TIOL-DDT 2522
21 01 2015
Wednesday

THE Income Tax Officer filed a complaint in the Court of ACMM that a company has deducted TDS amount of Rs.5,22,597/- and Rs.12,73,806/- during the Financial Year 2008-09 and 2009-10 respectively but has not deposited the same with Government account within the prescribed period. Hence, it was prayed that maximum fine may be awarded to the convict as prescribed in the Act.

The Judge observed, "Evasion of tax by companies/persons in one form or the other form by non-depositing of TDS or other taxes within prescribed time by a company, is rising day by day which causes huge loss to government exchequer and such practice should be curbed with firm hand. In this case, admittedly, the convict was under obligation to deposit the T.D.S. Amount within stipulated period from the date of deduction but same was not deposited and there was a delay."

So, the Company was sentenced to pay a fine of Rs.50,000/- for the offence u/s 276B of Income Tax Act for F.Y. 2008-09 and Rs.1,00,000/- for F.Y. 2009-10.

The Income Tax authorities are now launching prosecution in cases of non-deposit of TDS deducted.

Issue of summons in Central Excise and Service Tax matters - CBEC Instructions

IT has been brought to the notice of the Board that:

1. Summons under Section 14 of the Central Excise Act, 1944 have been issued by the field formations to the top senior officials of the companies in a routine manner to call for material evidence/ documents.

2. Summons have been issued to enforce recovery of dues, which are under dispute.

Board says that it is desirable that summons need not always be issued when a simple letter, politely worded, can also serve the purpose of securing documents relevant to investigation. It is emphasized that the use of summons be made only as a last resort when it is absolutely required.

Board has issued the following guidelines to be followed in both Central Excise and Service Tax matters: -

(i) Summons by Superintendents should be issued after obtaining prior written permission from an officer not below the rank of Assistant Commissioner with the reasons for issuance of summons to be recorded in writing;

(ii) Where for operational reasons it is not possible to obtain such prior written permission, oral/telephonic permission from such officer must be obtained and the same should be reduced to writing and intimated to the officer according such permission at the earliest opportunity;

(iii) In all cases, where summons are issued, the officer issuing summons should submit a report or should record a brief of the proceedings in the case file and submit the same to the officer who had authorised the issue of summons.

(iv) Senior management officials such as CEO, CFO, General Managers of a large company or a PSU should not generally be issued summons at the first instance. They should be summoned only when there are indications in the investigation of their involvement in the decision making process which led to loss of revenue.

Board wants strict compliance by the field officers. Non observance of the instructions will be viewed seriously.

CBEC had in Circular F.No 208/122/89-CX.6 dated 13.10.1989 observed,

Complaints have been received from the trade that in some of the Collectorates summons under Section 14 of the Central Excises and Salt Act, 1944 are being issued to the Managing Directors and other high officers with a view to enforce recovery of dues which are under dispute. Action under this section is to be taken only as a last resort in cases where assessees are not cooperating or investigations are to be completed expeditiously. This section should not be used for harassing the top management for forcing them to pay up demands which are disputed by them. For recovery of demands normal procedure under the law should be followed.

If any instance of issue of summons to Managing Directors and other Directors without justification is noticed, a serious view will be taken by the Board. Collectors will be held personally responsible for enforcing these instructions in their charges.

That was twenty five years ago.

Eight years ago in F. No. 137/39/2007-CX.4 dated 26.2.2007, Board issued some instructions on summons and firmly declared, Non-observance of these instructions would be viewed seriously.

All these years Board had no time to view the indiscriminate summons, let alone view seriously. And all these years, officers have used summons as a power to threaten and harass assessees. The summons are menacingly and misleadingly worded to instill fear among the assessees and the summoned persons are made to sit for hours - just to teach them a lesson.

Why can't there be a record of summons to be frequently inspected by senior officers and available for public scrutiny.

Board will come up with another circular after ten years.

