Excise Duty beyond death
30 07 2015
Thursday
In the Apex Court Yesterday
YESTERDAY the Supreme Court delivered three important judgements on Central Excise.
Excise Duty beyond death:
The Supreme Court started its judgement with these words, "Nothing is certain except death and taxes." To tax the dead is a contradiction in terms. Tax laws are made by the living to tax the living. What survives the dead person is what is left behind in the form of such person's property."
The question to be decided by the Supreme Court was whether an assessment proceeding under the Central Excises and Salt Act, 1944, can continue against the legal representatives/estate of a sole proprietor/manufacturer after he is dead.
The Supreme Court noted there is in fact no separate machinery provided by the Central Excises and Salt Act to proceed against a dead person when it comes to assessing him to tax under the Act.
The Supreme Court observed, "Apart from the fact that there is nothing about dead persons in Section 11, Section 11 is limited only to recovery of sums that are due to the Government. The very opening words in Section 11 show that duty and other sums must first be payable to the Central Government under the Act or the rules. If such sums are not "payable" then the provisions of the Section do not get attracted at all. We have seen that the Act contains no machinery provisions for proceeding against a dead person's legal heirs, such as are contained in the Income Tax Act. Obviously, therefore, duty and other sums do not become "payable" without such machinery provisions. Further, Section 11 deals with modes of recovery of tax payable and does not deal with the subject matter at hand - namely machinery provisions for assessment in the hands of the estate of a dead person and, therefore, does not have much bearing on the matter in issue in the present case."
The Court held that there is no provision which empowers the authorities to recover due from a deceased assessee by proceeding against his legal heirs. The way section 11 and 11A are worded, it is amply clear, the legislature has consciously kept away the legal heirs from answering to liabilities under the Act.
The Supreme Court further observed, "In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency."
The Supreme Court noted that the Income Tax Act also did not have such provisions, but they made their amendments in 1933. Maybe there will be an amendment to catch the survivor in indirect taxes also and will the GST Act have such a provision?
Iron and steel obtained by breaking up of ships – two different notifications for two similar assessees not correct:
Two notifications were issued on 27.03.1987 exempting iron and steel obtained from breaking up of ships.
By the first Notification No.102/87-CE, if the customs duty leviable on the import of ship for the purpose of breaking is paid at the rate of Rs. 1,035/- per LDT along with additional duty leviable thereon under Section 3 of the Customs Tariff Act, the excise duty payable is at the rate of Rs.365/- per tonne, exempting the remainder as specified in the Schedule.
On the other hand, as per Notification No.103/87-CE, if the customs duty has been paid at the rate of Rs.1400/- per LDT, the scrap obtained from breaking of such ships is exempted from the entire excise duty.
This was challenged by the assessee as arbitrary, artificial and has no nexus with the object that is sought to be achieved. When customs duty is payable under either of the two methods, it is not understood why exemption is granted only to one set of persons paying customs duty in a particular method of assessment.
The Supreme Court observed,
1. The State undoubtedly enjoys greater latitude in the matter of a taxing statute. It may impose a tax on a class of people, whereas it may not do so in respect of the other class.
2. A taxing statute, however, as is well known, is not beyond the pale of challenge under Article 14 of the Constitution of India.
3. It is, thus, beyond any pale of doubt that the justiciability of particular Notification can be tested on the touchstone of Article 14 of the Constitution.
5. Article 14, which is treated as basic feature of the Constitution, ensures equality before the law or equal protection of laws.
6. Equal protection means the right to equal treatment in similar circumstances, both in the privileges conferred and in the liabilities imposed. Therefore, if the two persons or two sets of persons are similarly situated/placed, they have to be treated equally.
7. At the same time, the principle of equality does not mean that every law must have universal application for all persons who are not by nature, attainment or circumstances in the same position. It would mean that the State has the power to classify persons for legitimate purposes.
The Supreme Court was in favour of the assessee.
Manufacture - Concurrent finding of fact on manufacture by all three lower authorities accepted:
On a question whether a particular activity amounted to manufacture, the Supreme Court observed that the Adjudicating Authority, the Commissioner (Appeals) and the Tribunal held against the assessee. The appellant has lost before all the fora below who have concurrently held that the activity undertaken by the appellant amounts to 'manufacture'.
The Supreme Court concluded,
A finding of fact is arrived at by all the three Authorities that the activity undertaken by the appellant amounts to "manufacture" within the meaning of Section 2(f) of the Central Excise Act, 1944, since the end result of the process or activity resulted in new and different commercial product. We, thus, are of the opinion that on the basis of the aforesaid findings which are concurrent findings of all the Courts below, the correct legal principle has been applied.
We bring you all the three judgements today. Please see Breaking News.
