Income Tax - Despite Stay by ITAT, bank accounts attached - clearly amounts to overreach of interim order of Tribunal; invites contempt proceedings - Attachment Lifted: High Court
TIOL-DDT 2330
09.04.2014
Wednesday
THE ingenious and often illegal and illogical ways invented by the Revenue for collecting illegitimate Revenue during the last quarter, though considered irreprehensible by the big bosses, causes irreparable damage, not only to cause of collection of Revenue but to the very basic foundation of taxation, as the following case would show.
The assessee had obtained Stay from the Tribunal on 14.2.2014. On 19.2.2014, the Assessing Officer attached the bank accounts of the assessee, in spite of the Stay granted five days ago.
The aggrieved assessee is before the High Court. In the High Court, the Revenue took a peculiar stand - that the Assessing Officer was not present when the Tribunal delivered the Stay order!
The High Court Judge, Justice Easwar - a former President of the ITAT was not amused. He noted that the CIT-DR was present when the Tribunal delivered its Stay order and further the Stay order was pronounced in the open Court. He further observed, "In these circumstances, the submission of the revenue that the concerned assessing officer was not intimated, cannot be accepted. If such an argument was made before this Court, where orders are pronounced in Court in the presence of counsel, it would certainly not be accepted, and in fact would be seriously viewed. In the facts of this case, it clearly amounts to overreach of the interim order of the Tribunal; in a similar situation, this Court itself would possibly be initiating contempt proceedings. In these circumstances, the Court is of the opinion that the respondent should lift the attachment and ensure that the amounts recovered are deposited back in the petitioner's account within a week from today."
Why do Revenue officers show such contempt for the Law framed by Parliament and for orders passed by higher judicial authorities? Is it plain arrogance or over-anxiety to collect Revenue by means fair or foul? Perhaps, it is a firm belief fortified by experience that they are never punished for such patently illegal activities. These officers are as much offenders as evaders and other criminals and the system can be set right only by awarding exemplary punishment to such offenders, who are a blot on democracy, government, law, administration, tax collection and public service. They don't deserve to be officers of the Government of a democratic welfare State.
Please see 2014-TIOL-453-HC-DEL-IT
Customs - Import of Pesticides - Importers treated differently
IT was alleged that imports of formulation is being allowed without any technical grade verification and are granted exemption without registering its technical grade material whereas the indigenous manufacturers are forced to undergo rigorous testing for the purpose of formulations as well as technical grade in the Insecticide Act.
The Gujarat High Court in an order passed on 05-09-2013 reported in 2014-TIOL-444-HC-AHM-CUS, inter alia directed that even in case of import of formulations its technical grade/ material will be tested and actual physical sample of such technical grade of each consignment when it is imported will have to be provided by the importer which will be subjected to all the rigours of the test applicable to the indigenous manufacturer like the examination of chemical composition, test with regard to bio-efficacy and human safety as well as its probable effect on the soil and human life.
CBEC desires that the directions of the Gujarat High Court should be strictly complied with by the field formations. The Commissioner concerned should ensure that samples are tested.
Incidentally, it took the Board more than seven months to issue this Circular when the fact of the matter is that the request made for stay of the operation of this order was turned down by the Gujarat High Court.
Defying Court orders and Board instructions is a favourite pastime in the field, with no solution visible.
CBEC Circular No. 07/2014 - CUS., Dated: March 07 2014
Customs - Manual filing and processing of Bills of Entry - Board not happy with disobedient field
CBEC had taken a serious note in instructions issued on 04-05-2011, on the possibility of misuse of the facility of manual filing and processing of import/export documents, which was allowed by the field formations. It was instructed that this should not be allowed except in exceptional and genuine cases where the electronic filing and processing is not possible. Further it was pointed out that the authority to allow manual filing is the Commissioner of Customs only.
Board has noticed that despite the strict instructions, some formations, particularly vulnerable outlying CFSs/ICDsare still routinely allowing manual filing of documents.
Board says, "THIS VIOLATION OF THE BOARD'S INSTRUCTION IS NOT ACCEPTABLE".
The Board directs that facility of manual filing should be permitted by the Commissioner of Customs strictly in accordance with the legal provisions read with Board's instructions. It shall be the responsibility of the supervisory officers to ensure that these instructions are adhered to by all concerned.
What will happen if the field officers continue to blatantly disobey Board's instructions and supervisory officers fail to ensure that Board instructions are obeyed?
After three years, Board will express its helpless anguish and anger and will view such disobedience seriously.
CBEC Instruction in F. No.401/81/2011-Cus.III., Dated: April 07 2014
CBEC - Improving departmental representation in High Court/CESTAT
IN a recent order the CESTAT Principal Bench observed, "it is high time for revenue to rise to the occasion and reduce its litigation without burdening the Tribunal to list the matters frequently in cause list to know status of compliance to stay orders. Aforesaid scenario exhibits laxity of the Commissioners to pursue the litigations before the High Courts. Therefore we direct the Registrar to send a copy of this order expeditiously to the Revenue Secretary, Ministry of Finance for appropriate action so that Revenue shall be litigation free and its blocked revenue shall be realized as early as possible".
The Bench made the above observations in the context of various orders of pre-deposit and failure of the department to ensure the compliance of the same. The Tribunal made remarks like:-
1. Department was directed to file counter which it had not done.
2. Revenue is casual in the matter.
3. Revenue not able to give latest status of the cases.
4. Department was directed to file counter in the High Court. DR had no instruction as to the status of the appeal before the High Court.
