TIOL-DDT 2955 24 10 2016 Monday

PRIME Minister Narendra Modi, addressing the valedictory session of the National Initiative towards Strengthening Arbitration and Enforcement in India, yesterday said that our domestic market has been fragmented. Different taxes across different states have made goods and services more expensive. This has hampered growth in inter-state commerce. We are enacting a Goods and Services Tax law, to create an integrated national market. This will further boost domestic demand, create more opportunities for Indian business and drive job creation.

In a rare brief speech full of wisdom, delivered in impeccable English, the Prime Minister said,

India is today the fastest growing major economy, and one of the most attractive destinations for FDI. Indeed, we stand out as a bright spot in the global economy. This is the result of India's fundamental strengths: democracy, demographic dividend and demand. We need to fully harness these strengths. This can happen only if businesses make long-term investments that create jobs and sustain economic growth.

Innovative business models and app-based start-ups have instilled a spirit of enterprise among Indians. Yesterday's job seekers are becoming today's job creators. The legal profession is also opening up to the promises of the digital world. From cause-lists to case-laws, the lawyer's library is now just a click away on your mobile phone.

Businesses seek assurance of the prevalence of rule of law in the Indian market. They need to be assured that the rules of the game will not change overnight, in an arbitrary fashion. And that commercial disputes will be resolved efficiently. A robust legal framework backed by a vibrant arbitration culture is essential.

However, legal reforms can deliver desired results only when there is an effective and efficient dispute resolution mechanism. The independence of the judiciary is a basic feature of the Indian Constitution. Common citizens as well as businesses repose immense faith in the integrity of the judicial process. Our Government has taken various initiatives to improve the judicial infrastructure and administration.

Our Government has been working on a strategy for convergence of existing tribunals. This will help transform the existing complicated tribunal system into a simpler structure.

We need to simultaneously facilitate a vibrant ecosystem for alternate dispute resolution, including arbitration, mediation and conciliation. This will provide additional comfort to investors and businesses. More importantly, it will also ease the case-load on Indian courts.

Resolution of disputes through arbitration is not new to us. In ancient India, there were several mechanisms for settlement of disputes between the parties. These included the Kulani, or village council; Sreni, or corporation; and Puga, or assembly. Likewise, commercial matters were decided by Mahajans and Chambers.

Today, corporates and financial institutions want legal experts who can help close business deals and transactions without any disputes and litigations. If a dispute arises, corporates want to resolve them quickly through arbitration, without going to courts. For this, they require specialized arbitration lawyers. Alternative dispute resolution processes also preserve personal and business relationships that might otherwise be damaged by the adversarial process.

India has no dearth of brilliant lawyers and judges. India also has a large number of retired judges, engineers, and scientists who can function as competent arbitrators in various fields. India's economic interests shall be better served by a higher number of arbitration experts and lawyers. This in turn requires widening the ambit of legal education in India. There is need to develop specialized arbitration bar associations. We also need professionally run arbitral institutions which can deliver international standards of services at reasonable costs to businesses in India. We welcome internationally recognized institutions in this effort.

We must deliberate on ways and means to supplement the efforts of the judiciary and arbitration mechanisms. Mediation is one such mechanism, the potential of which has not been utilized much in the country. An enabling alternate dispute resolution ecosystem is a national priority for India. We need to promote India globally as an arbitration hub. As Roscoe Pound famously remarked, "The law must be stable but it must not stand still." We need to take inspiration from beyond our shores.

The PM says, "Government has been working on a strategy for convergence of existing tribunals". It is learnt that CESTAT will be subsumed in ITAT.

CAG is GST Ready

IN his speech at the Valedictory Function of 28th Conference of Accountants General held in CAG Office on 21 October 2016, the C&AG of India said,

The importance of fiscal sustainability of the governments can hardly be over-emphasized. Our Department has since the 1960s given special emphasis to audit of government revenues to ensure that the government revenues are realized as due and in time. It is to the credit of the Department that, based on our audit observations and findings, substantial amounts of government revenues are recovered each year both at the Union and the state levels. The Department has been alert to the emerging new challenges in the area of revenue administration, including the GST and various other reform measures taken by Government of India to improve tax collection and combat tax avoidance.

The Department has taken note of the changing paradigm in revenue administration, including the challenges posed by shadow economy and black money, transfer pricing, accommodation bills etc. and the need to manage large volumes of digital information that will emerge from increasing automation of tax filing, assessment and recovery procedures. Notwithstanding the fact that the revenue audit has led to identification and recovery of thousands of crores of tax amounts every year, the Audit Department has faced challenges in accessing the data and information of tax- payers, which significantly limits the potential and effectiveness of audit.

This Conference has given in-depth consideration to all aspects of revenue audit including the availability of manpower and required skills. In the coming days the recommendations of the Conference will be examined with a view to effect changes and take measures that would enhance the effectiveness of revenue audit such that it contributes more effectively to the fiscal sustainability of the governments.

