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'Demand Notices' are not substitute for 'show cause notices' - JN Custom House

TIOL-DDT 2951
18 10 2016
Tuesday

"SOME cases of short payment of duty has been noticed where in spite of fact of short payment of duty was intimated by Audit / Directorate General of Valuation, no action was taken by Group for considerable period of time. It was noticed that if action would have been taken at the time of receipt of said letter from Audit / Directorate, revenue could have been protected within normal limitation period. However, after lapse of normal period of limitation "less charge cum demands notices"were issued proposing recovery of duty and interest by invoking Section 28 (duty) and Section 28A (interest) but without mentioning any ground for invoking extended period of limitation."

These are the observations of the Commissioner of Customs, NS-IV of Jawaharlal Nehru Custom House, Mumbai in a Standing Order.

The Commissioner continues,

Normally less charge cum demand notices are issued in cases (where there is no evidence / ingredient of deliberate mis-declaration, suppression or collusion etc), so that duty along with interest is recovered & case can be closed under section 28(2). However, if even after issue of less charge cum demand notice, duty and interest can't be recovered, a proper SCN is required to be issued so that case can be adjudicated on merits.

The Commissioner has instructed his officers that:

a. "Less charge / Less Charge cum Demand Notices"are persuasive demand notices, which can be issued to recover duty alongwith interest in cases of short payment or non payment of duty to seek voluntary compliance of person liable to pay such duty. However, such "Less charge / Less Charge cum Demand Notices" are not substitute for "show cause notices"required to be issued in terms of Section 28 read with Section 124 of Customs Act, 1962.

b. Deputy / Assistant Commissioners may issue such "Less charge / Less Charge cum Demand Notices" if they are of the view / opinion that duty short paid / not paid may be recovered by issue of such Notices. However, it should be noted that in cases where limitation period of "Two Years" or "Five Years", as the case may be (as provided under Section 28 of the Act) nearing / approaching, then demand should not be allowed to be barred by limitation of time by issuing such "Less charge / Less Charge cum Demand Notices". Instead, in such cases, proper Show Cause Notices should be issued at the earliest by incorporating all evidences and invoking all applicable provisions in terms of Monetary limit of adjudication as per Board Circular No. 24/2011-Customs, as amended.

c. Wherever "less charge notice"is issued and duty alongwith interest is not recovered within the time limit of 30days (as normally prescribed in such less notices), then within 15 days of expiry of said 30days period, proper Show Cause Notice should be issued in terms of Section 28 read with Section 124 of Customs Act, 1962.

d. Group should maintain the register containing details of all "less charge Notices"issued. Further details about recovery of duty & interest or issue of proper Demand Show Cause Notice should be mentioned against each entry.

e. Details of pending action against such "Less Charge Notices" should be part of "handing over/taking over note" prepared at the time of relieving/change of officers.

Commissioner of Customs, NS-IV Standing Order No. 58/2016., Dated: October 13 2016

Income Tax Demands - Figures Don't Match

REVENUE is not famous for its statistical accuracy. Now the Income Tax Department has found that there are noticeable differences in the amount of demand as reported in CAP-1 statement and the data appearing on CPC portal.

The Department informs the Pr.Chief Commissioners, "In view of the recent strides in use of technology in all aspects of Departmental functioning, it is necessary that statistics of Demand (the tax due to Department) as appearing in CAP-I of each Pr. CCIT Region should be reconciled with the database on e-portals so that this information becomes a reliable tool for policy formulation and performance appraisal."

The Department has requested all the Chief Commissioners:

that necessary directions may kindly be issued to all concerned Assessing officers to kindly ensure that the figures of demand available with them are duly reconciled with the figures of CPCITR, Bengaluru. The exercise of reconciliation may kindly be completed by 31.10.2016 positively. The amount of modified demand may be reflected in columns no.2 to 6 of CAP-I which will be submitted on i-taxnet as per scheduled date i.e. 7th November 2016. In case the reconciliation cannot be made in full or in part, explicit reason for the same may kindly be communicated.

Directorate of Income Tax (O&MS)., Dated: October 17 2016

WTO - India's Solar Dispute

ON 6 February 2013, the United States requested consultations with India concerning certain measures of India relating to domestic content requirements under the Jawaharlal Nehru National Solar Mission ("NSM”) for solar cells and solar modules.

The claims brought by the United States concern domestic content requirements (DCR measures) imposed by India in the initial phases of India's ongoing National Solar Mission. These requirements, which are imposed on solar power developers selling electricity to the government, concern solar cells and/or modules used to generate solar power.

The Dispute Settlement Body (DSB) of WTO established a Panel to study the issue. The Panel found that India failed to demonstrate that the challenged measures are justified. India appealed to the Appellate Body. The Appellate Body confirmed the findings of the Panel. And last week, the DSB adopted the Appellate Body Report.

