TIOL-DDT 2457
16.10.2014
Thursday

GOD said, "Let there be light and THERE WAS light." God is alleged to have made light from nothing - blissfully in those days there were no investigating agencies to record a statement from Him.

CBEC said, "let there be Commissionerates" and Lo and Behold, There are Commissionerates! The Board also followed God and made these offices out of nothing - there are no office buildings and so there are no addresses, there are no officers, though technically there are Chief Commissioners and Commissioners holding additional charge of these Commissionerates. Not a chair has moved an inch; not a paper has changed hands; not an officer has changed his position - and we have thousands of new offices, which have come into existence. CBEC has done the impossible.

A couple of thousand Superintendents are waiting for their much dangled promotion and so are officers of all ranks from AC to CC. The entire reorganisation exercise was to grant promotion to the frustrated officers, though higher revenue and better service were masqueraded as reasons for the massive re-haul of the Department. Nobody is against the Department's over-stagnated officers getting promotion - let them all be given double promotions, but why should the tax-paying citizens of this country be subjected to such cruel harassment? Look at the massive destruction that new babus can cause - the amount of paper that will be wasted on more Show Cause Notices, audit reports and what have you, the number of additional cars that will be polluting the atmosphere, the number of lowlife furniture that will be bought - the list is endless and we will all have to pay for this.

In the last cadre review, they promised the Government that creation of more appellate Commissioners will generate more revenue as if people were just waiting for the orders from the appellate Commissioners, to stand in queue outside banks to pay up the demands. These Appellate Commissioners created more litigation and virtually clogged the High Courts!

Yesterday the Board issued a Press Note:

The Central Board of Excise and Customs has implemented the cadre restructuring of the Indirect Taxes formations, with effect from 15th October 2014. The restructuring of formations is aimed (at) creating larger number of compact commissionerates, by reorganizing the existing commissionerates. This shall provide better tax payer services and deepen the tax base. Taking into account the growth in Service Tax over the last decade four exclusive zones for Service tax have been created in metro cities, and the number of service tax commissionerates have been increased from 7 to 22. Similarly with expansion of ports, the number of Customs Commissionerates has gone up from 34 to 60. In the context of self assessment, the department is also laying emphasis on non intrusive controls by creating 45 audit commissionerates. Trade notices have been issued by the Chief Commissioners, for information of the trade and assesses. There may be some teething troubles on account of reorganized jurisdictions. Trade may bring to notice of the department any issues they are facing so that timely resolution can take place.

Company Law Settlement Scheme, 2014 (CLSS-2014) - MoCA Clarification

REPRESENTATIONS have been received from stakeholders seeking clarification as to whether immunity from disqualification of directors pursuant to clause (a) of sub-section (2) of section 164 of the Companies Act, 2013 will be applicable with respect to companies who have filed Balance Sheets and Annual Returns on or after 01/04/2014, but before coming into force of CLSS-2014 with effect from 15.08.2014 as contained in General Circular No. 34/2014 dated 12/08/2014.

Ministry of Corporate Affairs clarifies that in case of companies, who have filed their balance sheets and annual returns on or after 01/04/2014 but prior to launch of CLSS-2014, disqualification under clause (a) of sub-section (2) of section 164 of the Companies Act, 2013 shall apply only for prospective defaults, if any, by such companies.

General Circular No. 41/2014 in No.2/13/2014-CL-V, Dated: October 15, 2014

Company Law Settlement Scheme, 2014 - Extended

AS per the General Circular No. 34/2014 dated 12-08-2014, the Company Law Settlement Scheme, 2014 was to end yesterday - October 15th 2014.

On consideration of requests from various stakeholders, the Ministry of Corporate Affairs has decided to extend the Company Law Settlement Scheme, 2014 up to 15th November 2014.

General Circular No. 40/2014 in No.2/13/2014-CL-V, Dated: October 15, 2014

Income Tax Commissioner's Transfer from Nagpur to Chennai- CAT declines to interfere

THE applicant, who is working as CIT (ITAT) at Nagpur, aggrieved by the action of the respondents in transferring him to Chennai as CIT (CO), filed the OA in the Central Administrative Tribunal, mainly seeking for a direction to retain him at Nagpur or to post him at any place in Maharashtra, on spouse ground.

The CAT quoted from a Supreme Court judgement that, A Government Servant has no vested right to remain posted at a place of his choice nor can he insist that he must be posted at one place or the other. He is liable to be transferred in the administrative exigencies from one place to the other. Transfer of an employee is not only an incident inherent in the terms of appointment but also implicit as an essential condition of service in the absence of any specific indication to the contrary. No Government can function if the Government Servant insists that once appointed or posted in a particular place or position, he should continue in such place or position as long as he desires.

The CAT quoted from another judgement that the courts should not interfere with a transfer order which is made in public interest and for administrative reasons unless the transfer orders are made in violation of any mandatory statutory rule or on the ground of mala fide. A government servant holding a transferable post has no vested right to remain posted at one place or the other, he is liable to be transferred from one place to the other. Transfer orders issued by the competent authority do not violate any of his legal rights. Even if a transfer order is passed in violation of executive instructions or orders, the courts ordinarily should not interfere with the order; instead affected party should approach the higher authorities in the department. If the courts continue to interfere with day-to- day transfer orders issued by the government and its subordinate authorities, there will be complete chaos in the administration which would not be conducive to public interest.

The CAT observed, "The applicant though vehemently contended that the respondents violated the Transfer Policy Guidelines, but failed to show, how the said alleged violation adversely affects his status, career prospects, seniority or emoluments. The applicant has also failed to show that the impugned transfer is vitiated by mala fides or in violation of any statutory provision."

