TIOL-DDT 2960
31 10 2016
Monday

IN a letter to the Prime Minister, former Prime Minister HD Deve Gowda says;

++ Any attempt to restrict empowerment or cross empowerment to the States in administering tax on services on any reason will amount to the Centre going back on its earlier assurances and endanger the principles of federalism, as well as fiscal autonomy of the States.

++ The spirit of GST and the principles of federalism should go hand in hand without any violation or favouritism.

++ The States had agreed to GST, relinquishing their exclusive constitutional right to tax goods. In reciprocation, the power to tax services on a mutually agreed and respectable ratio was assured to the States by the Central Empowered Committee of State Finance Ministers, which paved the way for passing of the GST Bill in the States.

++ He is against GST Councils attempt to reserve a large portion of empowerment to the Central Excise Department at the cost of Commercial Tax Departments of States.

++ He has been watching developments relating to strikes and protests by officers and employees of commercial tax departments of various states against the GST Council's attempt to reserve a large portion of empowerment to the Central Excise department at the cost of the commercial tax departments of the States.

++ Entrusting a larger responsibility in administration of GST to States is the only way to protect expanding avenues of revenue, badly needed for State welfare and infrastructural programmes.

The Kerala Finance Minister Dr. Thomas Issac says,

++ If the Central government adopts a more flexible stand, it should be possible to thrash out the differences and move towards the target date for the implementation of the GST. States are gripped with the fear of losing their financial autonomy after deletion of entry 54 and 62 from the constitution.

++ That fear has to be assuaged by reinforcing the commitment on the part of the Centre by agreeing to the States' request of a vertical split up of service tax administration so that goods and services up to Rs 1.5 crore would be in the domain of states and anything above would be administered simultaneously by the Centre and the States.

Creative Destruction: Former Finance Minister P. Chidambaram says, "I am glad the Prime Minister has called for suggestions on the World Bank Group's report. The best suggestions will be based on 'creative destruction' of the present system".

No Quashing of Charge Sheet at threshold - Income Tax Commissioner Loses in High Court

THIS is an interesting case before the High Court at Hyderabad.

The respondent is a Commissioner of Income Tax (CIT). The Department issued a charge sheet against him on the following grounds:

1. The CIT (A) passed an appellate order 30.05.2014. The appeal was stated to have been filed on 31.03.2014 which was a Monday and a Closed Holiday on account of Ugadi (Telugu New Year Day). However, the CBDT issued an Order under Section 119 (1) of the Income Tax Act, 1961 on 24.03.2014, directing the 'field Income Tax Offices' throughout India to remain open and the 'receipt counters' to work during normal office hours on 29th, 30th and 31st of March, 2014 (i.e. Saturday, Sunday and Monday).

2. But, it is claimed by the CIT that he came to the office on 31.03.2014 to see that his office was functioning on that day. He has also certified that his office functioned on 31.03.2014 and an appeal was filed by the assessee and the same was received by Sr. P.S., but not by the Sr. T.A. or O.S. of his office. It is ascertained, the CIT had availed permission to leave the Headquarters from the evening of 28.03.2014 to the morning of 01.04.2014 and in such circumstances, he could not have visited the Income-tax Office on 31.03.2014.

3. An analysis of the meta data of the hard disk of the computers used in the office of the CIT revealed that the appellate order was found to be transferred from a pen drive into the computer of the P.S. on 24th June, 2014 at 10.54.40 a.m. Therefore, the appellate order shown as passed on 30.05.2014 could not have been passed either on 30.05.2014 or before 24.06.2014. This makes it clear that the date of the order as mentioned in the appellate order was actually ante-dated as 30.05.2014. Further, the order was not prepared in the O/o the CIT (A), but has been brought from outside in pen-drive and copied into the computer of the P.S. and issued. But, the record is maintained in such a way that as if the appellate order was dictated by the CIT by affixing a stamp in the order sheet bearing the words 'As dictated the appellate order is typed and put up within seven working days from the date of last hearing'. This stamp has been affixed by Sr. P.S. with his signature and the same is endorsed by CIT (A). However, the Sr. P.S. has affirmed in his statement that the appellate order was not dictated by the CIT (A), instead the same was given to him in a pen drive by the CIT (A) for the purpose of preparing a hard copy of the appellate order and submitting the same to the CIT(A). Thus, the appellate order obtained by the CIT (A) from an outsider in a pen drive is migrated into the computer of Sr. P.S. and converted into hard copy.

++ The appellate order shown to have been passed on 30.05.2014 was not communicated to the DGIT (IT), New Delhi and DIT (IT &TP), Hyderabad. In fact, the Assessing Officer was not even aware of the appeal proceedings and came to know of the appellate order only when informed by the assessee during the course of enforcement of the collection of demand raised in the assessment order.

You may wonder what is so strange and new about this, but this time the Department took it seriously and issued charge sheet to the CIT. Because there was a charge sheet, they removed his name from the Panel for promotion to the post of Principal Commissioner.

The CIT approached the Central Administrative Tribunal which quashed both the Charge Sheet and the deletion of his name from the Promotion Panel and directed the Department to promote him.

The Union of India is aggrieved and took the matter to the High Court.

Interestingly, in the High Court, both the parties relied on the very same decisions of the Supreme Court in Union of India and others v. K.K. Dhawan - 2002-TIOL-441-SC-MISC and Zunjarrao Bhikaji Nagarkar v. Union of India and others - 2002-TIOL-130-SC-CX.

