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No Fear of Vigilance - CBEC Tells Adjudicators

TIOL-DDT 2607
28 05 2015
Thursday

IN a recent letter to all the Chief Commissioners, the Director General Vigilance, CBEC (Who is now also a Member of CBEC)refers to instructions issued in 2010 (DDT 1340) in terms of which the review committees were advised to undertake scrutiny of adjudication/appellate orders from vigilance angle as per the criteria laid down by the Supreme Court in its decision in the case of K K Dhawan (2002-TIOL-441-SC-MISC)

She emphasises that:

The adjudicating and appellate authorities are required to pass fair, judicious and legally sustainable speaking orders which can withstand judicial scrutinyat higher appellate fora.

Apprehensions have, however, been raised that the above instructions have created a 'fear of vigilance' amongst the field officers, due to which some of the adjudicating/appellate authorities are resorting to confirmation of demands through non-speaking orders/without following judicial discipline/non consideration of pleas put forth by the parties, etc. merely due to a fear of coming under vigilance scrutiny. Such unjust orders, besides attracting adversejudicial scrutiny, cause harassment to the trade and undermine the efforts of the Department inproviding a non-adversarial tax regime to taxpayers.

She notes that since 1997, only 18 adjudication orders have been taken up for scrutiny by the Directorate General of Vigilance. This indicates that on an average, only one case in a year i.e. 0.001% of the total quasi-judicial orders passed in the department have been taken up for vigilance scrutiny. The fear of vigilance action against adjudicating/ appellate authorities in respect of adjudication/ appeal orders, therefore, appears to be totally unfounded and misplaced.

She clarifies:

1. Adjudication and Appellate Orders are examined by Review Committees of Chief Commissioners or Commissioners comprehensively, including from the angle of legality and propriety, with a view to take a decision whether the orders are acceptable or to be appealed against in higher appellate fora.

2. Examination of orders from vigilance angle is also a part of this exercise.

3. An adjudication/ appellate order is not required to be referred by the Review Committee for further vigilance scrutiny merely on the ground of it being an anti-revenue order or having some legal infirmities (for which review and appellate remedy is available), unless there are genuine reasons to doubt the bonafides of the decision or where the order shows a conspicuous violation of the procedures involved or recklessness, etc., as per the criteria laid by Supreme Court in the K K Dhawan's judgment.

She expects that senior officers in the field, given their vast experience, would be able to distinguish between the orders warranting scrutiny from vigilance angle and those which do not.

CBEC DG, Vigilance F.No.V.500/39/2015, Dated: April (no date) 2015

Departmental Adjudication- a farce; Are they really afraid of Vigilance?

SPEAKING in a meeting organised by a Trade Association, CESTAT President Justice Raghuram said,

"This is a compulsive evidence of a deep pathology in departmental adjudication. Two interpretations are possible - one that the judges are not able to understand the law as well as the commissioners are able to - one interpretation, which is comfortable for the departmental family……..If the pro-family interpretation is to be assumed as hallucinatory, then we are left with the inescapable conclusion that something is pathologically, terminally and seriously wrong with our departmental adjudication.

Departmental adjudication is a blasphemy. If a revenue collecting Chief Commissioner is writing the confidential report of an adjudicating Commissioner or Superintendent something seriously wrong has taken place in the adjudication process of our country."

What makes brilliant officers, who have passed the toughest examination in the world and who are imparted the most expensive training in the world including a couple of foreign trips at State expenses, act idiotic and perverse while passing adjudication orders? There was a Commissioner who held that the Solicitor General did not explain the case properly to the Supreme Court and so the Supreme Court was not able to understand the law properly and so the law was what the Commissioner thought it to be and not what the Supreme Court interpreted. The other day a judge was heard asking in the Court, "Does your Commissioner think that he knows the law better than all the judges of the Supreme Court and all the Members of his Board?". Here was a Commissioner who refused to follow both the Board and the Supreme Court.

The DG, Vigilance states that only 18 cases (that is 0.001%) have been taken for vigilance scrutiny. Madam, how many cases are decided against the revenue, for you to take up vigilance scrutiny?

It has now become a norm that all adjudicating authorities invariably pass orders in favour of revenue in at least 95% cases. Where is the question of any vigilance?

I made a small quick study from the CESTAT cases reported by us, which shows:

Year	No.of appeals by Commissioners (obviously against Orders not favourable to Revenue)	No. of appeals by assessees against orders of Commissioners
2012	345	1581
2013	267	1621
2014	396	2343

These are only reported decided cases and will just give an idea.

Vigilance should initiate action not for dropping cases, but for confirming silly demands on illegal grounds, with absolutely unsound reasons. These adjudicators don't bring in any revenue but cause immense damage to the system. Already people have started losing faith in the departmental adjudication and an administration that cannot command public faith loses its right to exist in a democratic system. Such a system will perish under its own illegal unbearable weight.