Male MD Gets Treatment from Gynaecologist for Hypertension - Delay in Filing Appeal not Condoned - SC

THE CESTAT dismissed an application for Condonation of Delay and the appeal itself on the following grounds:

1. the question was whether the Managing Director, who was said not to be maintaining good health, was handling the affairs of the Company;

2. the counsel for the appellant had submitted that the Managing Director was not regularly visiting the factory but was managing the day to day affairs of the company on an irregular basis;

3. it was the Cost Accountant who was authorised to deal with the matter, and had received the order;

4. the medical certificate, placed on record, showed that the Managing Director of the appellant was suffering from hypertension with effect from 01.07.2013; the impugned order was received by the appellant on 20.04.2013, and there was sufficient time to prefer an appeal there against;

5. the affairs of the company were being taken care of by others; and, as such, the ill-health of the Managing Director was only an excuse.

On the ground that the delay could not be condoned on flimsy grounds, and there must be sufficient cause for the delay of 218 days, the Tribunal dismissed the appeal.

The assessee took the matter in appeal to the High Court. The High Court observed, 2016-TIOL-2374-HC-AP-CX

1. It is evident from the order of the Tribunal that the order under challenge before the Tribunal was received not by the Managing Director but by the Cost Accountant of the appellant Company.

2. It is also clear that the Managing Director was not even visiting the factory and it was the Cost Accountant who was authorised to deal with the subject matter of the appeal.

3. The Tribunal has also noted that the medical certificate, produced on behalf of the appellant, showed that the appellant's Managing Director was suffering from Hypertension with effect from 01.07.2013, whereas the impugned order was received even earlier on 20.04.2013 itself.

4. While interference under Section 35G of the Act would only be justified if a substantial question of law arises for consideration, and a substantial question of law can be said to arise only if the finding of fact recorded by the Tribunal is either based on no evidence or suffers from perversity.

5. We also examined the certificate to determine whether or not the illness, which the Managing Director of the appellant was said to have suffered from, was noticed by the Tribunal. The said medical certificate was issued by a doctor whose qualification, as recorded in the certificate itself, is M.B.B.S, D.G.O. The Managing Director of the appellant did not suffer from any gynaecological disorder. It is difficult to believe that the Managing Director of Appellant-Company would undergo treatment for Hypertension Heart Disease from a gynaecologist, and not a cardiologist for a heart disease.

6. In any event, the medical certificate dated 23.02.2014 appears to have been obtained just before, and for the purpose of, filing the appeal before the Tribunal.

7. No details as to the nature of treatment, which the Managing Director of the Appellant-Company is said to have undergone from 01.07.2013 till 23.02.2014, are even referred to in the said certificate.

8. We see no reason, therefore, to exercise jurisdiction under Section 35G of the Act to interfere with the order under appeal.

The assessee took the matter in SLP to the Supreme Court. The Supreme Court last Monday dismissed the SLP in a one-line order: -

The special leave petition is dismissed.

Ease of Doing Business - Giving Out of Charge of goods under import without Delivery Order

IN light of the "Ease of Doing Business" initiative by Government of India and in order to reduce dwell time and increase speedy clearance of cargo, the JN Custom House has further simplified the procedure of clearing the goods.

Henceforth, the Out of Charge of the goods will be given by the Customs Officers without insistence on Delivery Order. After payment of duty, the importer /CHA shall bring copy of B/E for registration alongwith duly self-attested copy of Bill of Lading. As soon as the goods are registered for examination, the Customs Officer posted in Docks will examine the goods in case where examination has been prescribed and check Container No. & Seal in case of RMS facilitated Bill of Entry. If the goods are found to be as declared, the Out of Charge of the goods will be given immediately without insistence on or waiting for Delivery Order.

JN Customs Standing Order No. 62/2016., Dated: October 20, 2016

Justice Katju to appear in Supreme Court

PERHAPS for the first time in the history of the Supreme Court of India, a former Supreme Court Judge will appear before the Court.

Justice Markandey Katju says,

In the Soumya case when I heard for the first time that the Supreme Court had issued notice to me and asked me to appear before them and explain my views, I was upset because I thought the Court was trying to humiliate me since I had criticized their judgement, and such an order was unprecedented. So I had initially thought of not appearing before the Court on 11th November (the date fixed).

But when I received the notice of the Court and read it, I found that the Court used very respectful language to me and had 'requested' me, not 'ordered' me, to appear, since they seemed to be sincere about their desire to reconsider their judgment, and did not have a closed mind.

Lord Denning, the celebrated British judge once said "The Judge has not been born who has not made a mistake", and in Soumya's case I genuinely believe that the Supreme Court made some serious mistakes in its judgment by reversing the death penalty awarded by the High Court.

Possibly these mistakes were made because the Court is so overburdened with work that it cannot give as much time to cases as they deserve which they would have otherwise done, had it not been for this heavy load of cases to decide.

We are all humans, and all of us make mistakes, but a gentleman is one who realizes his mistake, acknowledges it, and seeks to make amends. This should apply to judges too.

Until Tomorrow with more DDT

Have a nice day.

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