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UOI Vs UOI - All SCNs and Orders Against Govt Departments illegal? Supreme Court Dismisses Revenue Appeal

DDT in Limca Book of Records - Third Time in a rowTIOL-DDT 2640
14 07 2015
Tuesday

WHO should be the appellant/respondent in a case filed by/against a Government Department?

In Divisional Railway Manager Vs Commissioner of Central Excise, Jaipur-II - 2013-TIOL-1891-CESTAT-DEL, the CESTAT observed,

it is clear and beyond disputation that suits or proceedings against the State can be pursued only in the name of the Union of India or the concerned State, as the case may be. it is axiomatic that neither the Secretary to the Government; the Railway Board nor as has been done in the present case, the Divisional Railway Manager, Ajmer Division may in law and per se represent the Indian Railways or the Union of India, in the absence of the Central Government being arrayed as a party. A decree passed against the Divisional Railway Manager cannot be executed against the Union of India nor can a decree or award passed against the Divisional Railway Manager be satisfied by drawals from the Consolidated Fund of India. The provisions of Chapter II, in particular, the elaborate provisions relating to procedure in financial matters set out in Articles 112 to Article 114 in the Constitution clearly indicate that a charge upon or an appropriation from the Consolidated Fund of India could only be in respect of expenditure of the Government of India. It is noticed in several cases, clearly oblivious of this fundamental constitutional mandate, proceedings are initiated against state actors instead of the State as duly designated under the Constitutional mandate .

The Tribunal held: The adjudication order as confirmed by the order of the Commissioner (Appeals) in this case, (in circumstances where the Union of India, Ministry of Railways represented by the authorised designated authority was not arrayed as a party to the assessment proceedings) are incompetent and consequently the adjudicated liability cannot be recovered by lawful process of law, from the Indian Railways, a department of the Union of India or from any division thereof.

In fine, the Tribunal held that Proceedings against a Government Department are illegal, if the Union of India is not shown as a respondent. In this case, the Show Cause Notice and the orders were against the Divisional Railway Manager and not the Union of India. For more details on this issue, please see DDT 2256 - 20.12.2013.

The Tribunal forwarded a copy of its order to the Central Board of Excise and Customs for information and issuance of appropriate guidelines to the field formation. Instead of giving guidelines, the Board approached the High Court with the questions of Law whether:

1. the Tribunal was correct in dismissing the appeal for mis-joinder of parties, in an appeal arising out of quasi judicial proceedings (wherein the provisions of CPC are not applicable) of the Central Excise Department by incorrectly applying the Judgement arising out of a suit which was in nature of pure civil proceedings?

2. the Tribunal after holding the appeal to be incompetent could itself have declared/observed that quasi-judicial proceedings of the Central Excise department to be a nullity and void when the matter could not be examined on merits at all?

3. the CESTAT was right in holding the appeal to be an incompetent appeal when the dispute arose out of quasi-judicial proceedings inter-se between two departments of the Union of India (Central Govt.) as the Union of India was not impleaded.

The High Court observed, (2014-TIOL-2576-HC-ALL-ST)

It is not in dispute that the assessment was in respect of the Union of India through the Ministry of Railways. The Divisional Railway Manager, who is an employee of the Union of India or Ministry of Railway, is not the assessee. No show cause notice was issued to the Union Government. The adjudication did not take place against the Union Government. The order of adjudication and the demand that would be raised in pursuance thereof, would be enforced not against the Divisional Railway Manager but against the Union of India through the Ministry of Railways. Having regard to this position, it is but necessary that the proceedings commencing with the notice to show cause must be initiated against the Union of India through the Ministry of Railways .

The entire exercise of adjudication which commenced with the notice to show cause is clearly a nullity. The show cause notice ought to have been issued against the Union of India through the Ministry of Railways and not against the Divisional Railway Manager who was but an employee and servant of the Ministry of Railways.

The High Court found no merit in the appeal, which did not raise any substantial question of law. And so dismissed the appeal.

The perseverant Revenue took the matter in SLP to the Supreme Court.

A Larger Bench of the Supreme Court headed by the CJI, yesterday dismissed the petition on the ground of delay as well as on merits. But the question of law is kept open. (SLP CC No. 12565/2015, dated 13.07.2015)

What is the question of law kept open when the petition is dismissed on merits also?

