 TIOL-DDT 1951
27.09.2012
Thursday DDT had strongly championed the cause that AG's Auditors have no business to visit the premises of the Central Excise and Service Tax assessees to audit their records. It is understood that yesterday the Calcutta High Court held that Comptroller & Auditor General and any officers subordinate to him have no power to conduct audit of private enterprises unless these are financed or funded by Government or grants given by Government. The High Court also quashed the letter issued by CERA, a wing of CAG, to conduct audit of a Kolkata based stockbroker Company and held that there was no provision under Central Excise Act or Finance Act, 1994 empowering CAG to undertake audit of private enterprises, which are not funded by Government. The High Court further held Rule 5A (2) of the Service Tax Rules as ultra vires to the extent of directing every assessee to provide records to Audit Party of CAG. Rule 5A reads as, Rule 5A. Access to a registered premises. (1) An officer authorised by the Commissioner in this behalf shall have access to any premises registered under these rules for the purpose of carrying out any scrutiny, verification and checks as may be necessary to safeguard the interest of revenue. (2) Every assessee shall, on demand, make available to the officer authorised under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, within a reasonable time not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by such officer or the audit party, as the case may be,- (i) the records as mentioned in sub-rule (2) of rule 5; (ii) trial balance or its equivalent; and (iii) the income-tax audit report, if any, under section 44AB of the Income-tax Act, 1961 (43 of 1961), for the scrutiny of the officer or audit party, as the case may be.
The High Court is of the view that only in case of Special audit as envisaged under Section 72 A of the Finance Act, 1994 or section 14 A or 14AA of Central Excise Act, assessee is required to provide records and not otherwise, to audit party. We will bring you the High Court order as soon as possible. Please also see 1. Should AG's Audit be allowed to visit factories and Premises of Service Tax Assessees? 2. AG's Audit Visit to Factories and Premises of Assessees? 3. CAG not authorised to visit factory of assessee in private sector
No more Audit! - Has CBEC deleted Audit by CAG?And also its own Audit? THE CAG's Audit party get its power to audit the records of the Service Tax assessees by virtue of Rule 5A. As per Rule 5A (2), extracted above, ¶Every assessee shall, on demand, make available to the officer authorised under sub-rule (1) or the audit party deputed by the Commissioner or the Comptroller and Auditor General of India, within a reasonable time not exceeding fifteen working days from the day when such demand is made, or such further period as may be allowed by such officer or the audit party……¶ Now look for this Rule 5A(2) in the Service Tax Rules as given in the CBEC website and you will find that the portion marked in red is missing. So, according to the Rules published in the CBEC website, there can be no audit either by the Commissioner's party or the CAG's party!It's party time! Incidentally, the TRU has already informed us that the notifications on the CBEC website have no legal force - probably it applies to every other piece of information on the site too. See DDT-1942 Silly Mistake by Leading Tax Consulting Firm - Supreme Court Sets Aside Penalty THE assessee is one of the Big Four. It made a silly mistake in taking an ineligible deduction in Income Tax. The Assessing Officer after re-assessment imposed a 300% penalty, which was confirmed by the CIT (Appeals). The ITAT noted that the assessee had made a mistake, which could be described as a silly mistake, but since the assessee is a high-calibre and competent organization, it was not expected to make such a mistake. Accordingly, the Tribunal reduced the penalty to 100%. The High Court dismissed the appeal by the high calibre assessee. They are now before the Supreme Court. The Supreme Court asked the assessee to explain as to how and why the mistake was committed. The assessee submitted that it is engaged in Multidisciplinary Management Consulting Services and in the relevant year, it employed around 1000 employees. It has a separate accounts department, which maintains day to day accounts, pay rolls etc. It is stated in the affidavit