TIOL-DDT 2599
18 05 2015
Monday

BUT that is after 977 years! The CAG Audit in a recent report observed,

Only one Importer Exporter Code (IEC) is allowed against a single Permanent Account Number (PAN) issued by Department of Income Tax (Paragraph 2.9 of HBP). The IEC data indicates the genuineness of an exporter/ importer and determines his/her unique identity in the Trade and helps the regulatory agencies in tracking the holder in cases of default. This IEC data is transmitted online to Customs by the DGFT.

Scrutiny of the IEC master records revealed that the IEC allotment dates were prima facie incorrect in 42 cases, since the date of IEC allotment was found to be after the current date, viz. between 18 March 2088 and 07 January 2992.

All 42 such IECs are active in the database.

Thus, the DGFT EDI System lacks output control checks even for important IEC data such as the issue date.

CAG was auditing DGFT's EDI System.

The Directorate General of Foreign Trade (DGFT) started web based application processing in the late nineties for a few export promotion schemes. All 36 RLA offices are computerized and connected to the DGFT Central server through National Informatics Centre's NICNET service. The DGFT's EDI system is part of e - Trade, an Integrated Mission Mode Project (MMP) under National e - Governance Plan (NEGP). This seeks to simplify procedures, introduce electronic delivery of services by regulatory and facilitating organisations, provide 24x7 access to users, increase transparency in procedures, reduce transaction cost and time, and introduce international standards and practices in the area of clearance of export/ import of cargo. Other organisations involved in this integrated EDI implementation are Airports, Airlines, Export Promotion Councils, Banks and RBI, Customs, Container Corporation of India (CONCOR), DGFT, Export Promotion Organisations, Director General of Commercial Intelligence and Statistics (DGCIS) and Inland Container Depots (ICDs)/ Container Freight Stations (CFS), Indian Railways and Port Trusts.

Audit found:

1. DGFT has no Data Backup Policy; Disaster Recovery Plan (DCP) documents, Data Storage Policy, Password Policy, Access Control Policy, Hardware change policy etc.

2. The DGFT EDI System does not provide for a recorded trail of all transactions and no internal audit of the EDI System was carried out.

3. Storage of passwords as text data in the DGFT database tables, entails the risk of compromising the login access details of DGFT users and importers/exporters, eBRC loading banks, etc.

4. The same DEPB serial number was entered twice in the directory with different rates, effective from the same date. There were 6 such cases noticed, apart from 8 duplicate entries for the same product.

5. Exchange rates notified by CBEC are not updated in the DGFT System.

6. Multiple IECs had been issued against single PAN. Audit located 9,175 such irregularly issued IECs in the DGFT database.

7. Imports against cancelled IECs due to delay in intimation to Customs.

CBI arrests Service Tax Commissioner on bribery charge

EVEN the Gulf News published from Dubai carried this news. The amount of alleged bribe was Rs. 20 lakhs and the Commissioner was caught in the last round when the last instalment of Rs. 5 lakhs was being handed over. In this case, the assessee was also arrested. This Commissioner who is an IIM product has completed 25 years in the department and has another 9 more years to go which he would now spend between courts and jails and CBI offices - already he is remanded to police custody in CBI office for five days.

Publication of names of alleged offenders - Sleuths have no respect for CBEC

AN officer of the high rank of Commissioner has been arrested by CBI and look how they issued a Press Release - The Central Bureau of Investigation has arrested a Commissioner of Service Tax (an officer of 1990 Batch in Custom & Central Excise) of Haldia Commissionerate (West Bengal); his aide (a private person); a Director of a private company based at Haldia (West Bengal) and a courier (private person) related to the said company in an alleged bribery case of Rs. 5 lakhs. See, they have not revealed the name of the Commissioner or his aide or the Director of the Company.

Where CBI fears to tread, the super sleuths of the CBEC rush in.

As per Section 37E of the Central Excise Act, 1944 the Government (not lower level officers) can publish the names and other details of assessees against whom the Department has launched proceedings or prosecution. The CBEC has issued guidelines on how to go about publishing the names in Circular No. 849/07/2007-CX., Dated April 19, 2007. The decision to publish or not publish the names will be taken by the Member, CBEC and the actual publication will be done by the Chief Commissioner or DGCEI. Board has also cautioned that these are stringent provisions and may effect the reputation of a person and so should be sparingly used. However Board wants that in deserving cases this power should be used though there should not be any arbitrary selection.

