TIOL-DDT 951 · 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 951</font><br>
15.09.2008<br>
Monday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import Authorisation for Restricted Items – Only through Specified Ports</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The DGFT has amended the Handbook of Procedures (Vol.I), to stipulate that;</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import authorizations for a restricted item if so directed by the competent authority, shall be issued for import through one of the sea ports or air ports or ICDs or LCS , as per the option indicated, in writing, by the applicant. Authorization holder shall register the same at the port specified in the authorization and thereafter all imports against said authorization shall be made only through that port, unless the authorization holder obtains permission from customs authority concerned to import through any other specified port.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn078.htm">PUBLIC NOTICE NO. 78/(RE-2008)/2004-09, Dated: September 10, 2008</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Inflation as the Government sees it</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Annual rate of inflation, year on year as conventionally measured, moderated to 12.10 per cent for the week ending August 30, 2008 compared to 12.34 per cent reported a week earlier and 12.63 per cent for the week ending August 9, 2008. Inflation in the same period in the previous year at 3.72 per cent, however, was significantly lower.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Imagine! Inflation this year is nearly four times that of the previous year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For some of the important consumer items, however, inflation in the current year remained low. The inflation for primary food articles at 4.6 per cent on August 30, 2008 was lower compared to the inflation of 7.1 per cent, a year earlier. In manufactured products also, inflation for cement (at 2.0 per cent in the current year compared to 12.9 per cent, a year earlier) and machinery items (at 5.5 per cent in the current year compared to 8.7 per cent, a year earlier) remained lower.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Annual rate of inflation is a cumulative impact of changes in prices over 52 weeks. Since consumption is spread over time, average inflation over 52 weeks is often a better measure of the impact of price changes. Average 52-week inflation for three broad groups of commodities as summarized in Table below indicate that while overall inflation is higher in the current year, inflation for primary articles is lower compared to the rates in 2007-08.</font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>52-Week Average Inflation (per cent)</strong></font></p>
<div align="justify">
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top" width="173"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">52 weeks ending </font></strong></p></td>
<td valign="top" width="64"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">August 30, 2008 </font></strong></p></td>
<td valign="top" width="66"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">September 1, 2007 </font></strong></p></td>
<td valign="top" width="57"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">September 2, 2006 </font></strong></p></td>
</tr>
<tr>
<td valign="top" width="173"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Primary Articles </font></p></td>
<td valign="top" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.86 </font></p></td>
<td valign="top" width="66"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9.49 </font></p></td>
<td valign="top" width="57"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.80 </font></p></td>
</tr>
<tr>
<td valign="top" width="173"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Fuel and Power </font></p></td>
<td valign="top" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.76 </font></p></td>
<td valign="top" width="66"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1.70 </font></p></td>
<td valign="top" width="57"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8.67 </font></p></td>
</tr>
<tr>
<td valign="top" width="173"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Manufactured Products </font></p></td>
<td valign="top" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6.96 </font></p></td>
<td valign="top" width="66"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.40 </font></p></td>
<td valign="top" width="57"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2.66 </font></p></td>
</tr>
<tr>
<td valign="top" width="173"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">All Commodities </font></p></td>
<td valign="top" width="64"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7.12 </font></p></td>
<td valign="top" width="66"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5.46 </font></p></td>
<td valign="top" width="57"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4.44 </font></p></td>
</tr>
</table>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Seasonal factors play an important role in build-up of inflation. Deseasonalised index, therefore, are commonly used in assessing price build up. Seasonally adjusted inflation (annualized from month over month build-up) during August 2008 is provisionally estimated at 5.5 per cent, compared to 12.7 per cent in July 2008 and 29.5 per cent in June 2008. Annualized seasonally adjusted inflation in August 2008 has been the lowest since December 2007.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Through this jugglery of words, the Government is trying to impress that things are comfortable. If your head is inside a fridge and your feet are on a burning stove, averagely speaking your body temperature should be a comfortable 40 degrees, but the fact remains that your head will freeze and your feet will be burnt, but don't worry – statistically speaking, you are comfortable.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If your height is six feet and if the average depth of the river you are trying to cross is 5 feet, arithmetically, you can comfortably cross the river, but the fact remains, you will get drowned at the point where the river is 8 feet deep.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And today you don't get any vegetable at less than Rs. 50/- a kg.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI Cases - Conviction Rate: A Reality Check</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Shatrujeet Kapur , DIG, CBI Jaipur had made a study on the highly rated conviction rate in CBI cases and comes up with interesting details.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per official statistics, conviction rate in CBI in the last 10 years has been as under:-</font></p>
<div align="justify">
<table width="450" border="1" align="center" cellpadding="3" cellspacing="0">
<tr>
<td valign="top" width="80"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">YEAR </font></strong></p></td>
<td valign="top" width="132"><p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">PERCENTAGE </font></strong></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1998 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">72 </font></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1999 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">57.1 </font></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2000 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">71.9 </font></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2001 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">70.0 </font></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2002 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">68.7 </font></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2003 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">68.4 </font></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2004 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">66.3 </font></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2005 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">65.6 </font></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2006 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">72.64 </font></p></td>
</tr>
<tr>
<td valign="top" width="80"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2007 </font></p></td>
<td valign="top" width="132"><p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">67.25 </font></p></td>
</tr>
</table>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The above table demonstrates that the conviction rate has ranged between 57.1% and 72.64%. This looks impressive. However, conviction rate in CBI is calculated on the basis of cases resulting in conviction as a percentage of total number of cases disposed of by courts in a year. Clearly, the focus is on <strong>cases ending in conviction</strong> , rather than <strong>accused persons being convicted</strong>. This definition has certain limitations:-</font></p>