Vigilance should work for preventing such a calamity - there is no danger from adjudication orders against revenue - you can appeal; you have to worry about those nonsensical orders in your favour which has made you a diabolical State machinery.

Anti Dumping Duty on ‘Purified Terephthalic Acid' (PTA) - Resurrected

GOVERNMENT had imposed a provisional Anti Dumping Duty on ‘Purified Terephthalic Acid' (PTA) including its variants - Medium Quality Terephthalic Acid (MTA) and Qualified Terephthalic Acid (QTA) falling under tariff item 2917 36 00 of the First Schedule to the Customs Tariff Act, originating in, or exported from the People's Republic of China, European Union, Korea RP and Thailand, and imported into India, by Notification No. 36/2014-Cus(ADD), dated 25.07.2014.

The Notification emphatically stated that the anti dumping duty imposed under this notification shall be levied for a period not exceeding six months (unless revoked, amended or superseded earlier) from the date of publication of this notification.

Reporting this, DDT 2406 had commented, "The notification does not specify as to what happens if the Board forgets to revalidate it after six months."

And the Notification expired on 24.01.2015 and as usual, the Board forgot to extend it.

Now they have imposed definitive anti dumping duty retrospectively with effect from 25.07.2014 - after four months of its demise.

What do you do when the Revenue Department has no respect for the law framed by it, the judgement of the High Court or even its own circular? Poor Mr. Jaitley seems to be unaware of this retrospective illegality right under his nose.

Notification No. 23/2015-Customs (ADD), Dated: May 27, 2015

FTP - Updation of Importer-Exporter Profile

THE new Foreign Trade Policy 2015-20 has identified trade facilitation and enhancing the ease of doing business as its major focus areas and it is Government's endeavour and commitment to move towards paperless processing. A facility has been provided to importer/ exporter to upload his basic details and documents in the Importer-Exporter Profile. Once uploaded on the Importer-Exporter Profile, the importer/ exporter will not be required to submit these documents each time he/she/it applies for authorisations/scrips under different schemes of the FTP.

DGFT requests that Importers/Exporters may update their Importer-Exporter Profile by 15th June, 2015 by logging into the DGFT website (http://dgft.gov.in/) and clicking on the icon "IEC Profile Updation" and updating the requisite information with their digital signature.

DGFT further requests all EPCs to update the details of RCMCs issued to its members on the DGFT website, for linking of the same with the Importer-Exporter Profiles latest by 15th June, 2015 so that their members can avail the benefit of paper-less submission of applications. They are also requested to exhort their members to update Importer-Exporter Profile on DGFT website by 15th June, 2015 to facilitate online submission of applications.

DGFT Trade Notice 02/2015., Dated: May 26, 2015

Companies Act Amended - 'Common Seal' goes

THE Seal and rubber stamp hold eminent places in our official dealings. The Common Seal of a Company was sacred for many years. The idea of a Company Seal has almost become a relic globally and this Company Seal is also removed from the Indian Companies Act. The Government has notified the amendments to the Companies Act 2013, recently passed by Parliament. The amendments pertain to removing minimum mandatory capital for starting a company, doing away with common company seal, inspection of records of companies, winding up of companies, simplifying stringent bail provisions and utilisation of unclaimed dividends. In the existing Act they had forgotten to insert provisions for punishments in cases of accepting deposits in violation of the law. So now that is included. Board resolutions are now not available for public.

Companies (Amendment) Act, 2015.., Dated May 25 2015

CBI arrests ITO and three employees of Income Tax Department

CBI registered a case against an ITO and OS working in the office of CIT (TDS), Kolkata on the allegation that the accused were demanding an illegal gratification from the complainant for issuing certificate for lower deduction under section 197 of the Income Tax Act, 1961 to his firm(A firm of Chartered Accountants based at Kolkata). CBI laid a trap and caught the ITO and OS red handed, while they were demanding & accepting an illegal gratification of Rs. 50,000/- and Rs.10,000/- respectively from the complainant. During the course of investigation, a Senior Tax Assistant and a Tax Assistant of the same office were also arrested for having accepted Rs. 1000/- each from the accused OS, after the acceptance of a bribe of Rs.10,000/- by the OS from the complainant.

Search was conducted in the house of the ITO which led to recovery of Rs.6,50,000/- in cash. All the four were arrested.

