IT is learnt that the Chairman, CBDT has written a hard hitting DO Letter to his Chief Commissioners and DGs about the importance of filing appeals to the High Courts and Supreme Court on time. He informs the CCs that the Apex Court has time & again expressed its anguish & annoyance over the delayed filing of SLPs as also appeals in the High Courts. The Attorney General of India has conveyed the Apex Court’s displeasure to the Union finance Minister, who has desired to take immediate action against the officials found responsible for such lapse and to put in place proper mechanism ensuring that appeals are filed well in time and departmental litigation is conducted in an orderly manner.

The Chairman directs that:-

i. The Chief Commissioner and Commissioner concerned would be personally responsible to ensure timely filing of appeals;

ii. CCsIT (CCA) / the concerned CCsIT / the concerned CsIT would immediately initiate action against the officers / officials responsible for the delays in filing appeals, under intimation to the CBDT;

iii. CCsIT (CCA) would review the status of SLPs / appeals of their regions and ensure that these are filed in time & pursued properly;

iv. SLP proposals should be processed on the basis of orders downloaded from the court’s website without waiting for the certified copy which may be obtained in due course;

v. The soft copies of the proposals & accompanying documents must be sent to the Directorate of L&R well within the prescribed time limit;

vi. Henceforth any laxity in any judicial matter should be viewed seriously by the CCIT (CCA) & action against officers responsible be initiated within a time frame; [Does this mean other instructions can be taken lightly?]

vii. It is a matter of serious concern that despite the Supreme Court’s observations, posts in judicial wings are still lying vacant at various places; proper support system/ infrastructure has not been provided to the Judicial Wing. CCsIT (CCA)are advised to correct the situation immediately, fill up the vacant positions in judicial wing & send a compliance report under their own signatures by Feb 15, 2011.

Will the field officers obey the Chairman and if not, will action be really taken?

(See full text of Chairman's letter)

Refund of CENVAT Credit to exporters - Clear quarterly confusion

NOTIFICATION No 5/2006 CE(NT) dated 14th March 2006 issued under Rule 5 of the CENVAT Credit Rules 2004 specifies conditions and procedure for filing the claims for refund of unutilised credit on inputs or input services used for export of finished goods/ Output services. Though this facility was in vogue for manufacturers even before 2006 ( Under Notification No 11/2002 CE(NT)), with the extension of refund facility to output service providers also from 2006 onwards, there is sudden spurt in the number of refund claims by the service exporters and the associated disputes. While there are clear instruction on processing of the refund claims, especially for service exporters, still it seems the field formation have not understood the spirit of the scheme and have been interpreting the literal meaning of the words quarter and month used in the Notification. For example, if the claims are filed for a period of more than a quarter, the same are rejected by taking a view that the same should have been filed quarterly/ monthly. In a recent case the Chennai Bench of CESTAT (2011-TIOL-149-CESTAT-MAD)- has held:

The stipulation in Notification No. 5/2006 that the claim for refund of CENVAT credit relating to export should be made on a quarter basis is more for administrative convenience and this is to discourage the exporters to prefer too many claims leading to voluminous work at the divisional level. This does not specify any time limit for claiming the refund of credit.

Perhaps a suitable clarification that there is no mandatory requirement for filing the claims only on monthly / quarterly basis would help the exporters.

Nil Duty of Import of Pulses to Continue till April 2012

Import of pulses attract nil rate of duty as per sl. No. 11A of the table to Notification No. 21/2002 – Cus Dated 01.03.2002. And as per the proviso (f) to the preamble of the notification, this exemption was available only till 1st day of April 2011. Now this is extended to 1st day of April 2012. And the good Board has done this much before the clause died!

Notification No. 4/2011-Cus., Dated: January 27, 2011

Tax payers money spent for Haj - Not unconstitutional

AS per Article 27 of the Constitution of India, “No person shall be compelled to pay any taxes, the proceeds of which are specifically appropriated in payment of expenses for the promotion or maintenance of any particular religion or religious denomination.¶

A citizen filed a writ in the Supreme Court challenging the Haj Committee Act on the ground that the Act violative of Articles 14, 15, and 27 of the Constitution. The grievance of the petitioner is that he is a Hindu but he has to pay direct and indirect taxes, part of whose proceeds go for the purpose of the Haj pilgrimage, which is only done by Muslims.

The Supreme Court observed,

“In our opinion Article 27 would be violated if a substantial part of the entire income tax collected in India, or a substantial part of the entire central excise or the customs duties or sales tax, or a substantial part of any other tax collected in India, were to be utilized for promotion or maintenance of any particular religion or religious denomination. In other words, suppose 25 per cent of the entire income tax collected in India was utilized for promoting or maintaining any particular religion or religious denomination, that, in our opinion, would be violative of Article 27 of the Constitution.

In our opinion, if only a relatively small part of any tax collected is utilized for providing some conveniences or facilities or concessions to any religious denomination, that would not be violative of Article 27 of the Constitution. It is only when a substantial part of the tax is utilized for any particular religion that Article 27 would be violated.

The State Government incurs some expenditure for the Kumbh Mela, the Central Government incurs expenditure for facilitating Indian citizens to go on pilgrimage to Mansarover, etc. Similarly some State Governments provide facilities to Hindu and Sikh pilgrims to visit Temples and Gurudwaras in Pakistan. These are very small expenditures in proportion to the entire tax collected.”

The Supreme Court also made some observations on our polity:-

“It may be mentioned that when India became independent in 1947 there were partition riots in many parts of the sub-continent, and a large number of people were killed, injured and displaced. Religious passions were inflamed at that time, and when passions are inflamed it is difficult to keep a cool head. It is the greatness of our founding fathers that under the leadership of Pandit Jawaharlal Nehru they kept a cool head and decided to declare India a secular country instead of a Hindu country. This was a very difficult decision at that time because Pakistan had declared itself an Islamic State and hence there must have been tremendous pressure on Pandit Jawaharlal Nehru and our other leaders to declare a Hindu State. It is their greatness that they resisted this pressure and kept a cool head and rightly declared India to be a secular state.

This is why despite all its tremendous diversity, India is still united. In this sub-continent, with all its tremendous diversity (because 92 per cent of the people living in the sub continent are descendants of immigrants) the only policy which can work and provide for stability and progress is secularism and giving equal respect to all communities, sects, denominations, etc.”

The Supreme Court delivered this judgement on Friday. We bring you this decision today. Please see 2011-TIOL-13-SC-MISC

Customs Private Partnership

WRITING in the Business Standard today, TNC Rajagopalan says,

“CBEC ushered in a new era of Customs-private partnership this year by honouring the editors of Excise Law Times and taxindiaonline.com and the advisor to the Mumbai Customs House Agents Association. The spirit of mutual professional respect, cooperation and partnership should guide the Customs and the trade in the coming years.”

Jurisprudentiol – Tuesday's cases

Customs

Expired Milk Powder re-imported - Valuable goods worth more than Rs.1 Crore cannot be allowed to be drained because of technical objections of Revenue that too about conditions which are practically difficult to be followed: CESTAT

THE appellant is engaged in manufacture of various milk products. Due to recession in the Gulf market, Full cream Milk Powder exported earlier was re-imported by them. The Commissioner has rejected the re-import and clearances on the ground that provisions of Prevention of Food Adulteration Act, 1954 do not stand substantiated by the appellant.

On examination of the re-imported goods by the Customs, it was found that the expiry date was printed on the same as February 2010. Accordingly, the Revenue entertained a view that inasmuch as the goods are not fit for consumption as the expiry date was over, they should not be cleared.

Income Tax

Rule 29 - Whether Tribunal has powers to admit additional evidence if it deems it necessary for proper disposal of case - Yes, rules Delhi High Court

THE issue before the HC is - Whether Tribunal is empowered to admit additional evidence if it deems it necessary for proper disposal of the issue. And the High Court's answer is YES.

Central Excise/Service Tax

Once the assessee is entitled to take credit in relation to duty paid on inputs or capital goods, merely because there is some infirmity observed in document on which credit is sought to be availed, that cannot be a justification for denying the credit availed on Supplementary invoices issued by service providers - Prima facie case - Stay granted of Rs.1.96 Crores: CESTAT

THE issue involved is whether the appellant is eligible to avail CENVAT Credit on the supplementary invoices issued by the service providers. The service providers of the services had not paid the Service Tax and this non-payment was subsequently noticed by the department. On being pointed about non payment of service tax the service providers discharged the tax liability and raised supplementary invoices on the appellant assessee. Based on these ‘supplementary invoices', the assessee availed Cenvat Credit on the ‘Input Services'.

This credit is proposed to be disallowed by the jurisdictional authorities on the ground that the service provider is not eligible to issue these invoices; even otherwise such supplementary invoices are not specified documents under the sub-rule 9(1)(f) read with sub rule 2 of Rule 9 of CENVAT Credit Rules 2004 and rule 4(A) of Service Tax Rules 1994 for availing CENVAT Credit.

See our columns Tomorrow for the Judgements

Until Tomorrow with more DDT

Have a Nice Time.

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