CBEC Instruction in F. No. 207/07/2014-CX-6., Dated: January 20, 2015

Re-export of goods imported under bona fide mistake - CBEC Instructions

AS per Board Circular No. 100/2003-Cus., dated 28.11.2003, permission for re-export of goods that are shipped contrary to instruction of the importer has to be granted by Commissioner of Customs.

Board has been informed that the present procedure is time consuming and causes avoidable hardship to importer/airlines/ console agents. This is especially happening at air cargo complexes because numerous requests in respect of wrong shipments are to be dealt with here on daily basis. Board has been requested for a simpler procedure.

A conference of Chief Commissioners held in Hyderabad in February 2014 suggested that a solution lies in delegating the powers to permit re-export to the Customs Officers in accordance with their powers of adjudication.

With a view to expedite decision-making in respect of re-export of such goods, the Board has decided that the permission for re-export may be granted on merit by the officer concerned as per the adjudication powers as per Circular No. 24/2011-Cus., dated 31.05.2011.

Board wants Chief Commissioners to ensure that instructions are complied with scrupulously in their jurisdiction.

This is the slow process of decision making in Government. The highest officers of the Department suggested a solution and it took the Board a year to issue the instruction.

CBEC Circular No.04/2015 - Cus., Dated: January 20, 2015

Income Tax - Statement of income distributed by a business trust - new Forms

CBDT has amended the Income Tax Rules to insert a new rule 12CA, which stipulates that:

The statement of income distributed by a business trust to its unit holder shall be furnished to the Principal Commissioner or the Commissioner of Income-tax within whose jurisdiction the principal office of the business trust is situated, by the 30th November.

The statement of income distributed shall be furnished under sub-section (4) of section 115UA by the business trust to the Principal Commissioner or the Commissioner of Income- tax referred to in sub-rule (1), in Form No. 64A and to the unit holder in Form No. 64B.

The Director General of Income-tax (Systems) shall specify the procedure for filing of Form No. 64A and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies.

New Forms 64A and 64B are prescribed.

CBDT Notification No. 03 /2015/F.No.142/10/2014-TPL., Dated: January 19, 2015

Company Law -Resignation of Director - Rule amended

AS per Rule 16 of the Companies (Appointment and Qualification of Directors) Rules, 2014,

Where a director resigns from his office, he shall within a period of thirty days from the date of resignation, forward to the Registrar a copy of his resignation along with reasons for the resignation in Form DIR-II along with the fee as provided in the Companies (Registration of Offices and Fees) Rules 2014 .

Now the following proviso is inserted:

"Provided that in case a company has already filed Form DIR-12 with the Registrar under rule 15, a foreign director of such company resigning from his office may authorise in writing a practising chartered accountant or cost accountant in practice or company secretary in practice or any other resident director of the company to sign Form DIR-II and file the same on his behalf intimating the reasons for the resignation."

Ministry of Corporate Affairs Notification., Dated: January 19, 2015

Cadre Review - New Jurisdictions notified

IN the cadre review several Commissionerates have been created and there is lot of confusion on the jurisdiction of Commissioners and Principal Commissioners. CBEC has notified new jurisdictions for certain Commissioners and Principal Commissioners of Central Excise and Service Tax.

Notification No. 01/2015-CX (N.T.), Dated: January 20, 2015 and Notification No. 01/2015-ST, Dated: January 20, 2015

Hearing before Commissioner (Appeals) - Assessing Officer to be Heard

AS per Section 250(2) of the Income Tax Act;

The following shall have the right to be heard at the hearing of the appeal -

(a) the appellant, either in person or by an authorised representative;

(b) the Assessing Officer, either in person or by a representative.

In a case before the ITAT, the Assistant Commissioner submitted that he was not heard by the CIT(A), in spite of official request for the same.