Maybe now the CBEC can think of those instructions to the field formations, as suggested by the CESTAT.

So, now the Union of India also necessarily has to be the appellant/respondent.

Anti Dumping Duty On Glass Fibre and articles Extended JIT

THE  provisional Anti Dumping Duty on imports of Glass Fibre and articles originating in, or exported from People's Republic of China, was imposed vide Notification No. 75/2010-Customs, dated the 14th July, 2010. The definitive anti dumping duty was imposed on it for a period of five years from the date of imposition of the provisional anti-dumping duty, that is, the 14th July, 2010, by Notification No. 30/2011-Customs, dated the 4th March 2011.

This would have expired today and in a commendable action Just In Time (JIT), the Government yesterday extended its validity for another year till 13th July 2016. This is the legal way of doing things instead of the arbitrary illegal retrospective extension that the Board is often fond of indulging in. Let us hope LAW will prevail under the new Chairman of the Board.

Notification No. 33/2015-Cus (ADD)., Dated July 13 2015

CBDT - Restriction on Issuance of Manual Refunds by Assessing Officers

THE functionalities for passing orders u/s 143(1)(a)/143(3)/154/appeal effects/ penalty etc. exist on the system and, progressively, AOs are mostly issuing orders on the system from AY 2011-12 onwards.

The CBDT has repeatedly instructed that in all cases orders must be passed on the system. This has also been stressed in the Central Action Plan for each year. Further, all charges including LTUs and Central Charges are now covered by Refund Banker scheme.

However, instances continue to come to the notice of the Board where the Assessing Officers have issued manual refunds even in cases, which have been processed on AST.

CBDT has decided that henceforth no manual refund should be issued in a case which has been processed on AST. In exceptional cases, manual refunds may be issued with the following safeguards:

i. It is mandatory for AO to take Approval by Range head for refunds upto Rs. 1 lakh and approval by CIT for refund above Rs. 1 lakh and record reasons as to why manual refund was necessary.

ii. Mandatory quoting of PAN, AY and Bank account number on the Cheque.

iii. No manual refund will be permitted if a prior manual refund for same PAN, AY and amount has already been encashed.

CBDT AST Instruction No. 136 in DGIT(S)/DIT(S)-3/AST/Manual Refunds/85/2015-16., Dated July 10, 2015

Electronic Verification Code (EVC) for electronically filed Income Return - Procedure

EXPLANATION to sub rule (3) of Rule 12 of the Income tax Rules 1962, states that for the purposes of this sub-rule "electronic verification code" means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).

Further, Sub-rule (4) of Rule 12 of the Income Tax Rules 1962 states that the Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the returns in the manners (other than the paper form) specified in column (iv) of the Table in sub-rule (3) and the report of audit or notice in the manner specified in proviso to sub-rule (2).

The Principal Director General of Income-tax (Systems) has laid down the procedures, data structure and standards for Electronic Verification Code:

The Electronic Verification Code (EVC) would verify the identity of the person furnishing the return of income ('Verifier) and would be generated on the E-filing website https://incometaxindiaefilinq.gov.in or as otherwise indicated. The EVC can be used by a Verifier being an Individual to verify his Income Tax Return or that of an HUF of which he is the Karta. The EVC generation process may vary based on the risk-category of the Assessee, method of accessing the E-filing website or interface with third party authenticating entity. The EVC would be unique for an Assessee PAN and will not valid for any other PAN at the time of filing of the Income Tax Return. One EVC can be used to validate one return of the Assessee irrespective of the Assessment Year or return filing type (original or revised). The EVC will be stored against the Assessee PAN along with the other verification details. The EVC will be valid for 72 hours or as otherwise specified. The Verifier can use more than one mode to obtain EVC and can generate the EVC multiple times.

CBDT Notification No. 02/2015., Dated: July 13, 2015

Unauthorised Practice of Law - Big Four get Bar Council Notice

IT is reported that the big four accounting firms, PwC, Deloitte, KPMG and E&Y have been issued notices by the Bar Council of Delhi on a complaint by the Society of Indian Law Firms ( SILF) for allegedly "engaging in the unauthorised practice" of law. It is alleged that these firms are engaging in both litigious and non-litigious practice and are in clear violation of the Advocates Act by unauthorised practice of law.