The United States, which had initiated the dispute in 2013, said at the special meeting of the DSB that it was pleased with all of the findings of the panel and Appellate Body. The US said that while it supported India's efforts to promote solar energy in line with the global fight against climate change, it was of the view that India's domestic content requirements undermined these efforts by requiring the use of more expensive domestic technology.

India said it was disappointed with what it viewed as an unduly strict interpretation of the exception in WTO rules relating to government procurement. India said this limited the policy space available for undertaking government procurement and did not afford sufficient consideration to the unique nature of solar cells and modules in solar power generation. India said it was also disappointed with the findings relating to the exception in WTO rules in cases of supply shortages. India said the AB ruling effectively confined the use of this exception to restraints on exports and not those applied to imports.

Justice Markandey Katju Invited to Supreme Court

IN what is perhaps a historic decision, the Supreme Court yesterday requested former SC Judge, Justice Markandeya Katju to appear in person to participate in a hearing. The Supreme Court in its order yesterday observed,

A Former Judge of this Court Justice Markandey Katju in a blog published on Facebook has expressed an opinion that the judgment and order dated 15th September, 2016 passed by this Bench in Criminal Appeal No.1584-1585 of 2014 needs to be reviewed in an open Court hearing. Such a view coming from a retired Judge of this Court needs to be treated with greatest of respect and consideration. We, therefore, reproduce herein below the blog published by Justice Katju in Facebook and convert the same into a suo motu review petition.

"Markandey Katju September 16 at 11:41 a.m. The Malayalam T.V. channel Asianet just now took my interview on the Soumya murder case. I said that the Supreme Court has grievously erred in law by not holding Govindachamy guilty of murder. The Court held that since it has not been proved that the accused had intention to kill he cannot be held guilty of murder. What the Court has overlooked is that section 300 IPC, which defines murder, has 4 parts, and only the first part requires intention to kill. If any of the other 3 parts are established, it will be murder even if there was no intention to kill. It is regrettable that the Court has not read section 300 carefully. The judgment needs to be reviewed in an open court hearing."

Office to register a suo motu review petition. We issue notice to Justice Markandey Katju, former judge of this Court and request him to appear in Court in person and participate in the proceedings on 11th November, 2016 at 2.00 p.m. as to whether the judgment and order dated 15th September, 2016 passed by this Bench in Criminal Appeal No.1584-1585 of 2014 suffers from any fundamental flaw so as to require exercise of the review jurisdiction.

GST Council Meets Today - Dissent, Conflict?

KERALA's Finance Minister Dr. Issac Thomas tweeted yesterday, Govt. of India succumbs to corporate pressure to reduce all GST rates. Luxuries must be taxed @ 35/40% or the revenue will suffer .

In the meanwhile the All India Confederation of Commercial Tax Associations (AICCTA) organised a massive demonstration at Jantar Mantar yesterday.

The AICCTA made it clear that it is not against the implementation of the GST, but opposes the way it is being proposed to be implemented in such a way to weaken the states and dilute the powers and functions of the States Commercial Taxes departments. National president of the federation K.R.Suryanarayana, while addressing the gathering of the States CT. Departments at Jantar Mantar, observed that the proposals of the GST council are against the federal spirit of the Constitution, as the administration of Service Tax assessees is proposed to be retained with the Union Government, in violation of the GST objectives. He stated that nearly two lakhs employees of States C.T. departments were on Mass Casual Leave yesterday, protesting against the unilateral proposals of the GST Council. Suryanarayana hoped that the GST council will consider the apprehensions and aspirations of the states in its next meeting scheduled on 18th to 20th October, 2016. Otherwise the AICCTA will announce further course of action on 20th October 2016.

In a letter to the Prime Minister and Finance Minister, the Federation stated:

++ Currently, the CBEC is administering around 1.6 million assessees (with 50% defaulters) against 6.7 million assessees being well administered by the State Authorities.

++ It is demanded that on the appointed day all the assessees should be allotted to the CBEC and the States in proportion to the existing assessee base, i.e., preferably in the ratio of 1:7 for the Centre and the States with full cross empowerment powers. Further, new assessees joining the GST system after the appointed day should be allotted between the CBEC and the State Authorities according to their available manpower.

++ EQUAL PAY AND EQUAL SERVICE CONDITIONS FOR EQUAL WORK: It is demanded that the GST council should recommend a uniform cadre structure, pay and service conditions for the States on par with the Central Authorities.

++ The Central Authorities, particularly the CBEC is trying to disrupt the successful implementation of the GST by manipulating the GST Council to disproportionately empower themselves at the cost of the well established highly trained and well experienced State Authorities. Such machinations by the CBEC should be decried and voided. The State Authorities should be entrusted with the right role, powers and functions that they rightfully deserve. It is reiterated that the State Authorities under AICCTA fully welcome GST and are pledged to do their best for its successful implementation provided these demands are met forthwith.

The banners carried by the State VAT officers had these pictures: