TIOL-DDT 2482
25.11.2014
Tuesday

THE new section 35F of the CEA, 1944 as substituted by the Finance Act, 2014 has had its fair share of its interpretational controversies. Some seem to have been extinguished while others have been swept under the carpet to be taken care of, as the English proverb goes - Don't cross the bridge until you come to it!

The apprehensions emanating from the TRU letter D.O.F.No.334/15/2014-TRU dated 10th July,2014 covered exhaustively in this column & by various writers on our portal were assuaged to an extent by the Board Circular 984/08/2014-CX dated 16.09.2014 and later when the CESTAT came out with its own Circulars dated 28th August, 2014 and 14th October, 2014.

Few issues still remain and would continue to. One such issue came to notice recently.

In this case the appellant deposited the mandatory amount as prescribed under the new section 35F of the CEA, 1944. But the appellant had a few doubts -

+ What about the dues adjudged in excess of that paid in terms of section 35F?

+ Whether the recovery of the said balance amount should also be got stayed by the CESTAT or is it deemed to be stayed?

Knowing that clarifications would be hard to come, the assessee filed Miscellaneous applications before the CESTAT seeking stay of the balance amount of impugned demand confirmed against them by the CCE.

The matter was heard recently.

The Bench observed - "… The appellants state that they have deposited the mandatory amount as required under section 35F of the Central Excise Act, 1944. In this view of the matter, no separate order of stay is required under the mandatory statute. Thus, the miscellaneous applications filed for withdrawing the stay applications are allowed and the same are dismissed as withdrawn."

Please See 2014-TIOL-2345-CESTAT-MUM

SEZ Developers not to apply afresh for authorized services already approved

VIDE letter No. D.12/25/2012-SEZ dated 16th September 2013 a list of 58 services which may be permitted by all Unit Approval Committees (UACs) as default authorised services was conveyed. Later, representations were received for inclusion of more services in the list of default authorised services. Pursuant thereto, two more services namely, Rent-a-cab Scheme Operator's Services & SEZ Online Services were included in the list of default authorised services. This decision was conveyed to all Development Commissioners vide Instruction 79/2013 Dated: November 19, 2013.Subsequently, it seems six more got added in the list of default authorised services.

A fresh problem apparently has cropped up recently. Representations have been received by the Department of Commerce that despite issue of default list of authorised services by DoC, the SEZ Developers and Units are forced to apply afresh to UAC even for those authorized services which are already approved earlier by the UAC for the said Developers/Units.

The Ministry, therefore, reiterates that directions issued vide instruction No.79 dated 19.11.2013 may be followed and Development Commissioners should not insist on fresh application for authorized services already approved by UAC.

Perhaps, the officers manning the SEZ are unaware that the underlying philosophy of the Modified Government is - less government, more governance!

Instruction 83/2014., Dated: November 21, 2014

A Chinese success story

PTI yesterday reported that China has claimed major success in bringing back hundreds of corrupt officials, who fled abroad with billions of dollars. As many as 312 officials who had taken refuge in other parts of the globe including the US in the last few decades will now face trial in China. China has sentenced more than 13,000 officials found guilty of corruption and bribery in the first nine months of 2014 alone. In China corruption is punishable with the death penalty if the sums acquired illegally go beyond a certain threshold.

By the way, we are still to get hold of the black money stashed abroad, perhaps because the offenders have not sought refuge elsewhere but stay put in the country.

Seven years ago, observing that everyone wants to loot this country, the then Supreme Court Bench of Justices, S B Sinha and Markandey Katju remarked - "The only way to rid the country of corruption is to hang a few of you on the lamp post. The law does not permit us to do it but otherwise we would prefer to hang people like you at the lamp post."

The Bench's scathing observations came during the hearing of a bail application moved by a dismissed employee of Bihar government for his alleged involvement in the Rs.1000 crore fodder scam.

Government reiterates Instructions to babus on how to treat MPs

THE Members of Parliament and State Legislatures as the accredited representatives of the people occupy a very important place in our democratic set-up. The Committee on Violation of Protocol Norms and Contemptuous Behaviour of Government Officers with Members of Lok Sabha in its First Report tabled in the Lok Sabha on 06.02.2014 has recommended that DoPT may sensitise all civil servants and officials in various Ministries and Departments particularly under them for strict compliance of the instructions relating to official dealings issued in this regard between the Administration and the Members of Parliament.

Government reiterates the instructions issued earlier.

(i) Government servants should show courtesy and consideration to Members of Parliament and State Legislatures;

(ii) While the Government servants should consider carefully or listen patiently to what the Members of Parliament and of the State legislatures may have to say, the Government servant should always act according to his own best judgment and as per the rules;

(iii) Any deviation from an appointment made with a Member of Parliament/State Legislature must be promptly explained to him to avoid any possible inconvenience. Fresh appointment should be fixed in consultation with him;

(iv) An officer should be meticulously correct and courteous and rise to receive and see off a Member of Parliament/State Legislature visiting him.