The ITAT observed, "it is amply clear that the Assessing Officer should be provided an opportunity of being heard, which was not provided by the learned Commissioner of Income-tax (Appeals) to the Assessing Officer. Therefore, the impugned order is contrary to the principles of natural justice as well as the provisions of section 250(2)(b) of the Income-tax Act, 1961, thus, it is liable to be cancelled and we cancel the impugned order and also direct the learned first appellate authority to decide the issues in dispute in accordance with law, after giving the adequate opportunity to the Assessing Officer in terms of section 250(2)(b) of the Income-tax Act, 1961."

Even under the Indirect Taxes Laws, the Commissioner (A) is required to give an opportunity to the appellant (which would include the Adjudicating Authority) to be heard.

But in indirect taxes, we rarely find the Commissioners sending any officer to attend the hearing before the Commissioner (A). Because they know that any way the Commissioner (A) himself is representing the case of the Revenue. Somewhere down the line, they forgot that they are expected to be neutral.

Jurisprudentiol-Thursday's cases

Customs

Conversion of Free Shipping Bills to Drawback Shipping bills - whether Single Member Bench can hear matter - Issue referred to Larger Bench: CESTAT

THE issue involved is whether free shipping bills can be allowed to be converted into drawback shipping bills.

Against the order of the lower authorities the appellant Air India is before the CESTAT.

The AR raised a preliminary objection that since the issue involved in this case is of conversion of free shipping bills to drawback shipping bills the matter should be heard by a Division Bench of the Tribunal in view of the decision in Midex Global Pvt. Ltd. Vs. Commissioner of Customs, Pune [2014-TIOL-2124-CESTAT-MUM].

The Single Member Bench was of the view that “From the provisions of Section 129C(4) and also view taken by the various coordinate single member benches, I am of the view that the present case which involves only conversion of free shipping bill to drawback shipping bills can be heard by Single Member Bench."

But as the Single Member Bench has taken different view that this nature of cases should be heard by Division Bench and not by Single Member Bench, the issue is referred to a Larger Bench.

Income Tax

Whether proviso to Sec 2(15) automatically gets attracted merely because assessee cricket association charges fees for matches - NO: ITAT

THE assessee was incorporated u/s 25 of the Companies Act, 1956 with an aim to promote the game of Cricket in and around Delhi. It is affiliated to the Board of Control of Cricket in India (BCCI). Registration u/s 12A of the Act was granted keeping in view its role in promoting the game of Cricket in the country. The DIT(E) vide Notice issued a show cause notice to the assessee proposing withdrawal of registration granted u/s 12A of the Act.

In reply, the assessee submitted that the main object of the Association was to develop and promote the game of Cricket and thus it was submitted that it is a Charitable Association. The assessee filed submissions before the DIT(E) giving details of coaching and training expenses, physical training camp, pitch curator and various other activities for promotion of cricket including development of medical aid to players etc.

The issue is - Whether mere charging of fees does not mean that the assessee is carrying out its activity in the nature of trade, commerce and business and thus the Proviso to Section 2(15) is not automatically attracted. NO is the answer.

Service Tax

Submission that since penalty u/s 78 has been waived u/s 80 of FA, 1994, extended period is not invokable is not sustainable - both sections are to be independently examined - Appellant preferred to sit quiet with his eyes closed - no confusion regarding non-payment of ST - appeal dismissed: CESTAT

DURING the course of audit of M/s. Gujarat Borosil Limited, Bharuch, it was noticed that appellant has provided Rent-a-Cab service to M/s. Gujarat Borosil Limited during the period 01.4.2000 to 31.1.2004.

Based on the said information a SCN came to be issued demanding service tax of Rs.1,17,045/- and which was confirmed by the adjudicating authority with interest and penalties. In appeal the matter was remanded and the adjudicating authority reduced the demand to Rs.67,996/- along with interest and an equivalent amount of penalty u/s 78 of the FA, 1994 was also imposed.

In appeal, the Commissioner (A) set aside the penalties u/s 80 of FA, 1994 but upheld the order of the Adjudicating authority with respect to tax demand and interest.

See our Columns tomorrow for the judgements

Until tomorrow with more DDT

Have a nice day.

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