GOVERNMENT has imposed provisional anti dumping duty on Opal Glassware originating in, or exported from, People's Republic of China and UAE. This duty is valid for a period of six months. Let us hope the Government will wake up in time to extend it before it lapses.

Notification No. 72/2011-Cus., Dated: August 9, 2011

Limitation - When no limitation is prescribed in Statute

CENTRAL Excise officers have a feeling that for demands under Section 11D or 3A, there is no time limit and they can issue demands even after a hundred years. Some Courts have opined that where no limitation is prescribed, the provisions of the Limitation Act will apply. However, the Supreme Court does not agree. In a recent judgement, the Supreme Court held that if the legislature intended to provide for any period of limitation or intended to apply the provisions of Limitation Act, the legislature would have specifically said so in the Act itself.  It is trite that if no period of limitation has been prescribed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors. Three years period cannot be said to be a very long period and the power was exercised within a reasonable period of time.

We will bring you the judgement in the weekend.

Limitation and Section 11D - Show Cause Notice after 19 Years?

INTERESTINGLY, Section 11 D initially did not contain machinery provisions for recovery of the amounts collected as excise duty and vide Finance Act, 2000, the section was amended retrospectively, to make good the defect, which came to light after the Madras High Court decision in Eternit Everest case. The SCNs issued to Eternit Everest case were adjudicated after the retrospective amendment and the revenue took up the matter to CESTAT holding that the SCNs are non est in the eyes of law and fresh notices should be issued after the retrospective amendment. The CESTAT has agreed with revenue and set aside the demands. Now, fresh notices are to be issued in 2011 for the period 1992-95, and the chances of holding 19 years as a reasonable period are very bleak! And the amount at stake is nearly 24.5 crores! May be there should be a class in NACEN to all the Ld Commissioners about the elementary issues on law!

Black Money in Swiss Banks - Learn From Germany?

YESTERDAY Germany and Switzerland entered into a tax agreement under which Germans can declare their concealed wealth in Switzerland and pay a tax. The Swiss banks have agreed to pay an advance of CHF 2 Billions (about 2.8 billion dollars) to Germany.

The agreement includes:

Final withholding tax for the future: Future investment income and capital gains should be directly covered by a final withholding tax. The single tax rate has been set at 26.375%. This is in line with the current flat-rate withholding tax in Germany. The final withholding tax is a tax at source. After it has been paid, the tax obligation towards the country of domicile will generally have been fulfilled.

In order to prevent new, undeclared funds from being deposited in Switzerland, it has been agreed that the German authorities can submit requests for information in the context of a safety mechanism that must state the name of the client, but not necessarily the name of the bank.

Back taxation: To retrospectively tax existing banking relationships in Switzerland, persons resident in Germany should be given one chance to make an anonymous lump-sum tax payment. The size of this tax burden will vary from between 19% to 34% of the assets in question, and will be determined based on the duration of the client relationship as well as the initial and final amount of the capital. Instead of such a payment, those affected should also have the possibility of disclosing their banking relationship in Switzerland to the German authorities.

Further elements: Switzerland and Germany have decided to facilitate mutual market access for financial institutions. In particular, the implementation of the exemption procedure for Swiss banks in Germany will be simplified, and the obligation to initiate client relationships via a local institution will be eliminated. Likewise, the problem of purchasing data relevant for tax collection purposes has been resolved. The package also includes a solution for the problem of possible prosecution of bank employees.

The Swiss Bankers Associations says, “the bilateral treaty gives clients of banks in Switzerland who are taxable in Germany a path to tax compliance while maintaining their financial privacy; the agreement allows Switzerland as a financial centre to implement its forward strategy and focus in future on acquiring and managing taxed assets; Germany will receive direct access to the tax base it is due, both past and future.”

Will Germans rush to their tax offices to declare their illegal wealth in Swiss banks or will they simply shift funds to some other country? One view is that Switzerland's tax treaty with Germany may finish banking secrecy in Europe and prompt withdrawals as Swiss banks will no longer guarantee client confidentiality.

Can India follow suit? But why should an Indian invest his black money in Switzerland or any other foreign country, when there are plenty of opportunities in India? It seems some of our godmen are safer than Swiss banks!

CESTAT President Khandeparkar retires - He didn't Speak; He worked

JUSTICE Khandeparkar, born exactly a year before India got independence, will retire from CESTAT this Independence Day. Today would be his last working day in CESTAT. DDT spoke to the Justice on 17.03.2009, when he assumed office as President of CESTAT and asked him for a message. He said, “Judges don't give messages; they work”. Work, he did, but unfortunately, his work brought in a lot of undesirable publicity to the CESTAT. During his tenure two Members of the CESTAT had resigned.