that perhaps there was some confusion because the person preparing the return was unaware of the fact that the services of some employees had been taken over upon acquisition of a business, but they were not members of an approved gratuity fund unlike other employees of the assessee. Under these circumstances, the tax return was finalized and filled in by a named person who was not a Chartered Accountant and was a common resource. The return was signed by a director of the assessee who proceeded on the basis that the return was correctly drawn up and so did not notice the discrepancy between the Tax Audit Report and the return of income. The Supreme Court observed, ¶The facts of the case are rather peculiar and somewhat unique. The assessee is undoubtedly a reputed firm and has great expertise available with it. Notwithstanding this, it is possible that even the assessee could make a ¶silly¶ mistake and indeed this has been acknowledged both by the Tribunal as well as by the High Court. It appears to us that all that has happened in the present case is that through a bona fide and inadvertent error, the assessee while submitting its return, failed to add the provision for gratuity to its total income. This can only be described as a human error, which we are all prone to make. The calibre and expertise of the assessee has little or nothing to do with the inadvertent error. That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income .¶ We bring you today this judgment of the Supreme Court delivered yesterday. Please see Breaking News Customs - No Bank Guarantee For PSUs for Storing Goods in Duty Free Shops CBEC has clarified that all Central and State Public Sector Undertakings shall be exempt from furnishing Bank guarantee or other form of security for storing sensitive goods in the duty free shops operated by them. The execution of a double duty bond and other requirements stipulated under Circular No. 99/95-Customs dated September 20, 1995 would, however, remain. CBEC Circular No. 26/2012-Cus., Dated: September 10, 2012 Customs - Jurisdiction of Commissioner (Appeals) - CBEC Messes up another Notification NOTIFICATION No.16/2002-Customs (N.T.) dated the 7th March, 2002, notified the Jurisdiction of Customs Appellate Commissioners. Now this notification is superseded and the Board has notified the jurisdiction of Chief Commissioners of Customs with reference to appeals and that of Commissioner (Appeals). The Table 1 (col.2) of this notification stipulates a list of 8 Chief Commissioners of Customs who will have the jurisdiction in relation to an order or decision of the officer, subordinate to that officer, mentioned in column (3). This Column (3) mentions some Commissioners (Appeals). So the Chief Commissioner will have jurisdiction over an order passed by an officer subordinate to the Commissioner (Appeals). Now, who are the officers who are subordinate to the Commissioner(Appeals)?. One entry in Col.3 reads as Commissioners of Customs (Appeals), Jamnagar. How many appellate Commissioners are there in Jamnagar? And what will a Chief Commissioner do with jurisdiction over orders passed by an officer subordinate to the Commissioner (Appeals)? TOTAL CONFUSION? Notification No. 85/2012-Cus.,(NT.), Dated: September 26, 2012 Customs - CBEC Appoints Adjudicators for Specific DRI Cases BOARD has appointed common adjudicators for certain specific DRI cases. Notification No. 86/2012-Cus.,(NT.), Dated: September 26, 2012 Notification No. 87/2012-Cus.,(NT.), Dated: September 26, 2012 Notification No. 88/2012-Cus.,(NT.), Dated: September 26, 2012 Notification No. 89/2012-Cus.,(NT.), Dated: September 26, 2012 Customs - Anti Dumping Duty on Pre-sensitized Positive Offset Aluminum Plates - Close Resurrection ANTI Dumping Duty on Pre-sensitized Positive Offset Aluminum Plates originating in, or exported from, China PR (and some other countries) was imposed by Notification No. 108/2007-Cus Dated 25.09.2007. This notification lapsed on 24.09.2012. Now they have extended it by one more year till 23.09.2013 by amending Notification No. 108/2007, which had already lapsed. Shouldn't the Government set high standards instead of resorting to this sort of manipulation? Notification No. 44/2012-Cus.,(ADD) Dated: September 25, 2012 FTP - Imports from Sri Lanka through any EDI Port DGFT has deleted the Import Licensing Note (4) at the end of Chapter 25 and Import Licensing Note at