TIOL-DDT 2043
12.02.2013
Tuesday

THE recovery drive initiated by the Revenue authorities based on the Board Circular 967 has drawn stinging criticism from all quarters but that does not deter the Revenue from adopting a hot pursuit.

Although many assessees against whom such actions has been initiated have knocked the doors of the High Court and the CESTAT and have received favourable orders restraining the department from effecting any recovery as long as the appeals are pending, this does not help assessees who do not have the wherewithal to appoint Advocates and Consultants to file Writ petitions and make a mention of this recovery proceeding in the CESTAT.

We recently came across a case where against an adjudged dues of Rs.5 lakhs and in respect of which an appeal was pending before the CESTAT, the jurisdictional Assistant Commissioner in Mumbai wrote to three bankers of the assessee asking them to debit an amount of Rs.5 lakhs from the account of the assessee and send Demand drafts as the same are the dues recoverable from the assessee by the Department. This letter was issued on Friday to the bankers and all the three bankers debited the assessees account by an amount of Rs.5 lakhs each.

So, on Monday, the Assistant Commissioner was a proud recipient of Rs.15 lakhs of DDs and the assessee was left sulking.

Reason - the Central government offices were closed on Saturday and Sunday and the banker was in no mood to listen to him on Saturday. He could not knock any door!

The present case is another example of the highhandedness.

An appeal filed along with a Stay application by the appellant against a Service Tax demand confirmed by the Commissioner was listed for consideration of Stay application on 14/01/2013. The o-in-o is dated 22/03/2012.

The department requested the CESTAT that the matter be adjourned (for they had other wicked ideas in mind). Inasmuch as the department had already issued an attachment notice to the banker HDFC Bank Ltd., Worli, Mumbai and the said bank had remitted the amount by a DD dated 12/01/2013 and the said demand draft had been deposited to the credit of the exchequer.

Incidentally, although the department had sought an adjournment, the Tribunal had passed an order granting interim stay on the matter till disposal of the stay application and this order is dated 14/01/2013.

Since the department had encashed the DD, the appellant made a mention of the matter before the CESTAT on 28/01/2013 and the Bench held - ¶Inasmuch as the interim stay has been granted vide this Tribunal order dated 14/01/2013, we direct the Revenue to refund the amount received from the HDFC and not to proceed with recovery measures during the pendency of the stay application forthwith.¶

For the record, the amount involved in the demand draft is a whopping Rs.6,03,66,313/- [Rupees Six crores, three lakhs sixty six thousand three hundred thirteen only].

As for when the refund would be sanctioned, is anybody's guess. And what about the interest and the damages for the humiliation for all those cheques that groaned before bouncing?

Will this extortion ever stop?

(See 2013-TIOL-268-CESTAT-MUM)

CBDT - Delay in filling of SLP in SC - fix responsibility - FM is angry

CBDT notes that about 50% of the proposals for filing SLPs in Supreme Court are received after 60 days of the date of impugned judgement of High Court as against 21 days prescribed in instruction No 4 of 2011 laying down the SOP for filing SLP.

In view of the serious view taken by the FM in this matter, it has been decided that in cases where SLP Proposal is sent to the Directorate of Legal & Research after more than 90 days from the date of judgement, the CCIT/DGIT concerned shall fix responsibility for the delay and the name of officer(s) responsible for delay must be specified in the proposal itself.

Please see our TIOL-COB(WEB)-310   and TIOL-COB(WEB)-311

CBDT Letter, Dated: February 04, 2013

Recovery of Demands during pendency of Stay Petitions - Yet another High Court Order

THE Kerala High Court last week stayed recovery of demands confirmed in the Order In Original when the matter was pending before the Commissioner (Appeals).

Please see 2013-TIOL-112-HC-KERALA-ST

Highest ever CAD this year

RESERVE Bank Governor D SubbaRao predicted that we may be heading for the highest ever current account deficit (CAD) this fiscal. ¶Last year, CAD was 4.2 per cent of GDP, but this year we expect it would be significantly higher than that. It's going to be historically the highest CAD measured as a proportion of GDP,¶ said SubbaRao yesterday.