Welcoming Justice Khandeparkar at the Bar, the then Secretary of the Bar Association, RK Jain described the President as not only dynamic but also if needed, a dynamite. This was a prophetic statement; only it is not clear as to who was the dynamite – the President or RK Jain, but the lid was certainly blown off. It may be worth recalling that dynamite was invented by the man who instituted the Nobel Prize for Peace – Alfred Nobel!

The President had then promised that pendency of appeals would be brought down by half by the end of 2009. The crusading editor of ELT, RK Jain ran a series of editorials chronicling the acts of the Hon'ble justice and he pointed out that during his tenure, the pendency increased by 60% and disposal came down by 33%.

CESTAT with its 18 Members is a small Tribunal compared to the ITAT with over 150 Members, but over the years, the CESTAT has earned a reputation as a Tribunal of high standards – let us hope the tradition continues, in spite of minor aberrations.

The new President will have a tough time ahead – we wish him all the best, whoever he is.

Independence Day Wish List – Can't We Make Taxes Simple?

IT's not all that simple: Rajiv Gandhi dreamed of an Income Tax return that any taxpayer can fill without help from professionals. That dream got so complicated now that even experienced consultants find it extremely difficult to file complicated returns. And today the Consultancy industry has become almost as big as the software industry.

Maybe the CBDT and CBEC should first make their Chairmen fill up all those forms without any help and only those forms, which the Chairmen can fill, should be allowed to exist. Then perhaps all the returns will vanish. And do we need all those thousands of pages of Codes, Acts, Rules, Notifications, Regulations, Circulars…..?

We have to live with taxes, so that our politicians can earn lakhs of Crores and still leave the crumbs for running the country, but can we ever have a system that is simple and fair?

Should we have people behaving strangely just because of taxes. Why should an investor from Tamil Nadu set up a factory in Uttarakhand - just because the taxes are less there? Should I buy a house just to save some income tax? And should so many agencies tax me? The list would be endless – Local Municipality, State and Central Departments. Can't there be just one single simple tax?

Well, these are images in a fools' paradise – you can't really make things simple and every attempt at simplification, ends up more complicated than what we started with.

Can't You Treat taxpayers with little more respect?

ALL right, you can't simplify the laws and procedures, but what prevents you from treating your taxpayers with a little more respect? Why should every action of the taxpayer be treated as evasion? Some of the Show Cause Notices and Orders of the Authorities would make it appear as if every contravention is a fraud. These pious documents contain charges like, “it is an after thought”, concluding that the assessee is a liar. Assessees who pay Crores of rupees as taxes are charged with not paying a thousand rupees with intent to evade payment of duty.

Huge amounts of duty are demanded and penalties imposed without a thought as to how anyone can pay such huge amounts. And then appellate authorities and Courts are routinely convinced that the adjudication orders are correct and so huge pre-deposits are ordered. Insulting the tax payer after causing him injury is certainly not a proud thing to happen in a free country. May be we should start a new SPCA – Society for Prevention of Cruelty to Assessees.

Jurisprudentiol – Tuesday's cases

Customs

Exemption under rule 34 of SWAM Rules is available only if goods are sold by weight or measure - Lipsticks although weighing 2.2 gms are sold not by weight but on ‘per piece' basis - Goods to be assessed in terms of section 4A of CEA, 1944 for purpose of charging CVD: CESTAT

APPELLANT submitted before original authority that for the purpose of charging CVD on the imported goods transaction value under section 4 of the Central Excise Act, 1944 should be taken as assessable value and assessment should not be done on the basis of MRP under section 4A of the Act as Lip sticks weighing 2.2 gms a pc were not subject to Standard of Weight and Measures Act, 1976. Additional Commissioner of Customs did not accept importer's pleas on the ground that non application of MRP in such case shall hold good only if the subject goods are sold by weight.

Income Tax

Whether AO is required by law to substitute even fair rent determined u/s 23(1)(a) by standard rent - NO, says ITAT

THE issues before the Tribunal are - Whether notional interest attributable to interest-free securities is taxable; Whether AO is required to substitute even the fair rent determined u/s 23(1)(a) by municipal value or standard rent and whether AO can determine ALV on its own and has power to discard the ratable value or standard rent. NO is the Tribunal's answer.

Central Excise

Rasana Rozana Amrit drink mix is properly classifiable under heading 2001.10: CESTAT 

WHILE deciding the classification it has to be kept in mind that Chapter 21 deals with the edible preparations, not elsewhere specified or included. As such, if the product is otherwise covered by the description 20.01, the same would not fall under the heading 21.08, inasmuch as the same is a residuary entry. Chapter heading 20.01 covers the preparation of various products including preparation of fruit juices.

See our columns Tuesday for the judgements

Until Tuesday with more DDT

Have a Nice Weekend.

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