(v) Members of Parliament of the area should invariably be invited to public functions organized by a Government office. Proper and comfortable seating arrangements at public functions and proper order of seating on the dais should be made for Members keeping in view the fact that they appear above officers of the rank of Secretaries to Government of India in the Warrant of Precedence;

(vi) Where any meeting convened by the Government is to be attended by Members of Parliament, special care should be taken to see that notice is given to them in good time regarding the date, time, venue etc. of the meeting;

(vii) Letters from Members of Parliament and Members of State Legislatures must be promptly acknowledged, and a reply sent at an appropriate level expeditiously as per the relevant provisions of the Central Secretariat Manual of Office Procedure;

(viii) If the information sought by a Member of Parliament cannot be given and is to be refused, instructions from a higher authority should be taken and the reasons for not furnishing the information should be given in the reply;

(ix) References from the Committees of Parliament must be attended to promptly;

(x) The officers should not ignore telephonic messages left for them by the Members of Parliament/State Legislatures in their absence and should try to contact at the earliest the Member of Parliament/State Legislature concerned. These instructions also include SMS and e­mails received on official mobile telephones which also should be replied to promptly and on priority;

(xi) A Government servant should not approach MPs/MLAs for sponsoring his individual case as bringing or attempting to bring political or non-official or other outside influence is prohibited under the conduct Rules

DoPT letter in F.No.11013/2/2012-Estt.A., Dated: November 19, 2014

WCO Welcomes G20 Leaders' Communique

THE G20 Leaders, after their Summit in Brisbane, Australia, issued a communique on 16 November 2014.

The Communique emphasized "trade" as a powerful driver for economic growth, job creation and increased living standards, noting the importance of global supply chains linking developed and developing countries in manufacturing and trading in products. The Communique highlighted the importance of the WTO's Trade Facilitation Agreement with its focus on trade facilitation as a core component of any economic growth strategy to include "reforms to facilitate trade by lowering costs, streamlining customs procedures, reducing regulatory burdens and strengthening trade-enable services".

The Leaders agreed to refocus their efforts against cross-border tax evasion and avoidance in order to ensure "the fairness of international tax system and to secure countries' revenue bases", reconfirming the agreed timelines for automatic exchange of tax information between jurisdictions.

The Leaders also endorsed the 2015-2016 G20 Anti-Corruption Action Plan, which mentioned Customs as a high-risk sector that could potentially impede economic growth, trade, and development.

WCO Secretary General Kunio Mikuriya welcomed the G20 Leaders' Communique, noting that the economic growth strategies elaborated in it are wholly compatible with the WCO's strategic plan, instruments and tools. He said that Customs administrations are an important actor in the fight against cross-border tax evasion, including by leveraging exchange of information (EOI) between tax authorities and Customs administration in parallel with EOI between tax authorities.

The WCO has long been a vocal leader on promoting Integrity by all public and private sector actors at the border. He noted the innumerable efforts made by the WCO and its Member Customs administrations to mitigate corruption through instruments and tools such as the Revised Arusha Declaration and performance measurement contracts. He emphasized the importance of streamlining Customs processes and providing automated clearance environments for all international trade stakeholders.

He welcomed continued efforts to modernize trade processes, and encouraged all stakeholders to continue supporting the WCO in its work to improve the Customs environment for the ultimate benefit of all stakeholders and as a key driver of economic growth.

Jurisprudentiol-Wednesday's cases

Central Excise

Clandestine Removal - pan masala and gutkha - What is required to be proved by the department is preponderance of probability - Matter remanded with pre-deposit: CESTAT

THERE is no conclusion or evidence to show that quantum of production declared by the appellant was less than what was possible with support of evidence; no evidence has been gathered to show that there was excess use of machines or additional shifts of work done by the appellants during the relevant period; no consignment have been seized or intercepted while clearing without payment of duty; There is need for more detailed consideration of the available evidence and there is a need to show that with the available evidence, case has been made out. The matter is remanded to the Commissioner with a direction to consider each and every point that may be submitted by the appellants, record his observations and consider details of evidence gathered and why submissions of the appellants are not acceptable.

Income Tax

Whether when Revenue has issued restraint order against goods seized u/s 132(1), HC is right in directing official to make inventory of goods and then quash search proceedings on basis of Report submitted by official - NO: Supreme Court

THE assessee is engaged in the manufacture of C.I. pipes, fittings and manholes and had obtained the licence under the Central Excise Act. The assessee had been filing income-tax returns regularly. On 16.2.2000 the Income Tax Department conducted a search & seizure operation on the residential and business premises of the assessee. The assessee filed a writ against the action of the Revenue and contended that there was no information in possession of the officer which could have persuaded any reasonable person to form an opinion about the existence of undisclosed assets of the assessee. It was further urged that the warrant of authorization was issued mechanically, arbitrarily and there was total non-application of mind and moreover there was no formation of opinion about the existence of undisclosed assets as contemplated under Section 132(1) of the Act. On this foundation, the search and seizure were sought to be quashed.

The issue before the Bench is - Whether when the Revenue has issued restraint order against goods seized u/s 132(1), the High Court is right in directing a particular Revenue official to make inventory of goods and then quash the search proceedings on the basis of the report submitted by the official. NO is the answer.

Service Tax

CENVAT - Rule 2(l) of CCR, 2004 - Services namely, Brokerage for sale/purchase of shares & securities for Trading, Custodian charges, Event management are in nature of input services having nexus to the business activity of Banking - Pre-deposit waived & stay granted: CESTAT

AGAINST the order passed by the CCE, Thane-I denying CENVAT credit taken of the service tax paid on various services, of Rs.4,88,93,874/-, along with every other pecuniary provision that can go along with it, the Bank is before the CESTAT with an application for Stay.

The applicant is a banking company engaged in providing banking and financial services to their clients. To provide these services the applicants are required to maintain CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio) as per guidelines prescribed by RBI. For this, the applicant is paying brokerage and sale of investment and also paying custodian charges to M/s. Stock Holding Corporation of India Ltd. On these charges the service provider is paying service tax and the appellant has taken CENVAT credit of the tax paid on such services. They have also availed CENVAT Credit on event management charges paid by them to custodian for celebration of annual day function etc., they have also taken the CENVAT Credit on the consortium charges paid to the lead bank i.e. SBI and also availed CENVAT Credit on maintenance charges for residential flat of Managing Director.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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