11 03 2015
Wednesday
CLAUSE 115 of the Finance Bill 2015 proposes to insert the following two provisos in Section 86 (1) of the 1994 Act (Service Tax).
"Provided that where an order, relating to a service which is exported, has been passed under section 85 and the matter relates to grant of rebate of service tax on input services, or rebate of duty paid on inputs, used in providing such service, such order shall be dealt with in accordance with the provisions of section 35EE of the Central Excise Act, 1944:
Provided further that all appeals filed before the Appellate Tribunal in respect of matters covered under the first proviso, after the coming into force of the Finance Act, 2012, and pending before it up to the date on which the Finance Bill, 2015 receives the assent of the President, shall be transferred and dealt with in accordance with the provisions of section 35EE of the Central Excise Act, 1944.".
WHY? And what does it propose to achieve?
That's a long story.
The Central Excise appellate mechanism is a very complicated maze which is beyond the comprehension of high profile lawyers, wise judges of the High Courts, even wiser judges of the Supreme Court and the wisest of them all - the all knowing Superintendent of Central Excise whose erudition gets the stamp of approval of all the wise officers of the Department. But of course the assessee is expected to be a master on the subject.
Under Section 35EE of the Central Excise Act, in respect of orders passed by Commissioner (A) relating to transit loss, rebate or export without payment of duty, the appeal lies to the Central Government - the Revision Authority, and not to the CESTAT.
As per Section 83 of the Finance Act, 1994, certain sections of the Central Excise Act are made applicable so far as may be, in relation to service tax as they apply in relation to a duty excise.
Section 35EE is one such section made applicable to Service Tax. But this has been made applicable only with effect from 28.05.2012 by Finance Act 2012. (please note the proposed amendment is effective from this date)
As per Section 86 of the Finance Act 1994, an appeal can be made to the CESTAT against an order passed by the Commissioner(A).
Is there a conflict between Section 83 and Section 86? Which one would prevail? In Service Tax rebate matters where should one go in appeal - to the Tribunal or the Revision Authority?
Under Central Excise, Section 35B bars an appeal to the Tribunal in respect of transit loss, rebate or export without payment of duty; but there is no such bar under Service Tax.
So there was/is confusion as to where the appeal should be filed in cases relating to service tax rebate.
This is sought to be solved by the proposed amendment. This amendment has retrospective effect from the coming into force of the Finance Act, 2012 and the Bill does not mention that date. You are supposed to search and find that date. Any way for the exclusive use of TIOL readers I will let you know the secret - it is 28.05.2012.
Now the appeals in such cases will be to the Revision Authority and not CESTAT and all cases pending in the CESTAT will be transferred to the Revision Authority. Who will transfer the files? CESTAT Benches are located in six cities; will the Revision Authority go to all these benches and collect the pending cases? The CESTAT is already without much infrastructure and staff - can it be burdened with sorting out all these cases and transferring them to the Revision Authority? Is this exercise necessary? At least why can't the pending cases continue with the CESTAT? Why should the poor assessees and the Tribunal be put to so much inconvenience? Why can't they do it prospectively?
WHY? WHY?
I will tell you why, it is because of the sheer contempt the babus have for the judiciary and the rage the babus feel when their ineptly drafted laws are questioned/quashed by the courts. In spite of what Mr. Jaitley pronounces publicly, his babus have got him to present to Parliament a retrospective legislation which is absolutely of no use to the Government, except telling the Courts, "if you quash our badly drafted laws, we will bring them with double vigour and retrospectively”. What can a poor Finance Minister do against the might of the babus?
And they don't even tell the Parliament why they want this retrospective legislation.What they failed to do in 2012, they are trying to correct now retrospectively.
Service Tax Rebate - Appeals - judicial view
THIS confusion had been cleared by the Delhi High Court in the case of GLYPH INTERNATIONAL LTD, reported by us in - 2014-TIOL-560-HC-DEL-ST. The High Court held that the amendment to Section 83 by making a specific reference to Section 35EE of the Central Excise Act, did not make any difference to the nature of jurisdiction exercisable by the CESTAT under Section 86; it continued to possess jurisdiction to decide on matters pertaining to rebate and refund. For this reason, the question of law is answered in favour of the assessee/appellant and against the revenue. This was an appeal by the assessee against the order of the CESTAT holding that appeal lies to the Government and not CESTAT.
But when the Mumbai CESTAT took a similar decision in an appeal filed by Revenue, the Department took the matter in appeal to the Bombay High Court pleading that the right forum to appeal was indeed the CESTAT. And the Bombay High Court in a recent order agreed with Revenue and the Delhi High Court and allowed the Revenue Appeal holding that such appeals are maintainable before the CESTAT. This order was delivered on 12th February 2015. After winning the case in the High Court on 12th February, the Government took a U-turn and the Finance minister proposes an amendment in the Act to undo the judgements of two High Courts. This is how they make our laws.
We bring you the Bombay High Court judgement today. Please see Breaking News.
Hassles of transferring pending cases from CESTAT to Revision Authority
THE proposed amendment only says that the pending cases shall be transferred - it does not mention as to who will transfer, to whom and how? These are appeals filed in the Tribunal and numbered in the Tribunal Registry. They cannot be just bundled and thrown into the Government's court. Can the clerks in the Registry take the responsibility of transferring the cases and the related files? Should each case go to the Bench for a decision to transfer? If it has to, then the Bench can as well decide the issue.
Why all these complications? Do they get paid to clog the system with their law-making acrobatics?