5. Department was found lacking in its efforts to get the matters disposed of in the High Court.
6. Departmental representative had not been kept informed of the latest status of the case.
The Revenue Secretary has noted that:-
1. There was failure on the part of the departmental officers in co-ordinating with the departmental counsel.
2. There was delay in responding to the directions of the High Court/CESTAT.
3. Even the AR was not briefed and updated properly.
Board has communicated the observations of the Revenue Secretary and the Tribunal to the Chief Commissioners and Commissioners so that a proper system of monitoring and handling of litigation is introduced. Board also directs that pre-deposit orders are to be followed up for compliance and the office of the concerned Commissioner(AR) kept informed of all developments in the matter. Perhaps in this situation, the placing of the adjective seems proper - after all, he is the one who gets the stick!
Surprisingly, the Board is shy in disclosing the name of the appellant/respondent and avoids enclosing a copy of the Order referred.
CBEC Instruction F. No. 275/30/2014-Cx.8A., Dated: April 03 2014
Leading Newspaper claims to have copy of recent promotion order to cadre of Assistant Commissioner in CBEC
THE Times of India yesterday reported that a whistle blower within the Department has leaked the recent order of the CBEC promoting 110 Superintendents/appraisers as Assistant Commissioners and also that a complaint was filed with the Election Commission that it violates the code of conduct.- http://timesofindia.indiatimes.com/city/bangalore/Central-Excise-department-mass-promotion-under-EC-scanner/articleshow/33380875.cms
Times of India claims that it has a copy of the promotion order, apparently leaked by the so-calledwhistle-blower.
The fact is that the order was available on TIOL and also CBEC website on 31st March 2014 and there was no need for anyone to leak it to Times of India - they could have just downloaded it from our site or CBEC's - more than a week ago.
And it is understood that CBEC had kept the Election Commission informed about the promotion.
Koyal Rana - Miss India 2014 is ITO's daughter
THE newly crowned Miss India 2014 Koyal Rana is Income Tax Officer Arun Kumar's daughter.
In 2008, she had won Miss Teen India title as well.
Congrats Koyal.
Jurisprudentiol - Thursday's cases
Service Tax
Stock Broker service - Delayed Payment Charges recovered from clients are not includable in Taxable value - CESTAT
THE appellant is engaged in stock broker service. They are making payments towards stock exchanges, on behalf of their clients in advance, irrespective of the receipt of transacted amount. In cases, their clients made any delay in making payments to the appellants, they collected ‘Delayed Payment Charges' (DPC) from their clients, which is being done by making debit entries in the ledger maintained by the appellants. It is the case of the department that these charges are includable in the taxable value in terms of Section 67 of the Finance Act, 1994 as the said charges are part and parcel of the services and hence liable to service tax. On the other hand, it is the contention of the appellants that such DPC is not in lieu of stock broking service but is a penal recovery for late payment of the dues by the clients.
Income Tax
Whether provisions of Sec 40A(9) would hit on mere making of provision for retirement benefits to employees - NO: Madras HC
THE assessee-company entered into an arrangement with the employees that on completion of every year, the service of each employee would be provided with service weightage, which would get accumulated during period of service and the same could be withdrawn by the employees at the time of retirement or termination of service. As per the Scheme, the service weightage was payable in respect of each year of service, based on actuarial valuation on the services of the employee. According to the assessee, such valuation on actual basis was a scientific method of determination of its liability at the end of each year. In view of this actuarial valuation and scientific determination of the liability, the assessee viewed that making provision in the accounts could not be considered to be a contingent liability and hence, entitled to deduction. Thus, assessee-company claimed deduction on provision made by way of retirement benefit based on service weightage of the employee. The Assessing Officer viewed that the service weightage was neither a gratuity nor a payment to any welfare fund. Being just a provision, the same could not be allowed.
The issues before the Bench are - Whether where a provision was made that to pay the service weightage to the employees on the eve of their retirement even if there was no sum credited to an individual account, the contribution could be termed as contribution to a fund or a trust; Whether where a mere provision for retirement benefit was made in the accounts and there being no fund, the assessee's case would be hit by Section 40A(9) of the Income Tax Act and Whether where a provision was made in the books of account for retirement benefit based on the service weightage, and the scheme was not a recognised one, the claim would be hit by Section 40A(7)(a) of the Income Tax Act. And the verdict goes in favour of the assessee.
Central Excise
Refund of unutilized CENVAT credit - Tribunal not granting interest on ground that credit lying in account was not duty used by department - while dealing with interest on refund in Section 11BB of CEA, 1944 no distinction has been made between such credit and any other duty referred to in first proviso to 11B(2) - matter remanded: HC
THE appellant was entitled to CENVAT credit but the department prevented them from utilizing the same. It appears that this was because of certain notifications issued by the Government.
Ultimately, it was decided that those notifications do not stand in the way of utilizing these credits. By the time the same was decided, the goods manufactured and sold by the appellant became exempted from the levy of excise duty. Accordingly, question of adjusting such CENVAT credit with the excise duty payable by the appellant did not arise.
Appellant, therefore, approached the Department for refund of the amount of credit lying in their account but the adjudicating authority denied the claim. However, the Commissioner(A) passed an order in favour of the appellant and they finally got the refund. The department also agreed to pay the interest initially but later they backtracked.
When the matter reached the Tribunal, the CESTAT felt that it was not a refund of the duty as such, as the credit lying in the accounts of the appellant was not the duty used by the Department and, as such, no interest is payable thereon.
See our Columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a nice day.
Mail your comments to vijaywrite@taxindiaonline.com