Speaking in the Lok Sabha on 20.8.2004, the Finance Minister said, "I think, one must be careful before branding somebody finally as a tax evader. There is a hierarchy of Tribunals and Courts and only when the last forum is exhausted, we come to a final conclusion; one can say that there is a final evasion of tax." This was in response to request for publication of names of tax evaders.

When TIOL was invited to Parliament to speak to the Standing Committee on Finance, I submitted to the Hon'ble MPs that a mere Show cause Notice does not make anyone an offender and there should be some punishment for the officer who illegally and arbitrarily publishes the names of innocent persons as offenders - maybe the names of offending officers should also be published. There was an interesting discussion on this aspect in the Committee.

But why do some officers blatantly disobey the Board, the Government and the Parliament and issue press statements with names of alleged offenders?

Some time back, there was a Press Release issued by a DC (DD) in DGCEI, which was communicated by a Superintendent (SIO) about the arrest of a Director of a Company for evasion of Central excise Duty. The Press Statement gave the name of the Director and the name of the Company. DDT called up the Superintendent who sent the Press Statement. He was very angry with us for disturbing him. We asked an AD (Additional Director) whether he had the power to publish names of alleged offenders and whether he would like to follow Section 37E and the Board's Circular. He said he would get back to us. Then we spoke to a DD who emphatically said that Section 37E was not applicable and he had given a Press Statement which he had not withdrawn and therefore, that was the final word. I asked him whether I can quote him as saying that Section 37E and the Board Circular are not applicable to him. He asked, "where is the question of quoting me?, My official Statement is not withdrawn and that means I am perfectly legal in my stand; publishing the news is yourwish." I asked him why Section 37E and the Circular were not applicable. He said that is not open for debate. His decision is final as long as the sacred Press Release is not withdrawn.

It is not as if we do not know the name of the Commissioner who was arrested by CBI in Kolkata; even the Gulf News, in distant Dubai carried his name. But the CBI has not published it. Obviously CBI knows the Law and has some respect for it, which unfortunately is not a virtue with the Revenue Department. And if the Revenue wants the name of the alleged offender to be known to the public, it is not difficult - they can leak it to the Press and the modern Press is simply waiting to grab such news. But officially publishing the names of alleged offenders is unpardonable ignorance or despicable arrogance.

In a court of law people are seen to be innocent until proven guilty, but Revenue officers see people as being guilty until proved innocent.

Will CBEC reiterate its instructions in Circular No. 849/07/2007-CX., Dated April 19, 2007 and promise to take a serious view if the instructions are not followed?

Supreme Court Latest Judgements

WE bring you today two important Supreme Court judgements delivered on Friday 15th May 2015.

Income tax - Whether Section 80IB(10)(d) of the Income Tax Act, 1961 applies to a housing project approved before 31.03.2005 but completed on or after 01.04.2005? - yes, says the Supreme Court

Effect of 'savings' provision in the General Clauses Act: The Supreme Court quoted from an old judgement, "A right which had accrued and had become vested continued to be capable of being enforced notwithstanding the repeal of the statute under which that right accrued unless the repealing statute took away such right expressly or by necessary implication. This is the effect of Section 6 of the General Clauses Act, 1897. In this case the 'savings' provision in the repealing statute is not exhaustive of the rights which are saved or which survive the repeal of the statute under which such rights had accrued. In other words, whatever rights are expressly saved by the 'savings' provision stand saved. But, that does not mean that rights which are not saved by the 'savings' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they are taken away expressly. This is the principle behind Section 6(c) of the General Clauses Act, 1897.

Income tax -  Whether when unabsorbed depreciation of earlier years is carried forward it loses its identity by getting merged with the current year depreciation when it comes to claiming the same - YES: Supreme Court: The bone of contention before the Apex Court is - Whether when unabsorbed depreciation of earlier years is carried forward it loses its identity by getting merged with the current year depreciation when it comes to claiming the same. YES is the answer.

Please see Breaking News

Tariff Value of Gold and Silver Increased

THE Government has increased the Tariff value of Gold from 393 USD to 398 USD per 10 gms. The tariff value of Silver is increased from 537 USD to 567 USD per kilogram.

Tariff values of Crude Palm Oil, Poppy Seeds and Areca Nuts remain unchanged.

The Tariff values as on 30.04.2015 and with effect from 15.05.2015 are as under:

Notification No. 45/2015-Cus.(N.T.), Dated: May 15, 2015

Until Tomorrow with more DDT

Have a nice day.

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