serial no. (2) of Chapter 68 of ITC (HS) Classifications of Export and Import Items, by which Import of items under ITC (HS) Codes 25151100, 25151210, 25151220, 25151290, 68021000, 68022110, 68022120, 68022190, 68022200, 68029100, 68029200 from Sri Lanka under the India-Sri Lanka Free Trade Agreement (ISFTA) were allowed only through the Port of Kolkata¶. Now, Importer (s) shall be able to import the items under aforementioned ITC (HS) codes under the India-Sri Lanka Free Trade Agreement (ISFTA) from all EDI Ports. DGFT Notification No. 16/(RE-2012)/2009-2014, Dated: September 26, 2012 FEMA - Foreign Direct Investment (FDI) in India - Shares IT has been decided that in cases, where non-residents (including NRIs) make investment in an Indian company in compliance with the provisions of the Companies Act, 1956, by way of subscription to Memorandum of Association, such investments may be made at face value subject to their eligibility to invest under the FDI scheme. RBI AP(DIR SERIES) Circular No. 36 , Dated : September 26, 2012 Income Tax - Residency Certificate must for Foreign Investors - How They Report REPORTING of Tax matters is a very casual matter for the leading newspapers. Yesterday a very highly respected newspaper that is taken as the Gospel Truth by many readers, reported, ¶According to a notification issued by the Central Board of Direct Taxes on September 17, 2012, the amendments to the Income Tax Act, 1961, will take effect from April 1, 2013, and apply in relation to assessment year 2013-14 and subsequent years. The notification, in effect, amends Section 90 and Section 90A of the I-T Act dealing with taxation of foreign investment and tax benefits under DTAAs.¶ The Finance Act 2012 itself stipulated that the amendments will take effect from 1-4-2013; there was no need for any notification for this. The Notification cannot amend the Act. The newspaper goes on… Under Section 90 (4) of the Act, as inserted by the Finance Act, 2013, with effect from April 1, 2012, it is provided that an assessee, not being a resident, to whom an agreement referred to in sub-section (1) of Section 90 applies,... Finance Act 2013 is yet to be born! Jurisprudentiol - Friday's cases  Income Tax
Whether for purpose of investment allowance u/s 32A(2)(b)(iii), a canteen can be said to be an ‘industrial undertaking' - NO: SC ASSESSEE manufactures Tractors. It had a canteen in its factory where Refrigerator, Cooking Range and Fans were installed. The assessee claimed investment allowance under Section 32A of the Income Tax Act, 1961, in respect of Refrigerator, Cooking Range and Fans installed in its Canteen. Service Tax No Time Limit for taking CENVAT Credit - CESTAT WHAT is the time limit for taking CENVAT Credit? Nowhere in the Central Excise Act as well as in the CENVAT Credit Rules prescribed any period in which credit has to be taken. Although it is mentioned in the CENVAT Credit Rules that assessee can take the credit immediately, but there is no prescribed time limit either in the CENVAT Credit Rules or in the Central Excise Act. Central Excise Application/appeal filed by CCE, Delhi-III before CESTAT based on Review order passed by Committee of Chief Commissioners delayed by 63 days - CESTAT has no power to condone this delay: CESTAT IT is clear that where in pursuance of an order passed under sub-section (1) or sub-section (2) of Section 35E, the adjudicating authority makes an application before the Appellate Tribunal or Commissioner (Appeals) within a period of one month from the date of communication of the order passed by the reviewing authority, such application shall be heard by the Appellate Tribunal or Commissioner (Appeals), as the case may be, as if it were an appeal against the decision or order of the adjudicating authority and the provisions of this Act regarding appeals including the provisions of sub-section (4) of Section 35 B shall, so far as may be, apply to such applications. In sub-section (4), there is no provision for condonation of delay by the Tribunal or the Commissioner (Appeals) when the application by the concerned adjudicating authority is filed after expiry of period of one month from the date of communication of the Reviewing Authority's order. See our columns Tomorrow for the judgements Until Tomorrow with more DDT Have a Nice Day. Mail your comments to vijaywrite@taxindiaonline.com |
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