TIOL-DDT 1952
28.09.2012
Friday

THE other day I was sitting in a Tribunal listening to a Senior Counsel's arguments. A lawyer sitting next to me asked me how much the Sr. Counsel would charge for arguing the case. I told him, ¶about Eight Lakh rupees¶. The lawyer almost fell down from his seat and then asked me how much the Special Senior Counsel engaged by the Revenue would get. I told him ¶about Eight Thousand rupees¶! Again, he almost fell off.

In this week's CobWeb, Editor Shailendra wrote, ¶The political masters and the policy makers have no longer time to procrastinate the decision to break the vicious cycle of filing appeal in every sundry case, which contributes to the mountains of cases and that becomes an excuse for not paying enough attention to even quality cases and also an instrument for making money by logging more cases, which makes up for low fees. Ironically, the law officers are paid   'humiliatingly low sum'   per case   (look for more details in DDT Column tomorrow) , which coax them to focus on number rather than the quality. And this vicious cycle can be overcome only by substantially reducing the number of Government cases, followed by substantial hike in the fees for the law officers¶.

In 2011, the Law Ministry enhanced the fee payable to Counsels in the Supreme Court. The revised fees are as given below.

The fees payable to Senior Counsels in the High Courts and Tribunals are

In fact, the Revenue Departments do not pay even the above amounts as the CBEC and CBDT had issued their own circulars fixing the fees for their counsels. The CBEC rates were fixed in 2007. I asked a Revenue officer whether they were paying the fees fixed by the Law Ministry to their Counsels. ¶We are waiting for our Board's instructions¶, was his reply.The fees payable as per CBEC instructions are as given here: The fees are for Senior Standing Counsels - Standing Counsels and Junior Standing Counsels shall be entitled to only 1/3 rd of the amount specified against each item of work.

With this kind of fee, how do you expect the counsels to be motivated and work hard on a case to argue effectively?  So, as stated in CobWeb, they focus on number rather than quality!

A retired Revenue Board Member who is now a Senior Counsel told DDT that he gets about Rs. 28,000/- per case on an average!

Maybe the Commissioners who passed the orders/authorised the appeals should be made to argue the cases in the Tribunals and High Courts and their performance monitored. Perhaps the volume of litigation will come down.

Sans Didi Rail Bhavan Accepts to Pay Service Tax - Passengers to claim refund from Revenue Department only

THE tax was imposed on transport of goods by Rail in 2009 budget. The Railways really never took the tax seriously. DDT spoke to several Rail Officials and they considered the tax to be a joke. In 2009, DDT  asked a senior Railway officer whether they were ready to collect Service Tax on goods transport. He told us that the Finance Ministry has no right to levy Service Tax on Rail freight and he had no instructions to collect the tax. He said his Board does not recognise this tax. We tried to explain to him that this was an Act passed by Parliament, but he was not impressed. He was sure that it requires approval by his Board and as of now his Board was not too keen to approve the Finance Act. He was aghast that somebody is trying to tax the Railways! When told that Railways are already paying Service Tax on catering, he said it was paid by IRCTC and not by Indian Railways.

From 2009 till June 2012, the tax was being exempted on a quarterly basis and the tax would have come into force from 1st July 2012 under the new regime, but even without Didi, the levy was exempted till 30th September2012. Now that Didi and her party are out of the complex coalition compulsion, the Government is free to levy the tax it wants. And the Railways have issued a Press Release that Service Tax is applicable from 1st October 2012. Transportation of passengers by Railways in First Class or Air-conditioned coach and transportation of goods by railways will attract Service Tax from 1st October. Service Tax is leviable only on 30 percent of the value.

But the Railways Press Note says, ¶In case of refund of passenger fare, if any, refund of Service Tax shall be claimed by the passenger from the concerned Service Tax authority.  No refund shall be made by the Railways on this account. For the purpose of claiming refund, Chief Commercial Manager (CCM) office of concerned Zonal Railway shall issue a certificate to passenger detailing the amount of refunds to be signed by an Officer authorized by CCM, which shall be countersigned by the Dy. Chief Account Officer (DCAO) or officer authorized by them for this purpose.¶

Why should there be such a complicated procedure for refund? This means there will be no refund and every time you cancel a ticket, you will be donating 3.7% of your ticket as Service Tax to the Nation!

Now who will take registration as Service Provider? Every office that issues a ticket? Can't the Rail Board take a single registration and pay the Service Tax by one entry? That would solve a lot of accounting and record maintenance issues.

CENVAT Credit - Ensure that Input Service Provider has paid Tax

IN a recent Trade Notice, the Chandigarh Commissioner has advised the trade to to take reasonable steps to ensure that Service Tax has been paid by the input service provider before final manufacturer/service provider utilizes the CENVAT Credit.