Facility to replace paper documents with e-documents - CBEC
THE CBEC in a Press Release yesterday states:
As part of the Government's initiative to facilitate trade, Central Board of Excise and Customs has been taking several steps towards ease of doing business. One such recent initiative has been to encourage the trade to replace paper documents required by law to be preserved with electronic documents and to use digitally signed invoices in Central Excise and Service Tax. During the Budget exercise of 2015, legal provisions were amended with twin purpose of providing that the invoices issued by manufacturers or service providers can be digitally signed and to enable manufacturers or a service providers to store legally prescribed documents electronically. Now, a notification and a circular have been issued after due consultation with the trade and to prescribe the procedure and safeguards to be followed. Notification No. 18/2015-CE(NT) and Instruction issued from F.No 224/44/2014-CX.6 are available on the website www.cbec.gov.in. Besides improving ease of doing business and being environment-friendly, these initiatives are also expected to reduce transaction cost for the business.
You ASK, we answer!
YESTERDAY, the CBDT came out with a Press Release patting itself on the timely redressal of taxpayer grievances. It is informed that during the period 1.4.2014 to 22.07.2015 the overall disposal rate of grievances received on public grievances portal of the Government of India works out to 85%. And that a roadmap is being readied for additionally establishing 58 ASK Centres during the current Financial Year.
On our message board, V.G.Irkal from Hospet comments –
"…Presently ASK Centre, in many places, is performing merely as Tappal Receipt Counter managed by TA/STA. Receipts generated and issued through system is also of no use, since the Tax Payers are not able to track their tappal online. Statistics indicate increase in percentage of resolving tappals and applications, but Tax Payers' grievances remain unaddressed…."
It is hoped that the CBDT takes note of the above and fine-tunes the ASK Centre.
By the way, CBEC does not seem to be bothered about its "Help Centres", that is, if and only if they still exist!
European Commission Modernises Customs Procedures
THE European Commission has adopted a legal act to create a simpler, more modern and integrated EU customs system to support cross-border trade and provide for more EU-wide cooperation in customs matters. It builds on the Union Customs Code adopted in 2013, which sets out detailed rules for twenty-first century customs processes.
Customs services play a central role in policing the EU's external borders and in facilitating trade. The customs union is the operational arm of much of the EU's commercial policy measures. In addition, a growing range of government agencies call on customs to enforce their policies at the border. EU customs handle 16% of world trade, or over two billion tonnes of goods a year with a value of EUR 3,400 billion.
Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "A modern and cost-effective customs system facilitates international trade and is conducive to growth. It also plays a vital role in defending the safety and security of European citizens and in protecting Member States' interests."
The Commission has been working for several years on a major overhaul of customs rules in the EU. The basic regulations were changed in 2013. Detailed acts must subsequently be adopted so that the new rules can be applied as of 1 May 2016.
The act adopted covers a wide area of customs activity, including:
Simplifications of the customs procedure inward processing which allows the processing of non-Union goods without payment of import duty and other charges to support creation of added value in the EU;
Clearer rules to ensure equal treatment of economic operators in the EU;
Wide-ranging provisions which will allow customs decisions and authorisations to be valid across the EU in the future;
Establishing common data requirements as the basis for new IT systems linking Member States' customs administrations to ensure a seamless exchange of information;
Improvements in risk management to reinforce the fight against trade in illicit and prohibited goods, terrorism and other criminal activities.
The delegated act will now be considered by the European Parliament and the Council.
Morality, ethics and public service delivery
RENOWNED academician, scholar and former Chief Secretary delivered a lecture to the officers on "Morality, ethics and public service delivery".
The talk was delivered as part of a new series of motivational lectures organized on the initiative of the Board Chairman to motivate officers to work with renewed zeal.
In his animated style, the former Chief Secretary dilated upon the concept of motivation, and how motivation leads to a natural transformation but it has no meaning without ethical consideration. He said ethics has been an integral part of human resource management for nearly 2000 years and the role of universal moral values such as honesty, integrity, truthfulness and strength of character had been understood and recognized throughout history in the delivery of public service.
He said the civil service delivery in the country was hampered by problems of hypocrisy and duplicity and that there was a culture of shifting responsibility upstairs (or down to the grassroots) without understanding that change came from within, and it required exemplification, not mere lecturing or sermonising.
"In absence of individual motivation, the change that is likely to come will take a long time and it will depend in large measure on the kind of structural changes introduced in the way public policy is formulated and delivered in the country," he said.
He said honesty and competence, the two virtues, were the cornerstone of public service which required mastering or mustering over resources to ensure sustainability of state and welfare of its citizenry.
He added that any successful system of accountability was based on principles of accountability, merit, predictability, sustainability and equity. However, the moral content in our accountability system was still weak and fragile and needs infusion of a distinction between haram and halal to make the accountability system more robust and result-oriented.
He also called for ethical standards to be grounded in sound moral basis, saying ethical values were absolute and assigning them to relative terms was a fallacy. He said God had ingrained the sense of evil and good in us and it was up to individuals to see and cultivate good while discarding evil.
This is from the Press Release issued by the Federal Board of Revenue, Pakistan.
Many things in common that we have…
Until Tomorrow with more DDT
Have a nice day.
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