It is argued that under the Advocates Act, there is only one class of persons entitled to practice the profession of law - Advocates who are enrolled in the rolls of the State Bar Councils. And these accounting firms are advising clients on FDI policy, exchange control regulations, corporate laws, competition law and industry sectoral regulations. SILF has also alleged that the firms are involved in preparing cases and representing clients before appellate authorities and are also involved in providing legal, contractual and regulatory services.

The Madras High Court had in a judgement three years ago noted, the oversight of the Bar Council on non-litigation activities of such law firms was virtually nil till now, and exploiting this loophole, many accountancy and management firms are employing law graduates, who are rendering legal services, which is contrary to the Advocates Act.

Vijay Mallya imposed exemplary costs

NOTHING seems to be going right for the baron, Vijay Mallya these days. Yesterday the Supreme Court imposed costs on him in a FERA case.

Mallya was summoned by the Enforcement Directorate and since he failed to appear, a complaint was filed by the ED before the Additional Chief Metropolitan Magistrate, New Delhi under Section 56 of the FERA. This section provided for conviction for contravention of any of the provisions of the Act. The trial court after considering the material on record summoned the appellant and framed charge against him under Section 56 of the Act. This was in 2000 and Mallya challenged the charge in the High Court, but without success and he was in the Supreme Court.

While this was going on, FERA was repealed and the Show Cause Notice against him was dropped.

In a letter to the ED, Mallya had submitted,

"As you will appreciate, I am the Chairman of several public Companies both in India as well as in the USA and, therefore, my schedule is finalized several months in advance. During the fiscal year end period, the problem only gets compounded.

I would, therefore, request you to excuse me from the personal appearance on November 26, 1999 as I will be out of India.

I am willing to fix a mutually convenient date to appear before you."

The Supreme Court did not appreciate this and observed,

From the tenor of the letter, it appears that it was not a case of mere seeking accommodation by the appellant but requiring date to be fixed by his convenience. Such stand by a person facing allegation of serious nature could hardly be appreciated. Obviously, the enormous money power makes him believe that the State should adjust its affairs to suit his commercial convenience.

In spite of the case against him being dropped, the Supreme Court held that the offence of not appearing on summons remained, observing, the appellant is still liable for the punishment notwithstanding the fact that the presence of the appellant was required by the adjudicating officer in connection with an enquiry into certain alleged violations of the various provisions of the Act, but at a subsequent stage the adjudicating officer opined that there was either insufficient or no material to proceed against the appellant for the alleged violations of the Act, is immaterial.

The Supreme Court found the entire approach adopted by Vijay Mallya to be a sheer abuse of the process of law. Any other view of the matter would only go to once again establishing the notorious truth stated by Anatole France that - "the law in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets and to steal bread".

His appeal is dismissed with exemplary costs quantified at rupees ten lakhs to be paid to the Supreme Court Legal Service Authority.

After 15 years, his case is back in the trial court.

Please see Breaking News

Service Tax arrest

HYDERABAD Service Tax yesterday arrested the head of an infra firm for alleged evasion of Service Tax to the tune of Rs. 20 crores. It is learnt that he has collected the Service Tax and not paid it to the Government. The accused is in custody and admitted to a hospital. There is an income tax arrear of 17.88 crores on this assessee and CBDT had declared that the assessee is not traceable. The Service Tax sleuths have been able to get him.

Law(yer) will take its own course - Lawyers attack income tax office

BEFORE you blame me for the misleading headline, let me clarify this happened in Faisalabad in Pakistan yesterday. Lawyers attacked the Income Tax Commissioner's office and damaged furniture and window panes.

"The trouble erupted when some lawyers reportedly exchanged hot words with the Income Tax Commissioner Nasir Khan during the proceedings of a case, blaming him for "unnecessary delays and objections" and using "coercive measures". The commissioner had reportedly objected to the lawyers' contention, pointing out that he was discharging duties "strictly in consonance with law".On this the lawyers became enraged and attacked the income tax commissioner who immediately moved out of his office and took shelter in another room", Pakistan Today reported this morning.

Until Tomorrow with more DDT

Have a nice day.

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