How does one do it? Well, the Commissioner does not explain that.

Issuance of Trade Notices is passé, yet some Commissioners sitting pretty in the cooler climes of the country attempt to issue the same with a view to set things right in the field and trade formations, all in the name of clarifying the law.

An analytical article on the issue appears in our ST se GST column today.

Chandigarh-I Commissioner's Trade Notice No. 10/2012Dated: July 13, 2012

IRS Officers Assn Meets MOS - Wants Chairman to be Secretary Rank

THE IRS (C&CE) Officers Association, yesterday met the Revenue Secretary and Minister of State to represent their problems like delay in cadre Review, Promotions, lack of transparency in transfers, Mid career Training Program, Delay in grant of STS, empanelment of Joint Secretaries etc.

The Association wanted the CBEC Chairman to be given the rank of Secretary to the Government of India.

From Class IV Employee to Chief Justice of India

CHIEF Justice Kapadia retires tomorrow. In a letter to Justice Krishna Iyer, Kapadia wrote, ¶I come from a poor family. I started my career as a class IV employee and the only asset I possess is integrity…¶

In the early sixties, Sarosh Homi Kapadia arrived at the plush law offices of Behramjee Jeejeebhoy in the Fort area of Mumbai to work as an office boy. Even before studying law, Kapadia began dreaming about becoming a judge and tomorrow he leaves office as the top judge of the country. He left a lucrative practice in 1991 to become a judge of the Bombay High Court and in May 2010, he became the Chief Justice of India. He is leaving office after restoring a lot of faith in the judiciary and leaving his indelible stamp on the hallowed precincts of the temple of justice.

It is said of him, ¶A litigant may feel disappointed if he loses the case but no litigant goes back [from Kapadia's court] feeling he was not fairly or fully heard.''

He hermetically sealed himself and had no social life and even worked on holidays and vacation. He said, ¶judges and lawyers should work like a horse and live like a hermit.¶

Justice Krishna Iyer said of him, ¶While I have seen during the last 97 years of my life among good judges with great credentials, there was hardly anyone to compare with Kapadia the like of which no eye had seen, no heart conceived and no human tongue can adequately tell.''

DDT Cartoon

Jurisprudentiol – Monday's cases

Income Tax

Whether when Revenue fails to mention block period in notice issued u/s 158BD, even then notice is not unsustainable - YES: HC

THE issues before the Bench are - Whether the notice issued under Sec.158BD of the Income Tax Act is sustainable in law if it does not mention the block period - Whether the provision of Order 18 Rules 5 and 9 Code of Civil Procedure and Section 164 Cr. P.C. can be followed while recording a confessional statement u/s 131 of the Income Tax Act; Whether an order of assessment could be passed merely upon a statement u/s 131 without any corroborative material; Whether a notice issued u/s 158BD of the Income Tax Act is valid if the AO never recorded his satisfaction in the said notice that the alleged undisclosed income belonged to the Assessee and Whether the AO could have issued a notice u/s 158BD of the Act without conducting a search on the assessee u/s 132 of the Act. And the verdict goes in favour of the Revenue.

Service Tax

Commissioner (Appeals) has no power to remand even in Service Tax cases - CESTAT

CAN the Commissioner (Appeals) remand the case to the original authority in Service Tax cases? Netizens may recall our story reported in case of  2011-TIOL-200-CESTAT-MAD. The Tribunal while dismissing the revenue appeal, held that the Commissioner (Appeals) has the power to remand in service tax cases as the provisions of Section 35A of the Central Excise Act, 1944 are not applicable for appeals relating to Service Tax and Commissioner (Appeals) derives power to decide the appeals from Section 85 of the Finance Act, 1994 which does not preclude the Commissioner (Appeals) from passing a remand order if he thinks fit.

Now, in an identical situation, the Tribunal has allowed the appeal of the revenue by holding that the Commissioner (Appeals) does not have the power to remand even in service tax matters.

Central Excise

Applicant paying the rent for job worker's unit and taking Cenvat credit - since premises for which rent is paid is not a part of manufacturing unit as per ground plan submitted, prima facie applicant has not made out a case for waiver of duty demanded - Pre-deposit ordered: CESTAT

THE applicants are clearing semi-finished goods to their job worker and after due processing the goods are returned without payment of duty. The applicant paid rent of the premises of job worker and availed credit of the service tax paid.

The jurisdictional authorities objected to this availment on the ground that the job worker premises is not registered with the department as the premises of the manufacturing unit (applicant).

See our columns Monday for the judgements

Until Monday with more  DDT

Have a Nice Weekend.

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