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to vijaywrite@tiol.in

	RECENT DISCUSSION(S)		POST YOUR COMMENTS


Sub: CBI arrests ITO plus Black money outside SWISS Whether VIGILANCE ever caught any? what is the objective of this division in revenue boards? Parallel economy is created by enaction of these "eagles" i.e. vigilance to some extent. May be the short term solution is to put the anti-evasion/preventive and audit machinery behind the NON-PAN/NON-FILERS/NON_REGISTERED. Please clean where the DIRT is - do not clean the almost clean. Arbind Aggarwal Arbind Aggarwal
Posted by Arbind Aggarwal


Sub: Quality audit of adjudication orders In the indirect tax departments, thousands of orders are passed every year. But, there is no system in place, which performs a quality audit of the orders, irrespective of whether the orders are pro-Revenue or pro-Assessee. The basics to be checked are, (a) recording of facts, whether accurate, especially where great deal of investigative material has been gathered, (b) If some evidence has been gathered but not relied on, reason therefor, (c) how faithfully, the assessee's reply has been captured in the adjudicators own language. These days, assessees are asked to give soft copies of replies (or appeal memorandum), which are modified from 1st person to 3rd person and reproduced in the orders.(d) If there are requests for cross-examination, how such requests have been handled by the adjudicator (e) accuracy in the framing of the issues, (f) discussion of each issue, on facts, on law, examination of case laws relied on for both sides, (g) if the cases are not followed, whether any reasons have been given for distinguishing them, (h) finding, whether based on the discussion, or are perverse, i.e., divergent or contrary to the discussions. In the first appellate authoritys' orders, it is necessary to examine whether facts have been correctly captured, at least important grounds urged by the appellant have been recorded, conduct of PH, and whether recorded submissions have been considered while entering findings, and whether the discussion and findings are relevant to the case? In this cut and paste age, very often one finds irrelevant topics finding their way into the orders. There should be a permanent set up of quality audit team headed at least by a Chief Commissioner, which will examine randomly selected orders and report it to the Board and also give feed back to the concerned officer passing the order for future guidance. The adjudicator's or appellate authority's future growth should depend on the quality of work delivered by them, not based on meeting the revenue targets, or taking care of protocols. Unfortunately, most adjudicators do not write their own orders. Some can't even dictate cogent record of PH. The orders are written by experienced superintendents. I have wondered what will happen to adjudication process, if all these experienced superintendents eventually retire and the new tribe of promoted superintendents take over, who know neither law, nor English.
Posted by Gururaj B N


Sub: Adjudication Orders are farce The truth which Vijay has failed to mention is that adjudicating authorities are so busy in other activities detrimental to the revenue and that adjudication orders are being drafted by a blue eyed officer of the Adjudicating authority or outsourced, with clear cut instructions to favour department, irrespective of the reply submitted to the show cause notice and judgement cited. The said officer simply carries out cosmetic changes in the show cause notice and puts the draft orders for favour of signature of adjudicating authority who signs it without applying his or her mind.
Posted by V B Singh


Sub: Tale of an adjudicator What is expected of an adjudicating authority and what happens when he does not oblige? Let me give the real episode: DRI investigated the matter of overvaluation of textile items in the exports through Nhava Sheva port. One of the employees of an agent revealed in his statement that he was paying Rs. 1.50 per pc for the Supdt and Re 1 per pc for the Prev. Officer. The Prev. Officer stated that she reported orally to her Supdt that the goods were overvalued but he orally ordered her to give report that the goods are of fair value. The Show Cause Notice alleged that the Supdt. knowingly allowed the overvaluation of the goods but did not talk of the Prev. Officer. It is on record that the same Supdt. had refused to accept the report of the same Prev. Officer about the valuation and had referred the matter for investigation in the case of some consignments of the same group which attempted export of the goods seized by DRI. One other aspect to be noted is that the Prev. Officer physically examined the goods and the Supdt. did not examine any of the goods at all. In these circumstances, the adjudicating authority relied on the following points: i) that the Supdt. had earlier refused to accept the report of the Prev. Officer and discarded the Prev. Officer�s say that Supdt. orally ordered her to accept the values declared in the export documents. ii) If the statement of the agent�s employee to be taken as correct, then the Prev. Officer also should have been charged for abetment. iii) If the employee of agent says money was given, the exporter should have accepted to have sent the money without which the employee cannot have money to give. iv) Supdt�s house was searched immediately but the Prev. Officer�s house was not searched and her statement was recorded after giving a week�s time. For passing this order dropping the charges against the Supdt. the adjudicating authority, an Additional Commissioner of Customs was taken to task by DRI. They wrote to Directorate of Vigilance of the dept. to initiate disciplinary proceedings against him. What was unpalatable for DRI was the sentence � less said the better about the investigation�. On the same issue, for other consignments subsequently investigated by the local unit of the Nhava Sheva Customs, Show Cause Notices were issued making the Prev. Officer as a party. But not all the skeletons have been exposed from the cupboard. 18 cases are not needed to send the message. As the proverb says one stone drives away hundreds of crows!
Posted by sureshbala sureshbala

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