Why do we need a Revision Authority?
THIS revision authority is a relic of the past when we did not have the Tribunal. Now that we have a well functioning Tribunal, why do we need this parallel Revision Authority who is a Commissioner sitting in appeal over orders passed by another Commissioner, sometimes even senior to him? Can't we simply abolish this post and make all orders of the Commissioner(A) appealable to the Tribunal?
And this Revision Authority has only one office in Delhi - it will be difficult for small assessees to go to Delhi for the cases before the Authority.
This Revision Authority is like the Supreme Court; there is no appeal against its orders!
And strangely, the Department has no time limit to file an application before the Revision Authority!
If the Government is really interested in ‘ease of doing business' and less government, this institution should be abolished at the earliest.
Attorney General of India is Public Authority under the RTI Act -Yet another victory for Whistleblower RK Jain
IN a landmark decision, the Delhi High Court yesterday declared the Attorney General of India as a "Public Authority” under RTI Act. The Full Bench decision of the CIC, has been reversed.
The controversy started in January, 2013 when the legendary editor of ELT, RTI activist and whistle blower RK Jain filed an RTI application with the Attorney General of India seeking information and documents about the Petition filed by the Indirect Tax Bar Association, Bangalore seeking permission of the Attorney General for moving Contempt Petition against him. The information was declined claiming that the Office of Attorney General is outside the purview of the RTI Act.
Supreme Court of India had dismissed the Contempt Petition [See 2010-TIOL-64-SC-CONTEMPT] filed by the Bar Association against RK Jain and imposed exemplary cost of Rs.2 lakhs out of which Rs. 1 lakh was awarded to Jain. The Contempt Petition was filed for writing editorial about malfunctioning of the CESTAT. The Supreme Court had also found that the Attorney General of India was misled by the said Bar Association, while seeking permission for filing Contempt Petition.
The Attorney General (AGI) returned RK Jain's application stating that as per the full Bench decision of the CIC, the AGI is not a "public authority”. RK Jain is before the High Court challenging the impugned order of the CIC and he also prayed that a direction be issued to the AGI to provide the information as sought for by him.
The Counsel for the AGI argued that:
1. AGI is a standalone counsel of the Government of India and is in a sui generis position under the Constitution of India.
2. the functions performed by AGI neither alter the rights of any person nor bind the Government of India; therefore, the AGI could not be construed as an "authority”.
3. AGI does not have the necessary infrastructure to support the applicability of the RTI Act inasmuch as, the AGI is a single person office and, therefore, would have to act as a CPIO as well as the Appellate Authority. Since the same is not feasible, the AGI cannot be held as ‘Public Authority'.
The High Court observed,
1. In addition to acting as legal advisor and performing duties of a legal character that may be assigned, the AGI is also obliged to discharge the functions as may be conferred under any law for the time being in force.
2. By virtue of Section 15 of the Contempt of Courts Act, 1972, the Supreme Court may take an action for criminal contempt on a motion made by the AGI or the Solicitor General. Thus, the AGI also has the right to move a motion in case of a criminal contempt, before the Supreme Court.
3. The AGI is also an ex officio member of the Bar Council of India and is also considered as a leader of the Bar.
4. It has been contended that there would be a practical difficulty as the office of the Attorney General is only a skeletal office which only consists of the appointee and the appointee's personal staff. This cannot be considered as a reason for excluding the applicability of the Act on a public authority.
The High Court set aside the order of the CIC and directed the AGI to reconsider the application filed by RK Jain.
Please see 2015-TIOL-578-HC-DEL-RTI
Supreme Court Tax Bench - CBDT Directions
CBDT informs the field that a Bench has been constituted by the Supreme Court to deal exclusively with Tax matters on all working days which is functional w.e.f. from 9th March, 2015. This will necessarily entail briefing the counsels for the Department as well as meeting the requirements of the court on real time basis. The Member (A&J) has desired that all the Principal Chief Commissioner/ Chief Commissioner/ Commissioner(s) may check the website of the Supreme Court on daily basis, which generally displays advance cause list for next 10 days, and keep themselves prepared for cases in their jurisdiction for any briefing/service of notice/information as may be required by the Counsels or the Supreme Court at very short notice. In case of any officer proceeding on leave etc., their successor in office must be kept duly informed of such cases listed during the period of their absence.
CBEC is yet to issue any such direction.
CBDT F. No. 279/Misc./45/2015-SO(ITJ), Dated: March 10, 2015
Huge IT Demand on Cairn
CAIRN Energy is slapped with a huge demand of Rs 10,247 crore (1.6 billion Dollars) by the Income Tax Department. Cairn understands the the assessment stems from amendments introduced in the 2012 Finance Act which seek to tax prior year transactions under retrospective legislation. The transactions subject to the assessment are those undertaken to effect the group reorganisation that was required to enable the Initial Public Offering of Cairn India Limited (CIL) in 2007.
Simon Thomson, Chief Executive, Cairn Energy PLC said:
"Cairn has consistently confirmed that it has been fully compliant with all relevant legislation and paid all applicable taxes in India and we are confident of our position under the UK-India Investment Treaty.
Against a backdrop of regular engagement with the Government of India since January 2014 it is very disappointing to have received a draft assessment order at this time. Since the election of the BJP, senior Government Ministers have consistently commented on the negative impact the issue of retrospective taxation has had on international reputation and investor sentiment towards India.”
Until Tomorrow with more DDT
Have a nice day.
Mail your comments to vijaywrite@tiol.in |
Download PDF