He added, ¶We would not worry if the widening CAD is on account of import of capital goods, but here it is high on account of import of oil and gold. The other concern is the way we are financing it. We are financing our CAD through increasingly volatile flows. Instead, we should ideally be getting as much of FDI as possible to finance the CAD. On the other hand, what we are getting is a lot of volatile flows to finance it,¶

Can all the economists persuade the Government to live within its means?

Jurisprudentiol - Wednesday's cases

Central Excise

Rule 3(5A) of CCR, 2004 - Scrap of capital goods cleared during the period 2005 to 2009 without payment of duty - no evidence adduced by the appellant in support of their claim that no CENVAT credit had been availed in respect of such capital goods - Pre-deposit ordered of Rs.10 lakhs: CESTAT

CCE, Thane-I had issued a show-cause notice demanding more than Rs.83 lakhs of duty. The reason - the assessee was working under the CENVAT Credit Scheme and during the period 2005 to 2009 the applicants cleared the scrap of capital goods valued at Rs.5,09,85,377/- without payment of duty. On 11th March, 2010, the adjudicating authority confirmed the demand citing the provisions of Rule 3(5A) of the CENVAT Credit Rules, 2004 which provides that if the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value.The applicants failed to produce any evidence in support of their claim that no credit has been availed in respect of the capital goods of which scraps were cleared. Therefore, prima facie, no strong case has been made out by the applicants for total waiver of pre-deposit of the dues. However, in the facts and circumstances of the case and also the financial hardships as pleaded, the applicants are directed to deposit Rs.10 lakhs (Rupees ten lakhs) within a period of six weeks.

Income Tax

Whether in FCCB issue, disclosing identity of person, who has sole responsibility of subscribing issue, is sufficient disclosure warranted u/s 68 - YES: ITAT

THE assessee M/s Reliance Communications Ltd raised funds through three issues of FCCBs and the proceeds were received in Deutsche Bank, Singapore (DB) of USD 500 million; and JP Morgan New York and Hong Kong and Shanghai Banking Corporation of USD 1000 million. These FCCBs were subscribed to by the Lead Managers namely, Deutsche Bank Hong Kong (DB HK); JP Morgan Securities Ltd. U.K. and Hong Kong and Shanghai Banking Corporation. The assessee submitted all the details of the subscribers to the FCCB issue. The details of the bank in which the proceeds of FCCBs were parked in the foreign countries and from where these were transferred to Indian Bank, were also furnished. Along with the said reply, the assessee submitted copies of Offer Memorandum of the FCCBs issued, Global Certificate along with the Registrar's confirmation of entries of the Bondholder in Register, Foreign Inward Remittance Certificate and the details of FCCBs as per the Offer documents and Global Certificates.THE issues before the Bench are - Whether in FCCB issue, it is required to disclose the details of those subscribers other than the lead subscriber, even though they have no privity of contract under the subscription agreement and Whether in FCCB issue, disclosing identity of the person, who has the sole responsibility of subscribing the issue, is sufficient disclosure warranted u/s 68. And the verdict goes in favour of the assessee.

Service Tax

Applicant entered into an agreement for cleaning of the premises of D.Y.Patil Hospital & Research Centre - Revenue demanding ST under category 'Manpower Recruitment & Supply Agency services' - activity apparently is ‘Cleaning Services' and it is taxable if provided to any Commercial or Industrial Institution - as the service recipient is neither commercial or industrial institution, activity undertaken is not taxable - Pre-deposit waived and Stay granted: CESTAT

AS per the agreement, the applicants are engaged in the Cleaning services of D.Y.Patil Medical Hospital and Research Institute. As per the Section 65 (105) of the Finance Act, 1994, the Cleaning service is taxable, if provided to any Commercial or Industrial Institution. The cleaning activities have been provided by the applicant to D.Y. Patil Medical Hospital & Research Institute, which is neither commercial nor an Industrial institution. Therefore, the activity undertaken by the applicant is not taxable

See our ColumnsTomorrow for the judgements

Until Tomorrowwith more DDT

Have a Nice Day

Mail your comments to  vijaywrite@taxindiaonline.com