TIOL-DDT 2664
17 08 2015
Monday

56(j) was a terrifying word during the emergency and some years after that for Government employees. As per Rule 56(j) of the Fundamental Rules, the appropriate authority shall, if it is of the opinion that it is in the public interest so to do have the absolute right to retire any Government servant by giving him notice of not less than three months in writing or three months pay and allowances in lieu of such notice.

Under this rule, several employees were sent home on compulsory retirement. This was a method for the Government to weed out unwanted elements in Government service.

The Supreme Court once observed,

Rule 56(j) is not intended for taking any penal action against the government servants. That rule merely embodies one of the facets of the pleasure doctrine embodied in Art. 310 of the Constitution. Various considerations may weigh with, the appropriate authority while exercising the power conferred under the rule. In some cases, the government may feel that a particular post may be more usefully held in public interest by an officer more competent than the one who is holding. It may be that the officer who is holding the post is not inefficient but the appropriate authority may prefer to have a more efficient officer. It may further be that in certain key posts public interest may require that a person of undoubted ability and integrity should be there. There is no denying the fact that in all organizations and more so in government organizations, there is good deal of dead wood. It is in public interest to chop off the same. Fundamental Rule 56(j) holds the balance between the rights of the individual government servant and the interests of the public. 'While a minimum service is guaranteed to the government servant, the government is given power to energise its machinery and make it more efficient by compulsorily retiring those who in its opinion should not be there in public interest .

Maybe because of the routine and boring regularity with which Commissioners are getting caught by CBI with huge amounts of money, CBEC has decided to invoke the old dreaded rule and has formed a screening committee with the Chairman and two Members of the Board for preparing a comprehensive brief on each officer, for being placed before the Review Committee and to assist the Review Committee in reviewing the cases for pre-mature retirement of the Customs and Central Excise officers in Group 'A' (IRS).

A few heads are sure to be chopped off.

The CBEC has also asked all the Chief Commissioners to form similar committees in the field to do the exercise of identifying the heads to be chopped off and taking steps towards the Guillotine.

Is this compulsory retirement an effective method? In the earlier experiments when Revenue officers were compulsorily retired, they all came back through Court orders and continued their activities with double vigour, because the Government in its anxiety to chop off the heads had not followed the Procedure completely and thoroughly.

Then who will recommend the heads to be chopped? Corruption and incompetence are co-operative ventures in the Department. The honest employees are alone, but the corrupt are united and powerful. If a Commissioner who was nabbed by the CBI is the Head of the Committee to recommend names for compulsory retirement, who will he recommend? - Certainly not his accomplices!

CBEC Letter No.C.50/74/2015-Ad.II., Dated August 14 2015 and CBEC Office Order No. 117/2015., dated August 14 2015

‘Card Service' - Not Taxable prior to 1-5-2006 - CESTAT LB

THE CESTAT Larger Bench headed by the President, Friday delivered a landmark judgement on Card Services.

The President quoted extensively from renowned authorities on the Principles of interpretation applicable to taxing statutes.

1. In interpreting a section in a taxing statute, the question is not at what transaction the section is according to some alleged general purpose aimed, but what transaction its language according to its natural meaning fairly and squarely hits  and this is  the one and only proper test. - Lord Simonds in St. Aubyn (LM) vs. A.G 1952 AC 15 (HL)

2. The proper course in construing revenue Acts is to give a fair and reasonable construction to their language without leaning to one side or the other but keeping in mind that no tax can be imposed without words clearly showing an intention to lay the burden and that equitable construction of the words is not permissible. - Lord Atkinson in Ormond Investment Co. vs. Betts (1928) AC 143 (HL)

3. If a taxing provision is, so wanting in clarity that no meaning is reasonably clear, the courts will be unable to regard it as of any effect. - IRC vs. Ross and Coulter (1948) 1 ALL ER 616 (HL)

4. If the words used in a taxing statute are ambiguous and reasonably open to be two interpretations, benefit of interpretation is given to the subject. - CIT vs. Karamchand Premchand Limited - 2002-TIOL-1228-SC-IT-LB.

5. Before taxing any person it must be shown that he falls within the ambit of the charging section, by clear words used in the section.- Commissioner of Wealth Tax, Gujarat vs. Ellis Bridge Gymkhana - 2002-TIOL-784-SC-WT;

6. In interpreting a taxing statute, considerations of hardship, injustice or anomalies do not play any useful role, unless there be some real ambiguity.- State Bank of Travancore vs. CIT - 2002-TIOL-1099-SC-IT-LB.

7. The golden rule in statutory interpretation is that there are no golden rules.

8. There is an equally established principle of construction, that if the language of the statute is capable of bearing more than one construction, in selecting the true meaning regard must be had to the consequences resulting from adopting the alternative construction; and a construction that results in hardship, serious inconvenience, injustice, absurdity or anomaly or which leads to inconsistency, uncertainty and friction in the system which the statute purports to regulate has to be rejected and preference given to that construction which avoids such results; however this rule of construction has no application where the words are susceptible to only one meaning and no alternative construction is reasonably open.

