held to discuss these matters and more money wasted on travel and wasting paper! In any case, how much money is going to be saved in all these exercises? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Government should set an example in austerity in use of petro products. There was a time when even Supreme Court judges used to travel in pool cars. There is simply no logic in each officer using a separate car for coming to office and going home. You stand in front of any Chief Commissioner's office in the evening and you can see at least fifty cars leaving with just one passenger inside – right from Assistant Commissioner to Chief Commissioner, they all have individual cars, clogging the roads and wasting precious fuel. Why can't they share the cars? Be comfortable, but at least three officers can travel in one car. And every minister has a convoy of at least four vehicles. State Chief Ministers usually have a convoy of more than a hundred cars following them when they go on tour. This is criminal waste of precious petrol. In the name of Security, there is no real logic in sanctioning a large convoy for our politicians – After all how many politicians are going to be blown up by terrorists? Our experience has been that the best of Security could not protect our leaders from mad terrorists; then why bother with so much expenditure and burning of petrol? Let there be a rule that nobody should have more than one escort vehicle, including the President and Prime Minister and all those Z class security VIPs. And let there be a rule that no VIP will be received at airports with more than one vehicle. We should try to have austerity in use of petrol, not in trying to have a 10% cut in expenditure. And why should the Government subsidise petrol? Even when the richest Indian buys petrol, he gets a gift of about twenty rupees per litre from the government! </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Payment of interest on delayed refund of Deemed Export DBK / TED / CST – DGFT clarifies </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In terms of Handbook of Procedure Vol I 2004-2009 (RE 11.04.2008), the application for claiming interest has to be filed in the prescribed Aayat Niryat form within a period of 90 days after receipt of cheque for the main claim. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The AN form was released under <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn010.htm" target="_blank">Public Notice No. 10 (RE-2008)/2004-2009</a>, dated 29th April, 2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So a doubt has been raised about the period of filing claim for interest in those cases which were approved on or after 01.04.2007 upto the date of policy announcement on 11.04.2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has clarified </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. that the claim for interest may be filed within 90 days from 29.04.2008, i.e. the date of issue of above mentioned Public Notice. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The same period of 90 days will also be applicable for old cases approved on or after 01.04.2007 till 29.04.2008. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. For fresh cases, the period of 90 days will apply from the date of issue of cheque. </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=46&filename=notification/dgft/2008/dgft08cir009.htm" target="_blank">DGFT Policy Circular NO 9 (RE-2008) 2004-09, Dated: June 5, 2008</a> </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>EPCG - Export obligation automatically extended when ban is imposed on exports </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
DGFT PN stipulates that </font></p>
<blockquote>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">“Whenever a ban/restriction is imposed on export of any product, export obligation period in respect of EPCG authorizations already issued prior to imposition of ban of such export products, would stand automatically extended for a period equivalent to the duration of ban, without any composition fee and exporter would not be required to fulfill average E.O. as well for the ban period”. </font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn026.htm" target="_blank">PUBLIC NOTICE No. 26 (RE-2008)/2004-2009 Dated 3 June, 2008</a> </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden <font color="#FF6633" size="5">tiol</font> – Monday ' s cases </strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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><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></font></strong></font></strong></font></font></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>Valuation - even if the parties are related, if it has not influenced the price at which goods are sold; transaction value has to be accepted – Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Even if the STL is taken to be a related person to BTL [we are not holding so], it has not influenced the price at which goods are sold by BTL to STL . Under the circumstances, transaction value has to be accepted. Without recording any finding as to whether BTL or STL are related persons and leaving the said question open, since the product is being sold to STL at or about the same price at which it was sold to DOT and MTNL , the relationship of BTL and STL did not influence the price and, therefore, the transaction value between BTL and STL has to be accepted in the facts and circumstances of this case. </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>Imported goods re-exported - duty originally paid from DEPB Credit - Revenue cannot reject both refund and DEPB credit - Principle of unjust enrichment applies to Government also – Supreme Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is a cardinal principle of law, which has been settled by a Bench of seven Judges of this Court in the case of Mafatlal Industries Ltd. v. Union of India, that refund of a claim made by the assessee can be denied on the principle of undue enrichment if the assessee has passed of the burden to the consumers. This principle would be equally applicable to the revenue as well as it cannot have the double advantage. Applying the same principle, revenue cannot be allowed to enrich itself by denying the duty drawback as well as by refusing adjustment of duty paid by way of debit in DEPB . Admittedly, in this case the parts imported by the assessee were re-exported. Once the imported parts which were found to be defective/unusable are re-exported, assessee became entitled to either refund of the duty, if paid in cash or adjustment of the duty if paid by way of debit in DEPB book either by reversing the entry or by issuing a fresh DEPB book, as provided in the public notice dated 30.6.2000. Public Notice dated 30.6.2000 is procedural in nature and it does not make any substantive change in the policy. Procedural laws cannot be equated with substantive laws. Substantive laws are generally not retrospective unless specified to the contrary by the Legislature. Insofar as procedural laws are concerned, they may be retrospective unless shown to the contrary. Otherwise also, once the imported parts which were found to be defective are re-exported, assessee under the policy itself without reference to the public notice would be entitled for adjustment of the duty paid by way of adjustment in DEPB . The revenue cannot be permitted to take the stand that it would not refund the duty as it was not paid in cash or deny the adjustment in DEPB book after the goods have been re-exported. </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>Gold Biscuits purchased with cash - No deduction claimed, but investment made from undisclosed sources to be added: High Court </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Expenditure obviously means, expenditure admissible to be deducted, from out of the income, which may include the expenditure on purchase, and the like, and the sub-section provides, that if any such expenditure is incurred after specified date, in a specified manner, then 20% of such expenditure shall not be allowed as a deduction. In the present case the assessee has not claimed any deduction of any expenditure of Rs. 3 ,88,000 /- or Rs. 7,35,000/-, and therefore, there is no question of not allowing any part of that expenditure, as deduction. Thus, the finding arrived at in this regard, by the Commissioner, and the Tribunal, cannot be said to be wrong. The investment is clearly investment, on the face of it, made from out of the funds available with the assessee, from undisclosed sources, and is unexplained investment. What happened to the sale proceeds, where that money has gone etc., are all aspects, which are alien to the present controversy. In that view of the matter, we have not been able to persuade ourselves, to concur with the finding of the Tribunal, on this question, rather the findings of the assessing officer, and the Commissioner, are the findings, in accordance with law. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns Monday for the judgements </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT </strong></font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend. </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></font></p>
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