<blockquote>
<blockquote>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) Only if one accused is convicted in a case, the whole case is deemed to have resulted in conviction, even though rest of the accused may have been acquitted.</font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) At times, accused persons confess after an informal understanding is reached and only a mild sentence is imposed in such cases like ‘till rising of the court' etc. Such cases inflate the conviction rate.</font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Conviction rate takes into account only the outcome of trial at the first stage i.e. judgement of the trial court. In several instances, convicted persons are later acquitted by the appellate court. Official conviction rate at present does not reflect decisions of the appellate courts.</font></p>
</blockquote>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Substantive Conviction Rate is less than 4% and is a telling commentary on the state of affairs of our criminal justice system.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Justice delayed is justice denied</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On an average, a case instituted in the year 1980 was sent up for trial in 1981, trial proceedings were completed on an average in the year 1988 and appeals filed by the accused persons were decided in the year 1998. Appeals were followed by revisions (which are nothing but appeals by another name).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Conclusions: </strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Judicial processes (trial, appeals, and revisions) in India are tardy. The whole process practically outlives the accused.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• There are too many layers of decision making – trial, first appeal, revision, second appeal and so on.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• The accused has nothing to lose by prolonging trial and post-trial process (and rather gains by the delay).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Quantum of punishment is meagre.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Certainty of punishment is missing.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• As a consequence, compliance levels in the society are low. Only the poor fear law.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• All this unmistakably points to one fact: the existing criminal justice system in India needs to change.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Many officers often cite resource constraints (poor judge/Police to population ratio etc.) as a reason for poor performance. However, this is not tenable. Reason: A system needs to be designed keeping in mind the resources (and not the other way round).</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Issues for consideration:</strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) Post-trial proceedings take too long and negate the very object of the criminal justice system. There is a case for limiting number of appeals/revisions allowed to a convicted accused to just two.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) At present, accused has nothing to lose by filing appeal after appeal. A provision may be made in law that in case the appeal is dismissed, quantum of punishment would be raised. This will discourage frivolous appeals.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Once the appeal of a convicted accused is dismissed, he should logically get an opportunity to file appeal in a higher court. However, the study has shown that 5 convicted accused persons whose conviction was upheld by the appellate court have filed revision in the High Court. In 3 instances, even CBI has filed revisions. Section 397 Cr.PC needs to be amended in a manner that revision does not lie on the issue of sentencing. The word ‘sentencing' should be deleted from this provision.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) There is an urgent need to evolve sentencing guidelines. Presently, there is a huge discretion in sentencing. Efficacy of any criminal justice system is governed by the following three factors:</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Quantum of punishment</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Certainty of punishment</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">• Speedy decision</font></p>
</blockquote>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBI top brass is too busy in day to day operations. CBI plays little role in improvement of the criminal justice system. As a premier law enforcement agency, it is our duty to work closely with policy makers (law makers, Law Ministry, Law Commission etc.) and make concrete suggestions to get the laws amended. Nobody is closer to ground realities than us. We just have to lift our head and look around. Let us stop worrying about crime statistics for a change.</strong></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></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Jewellery business - Customs seizes smuggled gold bars - AO makes addition u/s 69A for undisclosed income - Assessee claims deduction - Since assessee was into lawful trade, loss arising out of violation of law is not incidental to his business: Bombay High Court</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>LET's</strong> all travel back in time zone for about three decades. To be precise - May, 1980. Let's now recall the Apex Court famous ruling in the Piara Singh case (<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-245-SC-IT.htm"><font size="1">2002-TIOL-245-SC-IT</font></a>). Piara Singh was a smuggler. He used to carry currency notes to Pakistan and buy gold biscuits for smuggling that into the country for making profits. Since he used to pay income tax on profits generated out of his illegal trade, when the Customs seized the currency notes he was trying to smuggle out to Pakistan for purchase of gold biscuits, he claimed deduction under the Income Tax Act for the same. And the same was allowed as a seizure by the Customs was incidental to his illegal trade. Citing the same line of argument, an assessee tries to claim deduction in the latest case decided by the Bombay High Court. However, his efforts failed him as he was into a legal vocation to which loss arising out of seizure of smuggled gold can be directly linked as a business loss or incidental to such a trade. And the final verdict has gone in favour of the Revenue.</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">Appeals – not using the phrase “not legal or proper” and instead using “bad in law” – Commissioner's Review order is not bad in law – High Court</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> phrase 'bad in law' really means something which may be inapt or which cannot be sustained or held to be valid. Surely, this term is interchangeable with the words of the Statute 'not legal or proper.' It would have been an entirely different matter if the order of the Commissioner directing an appeal to be filed would have been passed without any application of mind and had merely said that the order is bad in law or for that matter not legal or proper. But the Commissioner has clearly given his reasons for directing that an appeal be filed and that in his opinion, the Commissioner (Appeals) has wrongly allowed the benefit of Modvat credit on inadmissible items by applying a notification retrospectively. No fault could have been found with the Commissioner for describing the finding of the Commissioner (Appeals) as bad in law for the purpose of Section 35B ( 2) of the Central Excise Act.</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 color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">SIM cards imported on payment of Customs duty and Sales tax also paid on sale thereof - SIM card value not addable in Assessable value of service provided – Tribunal</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> contention of the appellant is that the SIM cards were imported on payment of Custom duty and they were also paying Sale Tax on sale of SIM cards; in respect of activation charges appellants are paying Service Tax; as regards Revenue's contention the issue is settled by the Tribunal in the case of M/s RPG Cellular Services Ltd. Vs. CCE(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2008/2008-TIOL-642-CESTAT-MAD.htm"><font size="1">2008-TIOL-642-CESTAT-MAD</font></a>).</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="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></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 size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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