9. if the grammatical construction leads to some absurdity or some repugnance or inconsistency, it may be departed from so as to avoid such consequences.

Can the Larger Bench of the Tribunal decide a case when the same issue is pending before the Supreme Court?. The Revenue sought adjournment of the hearing on the ground that the same issue is pending before the Supreme Court against the decision of the Tribunal in ABN Amro Bank vs. Union of India - 2011-TIOL-1147-CESTAT-DEL, which is the case differed with by the referral bench.

The larger Bench observed that Mere filing or pendency of an appeal against the decision in ABN Amro Bank Limited , neither eclipses this decision nor operates as a fetter on another Division Bench, which would be free to either follow the ABN Amro Bank Limited decision or could doubt its correctness and seek interpretation, by a Larger Bench. There is also no purpose served in adjourning the reference to await the decision of the Hon'ble Supreme Court. In case the ABN Amro Bank Limited decision is confirmed by the Supreme Court, that would be the governing law and the reference would not survive. The same would be the position if ABN Amro Bank Limited decision is reversed in appeal. Till a final pronouncement by the Supreme Court emerges, there exist diametrically contrary views in the Tribunal; one the final order in ABN Amro Bank Limited and the other which is expressed in the order of reference and in respect of the same subject matter, namely identification of the scope of "credit card services" in BOFS, during the period prior to 01.05.2006.

Resolution of such a conflict at the level of the Tribunal is therefore a salutary course of action, in interests of interpretative stability which would operate until an authoritative decision is received from the judgment of Supreme Court.

Referring to precedential judgements, the larger Bench held that it can hear and decide an issue pending in the Supreme Court.

We bring you this order today. Please see Breaking News

CESTAT Bench at Allahabad - Notified

FOR a background of this issue, please see Friday's DDT.

The CESTAT President has notified the formation of a Regional Bench at Allahabad. The Allahabad Bench will have jurisdiction on appeals arising in the State of Uttar Pradesh. The Registry of the Bench will start functioning from Room No. 210 and 220 of the Office of the Commissioner of Central Excise, Allahabad from 01.09.2015.

The Registrar of the CESTAT was asked to be present in the Allahabad High Court on 20.08.2015 to report about the functioning of the Tribunal at Allahabad. Now he can give his compliance report that the Notification is issued and the Registry will start functioning.

But when will the Bench sit and where are we going to get Members from?

CESTAT Notification No. 01/2015., Dated August 14 2015

CESTAT Bar Vs Bench

UNFORTUNATE incidents are happening in the CESTAT. The CESTAT Bar Association in Delhi is observing today (17.08.2015) as protest day by wearing white badges on their coat. The Association says that the President in a speech in the conference room on 23.07.2015 attacked the Bar Association and its President and interfered in the affairs of the Bar association.

Cordial relations between the Bench and the Bar are supposed to be the essential pre-requisite for the efficient functioning of the Court. The bar and Bench together make the court and they should not be adversaries, but be partners in the dispensation of justice.

Let us hope the issue is amicably settled and the CESTAT functions normally.

Short and Sweet Question

WE found this from a recent CESTAT order:

The short question in this appeal is whether CENVAT credit not reversed by the principal manufacturer in respect of the inputs sent to the job worker and the latter not taken credit thereof shall entitle the principal manufacturer to the refund of any amount paid at a subsequent date without reversing the CENVAT credit on the date of dispatch of the input to the job worker .

Read that again; Simple, short and sweet?

Appraiser and Inspector dead in Mysterious Circumstances - Commissioner arrested by CBI in Corruption Case

IT was not a good weekend for the Customs Department. The Commissioner and Deputy Commissioner in Delhi ICD booked in the Drawback fraud case, were arrested by CBI. It seems CBI found 85 lakh rupees in hard cash in the locker of the DC and this as they say might be the tip of the iceberg.

A Customs Appraiser in Mumbai's JN Customs is reported to have committed suicide. This appraiser had joined JN Customs only a few months ago, on transfer from Kandla. He was suspended in a case booked by DRI recently.

A 29 year old Inspector of Central Excise was found dead in his flat in Visakhapatnam on Saturday. He was a native of Bihar posted in Visakhapatnam - the cause of death is not known.

Tariff Value of Gold and Silver Increased and Oil Reduced

THE Government has increased the Tariff value of gold and silver, reduced the tariff values of all oils and brass scrap. The tariff values of Poppy seeds and areca nuts see a hike after a long time...

The Tariff values as on 31.07.2015 and with effect from 14.08.2015 are as under:

Notification No. 75/2015-Customs (NT), Dated: August 14, 2015

Until Tomorrow with more DDT

Have a nice day.

Mail your comments to vijaywrite@tiol.in