The Application was dismissed.

The Government servant has no right to claim a posting in a particular place, but will the bosses be fair? Transfers are not always in public interest. It is the avowed policy of the Government to post husband and wife in the same place as far as possible. Even when it is possible, it is not done due to the sadistic attitude of some bosses.

Please see 2014-TIOL-02-CAT

Customs Sepoy fined ONE CRORE rupees and sentenced to Four years imprisonment - Disproportionate Assets

THREE days ago, the Special Judge for CBI cases, Goa at Mapusa delivered a judgement imposing a fine of One Crore rupees on a sepoy, yes you read right a sepoy in the Customs and Excise Department. Even his wife was a co-accused and she gets a jail term of one year. A Sepoy as you might know is the lowest position in the Department.

Suresh was appointed as a sepoy in Goa on ad-hoc basis in 1991 and was regularised in 1995. The CBI conducted a raid in his house and found that as on 1.5.2008 he was holding assets worth Rs. 3,51,533/- which grew to Rs. 56,41,563/- as on 6.1.2011. He had, therefore, acquired assets worth Rs. 52,90,030/- during the said period. It was accused that his expenses during the check period were Rs. 2,03,43,235/-, income during the said period was Rs. 1,40,36,473/- and, therefore, the disproportionate assets which he had acquired were to the extent of Rs. 1,15,96,792/-.

What really gave in was he and his wife had invested nearly thirty lakhs in insurance policies during that period. He and his wife had also paid income tax during the period.

The Court found that disproportionate assets to the tune of Rs. 1.15 Crore are proved.

It was pleaded on behalf of the accused:

That Suresh is a poor, family person with minors dependent on him; that in case he is awarded punishment of imprisonment, future of his children will be adversely affected;

That Accused no.2 (his wife) is innocent; that she does not know any intricacies of law or business; that she was not personally involved in any of the activities and that that she has children to be looked after and, therefore, minimum punishment should be awarded to her.

The Judge was not impressed: He observed,

Accused no.1 was a mere sepoy. During the check period his total take home salary was Rs. 2,21,171/- only. The evidence reveals that although accused no.2 was the proprietor of the business run by her, accused no.1 was actively participating in the same. The total income earned by accused no.2 from her business during the check period was only Rs. 6,64,195/-. The accused, however, have amassed huge assets of about 1.15 crores during the short span of two years and eight months. The extent of criminal misconduct committed by accused no.1, therefore, cannot be said to be minor to give him a flee bite punishment. May be accused have children who are minors but then they must have thought of it before committing such misconduct.

So our Sepoy was awarded a rigorous imprisonment for a period of four years and fine of Rupees One Crore only; his wife was sentenced to undergo simple imprisonment for a period of one year and pay a fine of Rupees Ten Thousand Only.

What will happen to the poor children when both the parents go to jail?

Jurisprudentiol - Friday's cases

Central Excise

Rule 7 of CCR, 2004 - Prior to 01/04/2012 there was no bar on an Input service distributor to distribute the credit which pertains to one unit to another unit - Credit rightly taken - Appeal allowed: CESTAT

THE appellants' head office paid the service tax on commission paid to overseas commission agents for procuring the purchase orders for export of goods under reverse charge mechanism. Various other common input services were also used in or in relation to the manufacture of final dutiable goods and payments for the input services were made by the appellant's Head office. The head office distributed the service tax credit of Rs.3.79 crores to the appellant's DTA unit and which was utilized for payment of CE duty on the final product manufactured and cleared by them. The EOU unit was also clearing final goods in DTA on payment of applicable excise duty.

Income Tax

Whether penalty is warranted when assessee was under bona fide impression that he was ‘person resident outside India' as defined under FEMA and has not offered interest income for tax due to wrong interpretations of law - NO: ITAT

THE assessee is an employee of Cognizant Technology Solutions as Sr. Software professional. During the course of scrutiny assessment, the AO observed that the assessee had opened a bank account in ICICI Bank. The amount in this savings account was transferred to NRE Fixed Deposit account in 2002. During that period, the assessee was sent on a particular assignment by the employer company to US. The Fixed Deposits in NRE account were made in the year 2002 that had matured in the year 2009. The interest received by the assessee was not offered to tax in the return of income filed by the assessee for the relevant period. The assessee during the course of assessment proceedings gave explanation that u/s.10(4) of the Act, interest income in the NRE A/c is exempt from tax. It was submitted that the assessee was under a bona fide impression that he was a resident outside India in terms of the definition of ‘persons resident outside India' defined in section 2(q) of the Foreign Exchange Regulation Act [FERA], 1973.

THE issue before the Bench is - Whether penalty is warranted when assessee was under bona fide impression that he was a ‘person resident outside India' as defined under FEMA and has not offered interest income for tax due to wrong interpretations of law. NO is the answer.

Service Tax

Delay in payment of tax - Merely, because CENVAT credit is available in books of accounts, it does not mean that tax has been paid - demand of interest upheld - Revenue appeal allowed: CESTAT

FOR the month of October 2006, the tax liability was required to be discharged by the respondent by 05/11/2006 and for the month of January 2007 by 05/02/2007. Both these tax liabilities were discharged by the appellant by debit in the CENVAT credit account only on 15/02/2007. Therefore, in respect of the payment of duty on 05/11/2006 there was a delay of 102 days and in respect of payment of duty on 05/02/2007 there was a delay of 10 days.

A SCN was issued demanding interest u/s 75 of the FA, 1994.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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