Incidentally Zunjarrao Bhikaji Nagarkar is no more good law as the Supreme Court in Union of India V Duli Chand - 2006-TIOL-78-SC-MISC-LB held, "The decision in Nagarkar's case therefore does not correctly represent the law." This fact of Duli Chand was apparently not brought to the notice of the High Court. Any way that does not make any difference in the decision as the High Court held,

The Supreme Court has cautioned time and again that once a charge memorandum is quashed, a person is let off without even an enquiry. But if a charge memo is not quashed, the maximum damage that is done to an officer is to compel him to face an enquiry and come out clean in a test of fire. In the light of the imputations of misconduct alleged against the 1st respondent, however valid and good defence he may have to the charge memo, he is liable to face the enquiry. The Tribunal faulted in quashing the charge memo at the threshold without properly appreciating the imputations of misconduct. Therefore, the order of the Tribunal quashing the charge memo is liable to be set aside.

Once the order of the Tribunal quashing the charge memorandum is set aside, the order of the Tribunal directing the reinclusion of the name of the 1st respondent in the panel for promotion to the post of Principal Commissioner of Income Tax should also go. The only reason why the name of the 1st respondent was deleted from the panel for promotion was the issue of the charge memo. The only ground on which the Tribunal granted the relief of promotion to the 1st respondent was the setting aside of the charge memo. Therefore, the order in the next writ petition should naturally follow the order in the first writ petition .

So the CIT has to now come out clean in a test of fire.

An aside: Immediately after we carried the Duli Chand Judgement in 2006, I got a telephone call and the caller said, "I am Duli Chand”. I was flabbergasted. I was rather inexperienced and for me Duli Chand was only a case, a citation and I couldn't believe that my case law would call me. It was like a character in a story walking out of the story to talk to you.

Please see 2016-TIOL-2663-HC-AP-SERVICE

GSTN signs MoU with DGFT for sharing of foreign exchange realisation data 

THE Goods and Services Network(GSTN) has signed a Memorandum of Understanding (MoU) with Director General of Foreign Trade (DGFT) for sharing of foreign exchange realisation and Import Export code data, a move that is expected to strengthen processing of export transactions of taxpayers under GST, increase transparency and reduce human interface. 

The Memorandum of Understanding was signed by Mr. Ajay K Bhalla, Director General of Foreign Trade and Mr. Prakash Kumar, CEO, GSTN in New Delhi on 27.10.16. An electronic bank realisation certificate (eBRC) captures transaction level details of foreign exchange realised in India. The eBRC project implemented by DGFT created an integrated platform for receipt, processing and subsequent use of all Bank Realization related information by exporters, banks, central and state government departments. The e-BRC project enabled banks to upload foreign exchange realisation information related to exports on to the DGFT server under a secured protocol. 

Income Tax - Withholding of tax on 'Other sum chargeable' in case of non residents - Disallowance U/s 40(a)(i) of Income-tax Act 1961 - CBDT Clarifies

BY Circular No 3/2015 dated 12.2.2015 issued by the CBDT it was clarified that for the purpose of making disallowance of "other sums chargeable" under Section 40(a)(i) of the Income-tax Act, in the case of non-residents, the appropriate portion of the sum chargeable to tax under the Act, i.e., income component there in shall form the basis of such disallowance.

It has been brought to the notice of the Board by various forums, that this Circular is not being kept in view by administrative Commissioners & Commissioners (Appeal) while filing further appeals and while deciding cases. Further, the Circular is not kept in view by departmental representatives in ongoing litigation cases, who still take a position that the disallowance should be based on the gross amount of offshore payments such as purchases.

In this connection, Board requests that the departmental officers including representatives of the department in litigation before ITAT/Courts etc. may be sensitized to the content of this circular.

CBDT F.No.500/39/2015 (US FT&TR-V)., Dated: October 26, 2016 

First Meeting of National Committee on Trade Facilitation(NCTF)

PURSUANT to the establishment of the National Committee on Trade Facilitation vide order dated 11th August, 2016, its first meeting was held on 28th October, 2016 at the North Block, New Delhi. NCTF is a mandatory requirement under Article 23.2 of the WTO Agreement on Trade Facilitation. Its Secretariat is housed in CBEC.

The meeting was chaired by the Cabinet Secretary Mr. P.K. Sinha and attended by all the 24 members of the NCTF, which included Secretaries of various Ministries/Departments like Revenue, Commerce, Home, Shipping, Civil Aviation, Textiles, as well as Industry Associations like FICCI, CII, FIEO, etc. The meeting started with a welcome address by Mr.Najib Shah, Chairman CBEC who said that TFA on Customs side is as important as GST in Indirect tax reform.

Vigilance Awareness Week from Today

THE Government offices will be observing a Vigilance Awareness Week from 31st October to 5th November. The theme this year is "Public Participation in Promoting Integrity and Eradicating Corruption". The babus will take the following

PLEDGE

WE, THE PUBLIC SERVANTS OF INDIA, DO HEREBY SOLEMNLY PLEDGE THAT WE SHALL CONTINUOUSLY STRIVE TO BRING ABOUT INTEGRITY AND TRANSPARENCY IN ALL SPHERES OF OUR ACTIVITIES. WE ALSO PLEDGE THAT WE SHALL WORK UNSTINTINGLY FOR ERADICATION OF CORRUPTION IN ALL SPHERES OF LIFE. WE SHALL REMAIN VIGILANT AND WORK TOWARDS THE GROWTH AND REPUTATION OF OUR ORGANISATION. THROUGH OUR COLLECTIVE EFFORTS, WE SHALL BRING PRIDE TO OUR ORGANISATIONS AND PROVIDE VALUE BASED SERVICE TO OUR COUNTRYMEN. WE SHALL DO OUR DUTY CONSCIENTIOUSLY AND ACT WITHOUT FEAR OR FAVOUR.

Until Tomorrow with more  DDT

Have a nice day.

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