 TIOL-DDT 2092
26.04.2013
Friday IT was only recently that we carried a news item in DDT -2089 titled ¶ITAT Bar Association boycotts member¶ and also mentioned - ¶The ITAT seems to be in bad shape. The Income Tax Appellate Tribunal, the oldest Tribunal in India established more than 70 years ago, is today without regular President for the last three years and nearly a third of the sanctioned strength of 146 Members is lying vacant. It will be difficult for an Acting President to effectively manage such a Tribunal. The Government should bestow more attention at least on the Tax Tribunals, instead of rushing to legislate draconian arrears recovery.¶ We have some good news on this front. The Central Government has invited Applications for a total of 48 posts of Judicial Members and Accountant Members in the Income Tax Appellate Tribunal and the last date for making the application is 14th June, 2013. DDT is optimistic that by year-end the vacancies would be filled and we can have the ITAT working at its full strength. It is also heard that the additional Benches of CESTAT will see the light of the day soon. Most probably the Government would be furnishing a positive report to the Karnataka High Court. Commissioner for CESTAT; Additional Commissioner for ITAT - Why? AS per the Customs, Excise and [Service Tax] Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1987, ¶A person shall not be qualified for appointment as a technical member unless he has been a member of the Indian Customs and Central Excise Service Group 'A' and has held the post of Commissioner of Customs or Central Excise or any equivalent or higher post for at least three years.¶ As per the Income-tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963, ¶A person shall not be qualified for appointment as an accountant member unless:-xxxx he has been a member of the Indian Income Tax Service Group ‘A' and has held the post of Additional Commissioner of Income Tax or any equivalent or higher post for at least three years.¶ So, to become a technical member of the CESTAT, one has to be a COMMISSIONER or above, while one can become an accountant Member in ITAT if he had been an Additional Commissioner or above. Why this difference? (There are other differences too like for the ITAT Judicial Member, a Grade II officer of the Indian Legal Service is eligible while only Grade I officers are eligible for CESTAT; the minimum age for CESTAT is 45 years while it is 35 for ITAT Normally, a Commissioner of Income Tax appears for the Department before the ITAT and he has to bow before an Additional Commissioner who must have worked under him! Is it because they don't find enough Income Tax Commissioners to join as Members of the Tribunal? The salary of a Tribunal Member is higher than that of a Chief Commissioner - maybe that is the incentive for Additional Commissioners. Overseas Direct Investments - Clarification IT has been observed that eligible Indian parties are using overseas direct investments (ODI) automatic route to set up certain structures facilitating trading in currencies, securities and commodities. It has come to the notice of the Reserve Bank that such structures having equity participation of Indian parties have also started offering financial products linked to Indian Rupee (e.g. non-deliverable trades involving foreign currency, rupee exchange rates, stock indices linked to Indian market, etc.). RBI clarifies that any overseas entity having equity participation directly / indirectly shall not offer such products without the specific approval of the Reserve Bank of India given that currently Indian Rupee is not fully convertible and such products could have implications for the exchange rate management of the country. Any incidence of such product facilitation would be treated as a contravention of the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 and would consequently attract action under the relevant provisions of FEMA, 1999. RBI/2012-13/481 - A.P. (DIR Series) Circular No. 100, Dated; April 25, 2013 CESTAT grants Stay for a limited period AS per Section 35C (2A), a Stay granted by the Tribunal stands vacated after 180 days. There has been a lot of dispute and Tribunal has been consistently holding that it can grant stay for unlimited periods and in any case, it is a mockery of justice if the Stay is vacated, for no fault of the appellant. As per the Finance Bill 2013, the Tribunal can extend this period of Stay for another 185 days. Recently, the Tribunal passed an order on 11.04.2013 granting STAY during pendency of the appeal or till 3.12.2013 whichever date is earlier. That means the Stay granted expires and is vacated on 3.12.2013. If the Tribunal is not able to dispose of the case by 3.12.2013, is the appellant required to pay the whole demand or will the Department attach the property of the appellant and should the appellant approach the Tribunal for extension of the Stay or approach the High Court? We bring you that order today. Please see Breaking News President to be Chief Guest at IRS Probationers Valedictory THE valediction of the 65th Batch of the Indian Revenue Service (Income Tax) will be held on 29th April 2013. The Chief Guest for the Valedictory ceremony is President of India Pranab Mukherjee. The Valedictory ceremony will mark the moment where the officers of the 65th Batch of the Indian Revenue Service will step into the work field (karmakshetra) and in this they will be equipped with the blessings of the President of India. DA Orders Issued GOVERNMENT yesterday issued orders enhancing the Dearness Allowance payable Central Government Employees with effect from 1.1.2013 from the existing 72% to 80%. Department of Expenditure OM No. 1(2)/2013-E.II(B), Dated: April 25, 2013 Self goal - Lackadaisical Revenue gets its appeal dismissed for not furnishing a certified copy of the order appealed against ONE more instance of the lackadaisical attitude exhibited by the Revenue is evident in the present case. Against an order-in-appeal of October, 2010 passed by the Commissioner of Customs (A), Mumbai, the Commissioner of Customs (Gen), Mumbai had filed an appeal before the CESTAT. The Registry had issued a defective memo mentioning that the order appealed against and enclosed with the appeal was NOT a certified one. This memo was issued on 21.02.2011. No one bothered to rectify this simple lapse and the matter remained pending for two years. In the meantime, none of the other sections concerned bothered to find out what happened to the appeal filed for had they done this exercise someone would have reminded the section concerned to attend the Registry defective memo. Be that as it may, the CESTAT Registry issued a Show cause notice on 21.02.2013 in the matter. Still, there was no reply from the Revenue. So, the Bench dismissed the appeal as defective. See 2013-TIOL-655-CESTAT-MUM Ponzi scheme A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity. The schemes are named after Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. At a time when the annual interest rate for bank accounts was five percent, Ponzi promised investors that he could provide a 50% return in just 90 days. Ponzi initially bought a small number of international mail coupons in support of his scheme, but quickly switched to using incoming funds to pay off earlier investors. Bernard L. Madoff, who is currently serving a 150-year sentence in federal prison, orchestrated a multi-billion dollar Ponzi scheme that swindled money from thousands of investors. Allen Stanford is a former prominent financier and sponsor of professional sports who is serving a 110-year prison sentence, having been convicted of charges that his investment company was a massive Ponzi scheme and fraud. The above is sourced from the website of the US Securities and Exchange Commission. DDT Cartoon 
Jurisprudentiol - Monday's cases  Service Tax
Appellant allowing another company to use its plant, machinery and equipment by a conducting agreement for period September, 2004 to July, 2005 - whether services are liable to tax under 'support services of business or commerce' - issue involves a serious triable question - petitioner entitled to a complete waiver of pre-deposit: HC THE appellant entered into a conducting agreement on 25th August, 2004 by which it allowed the use of its plant, machinery and equipment by a company called International Synthfabs Private Ltd. (ISPL) for a period of eleven months from September 2004 to July 2005. It is the allegation of the department that the agreement involved the rendering of ‘support services of business or commerce' within the meaning of Section 65(104c) of the Finance Act as amended and, therefore, the appellant is liable to pay Service Tax. Income Tax Whether hiring of machinery for purpose of using them in assessee's business amounts to contract for carrying out a work as contemplated u/s 194C - NO: ITAT THE issues before the Bench are - Whether the hiring of machineries for the purpose of using them in the assessee's business amounts to a contract for carrying out any work as contemplated u/s 194C; Whether mere hiring of a machinery can be regarded as payment made for a contract for carrying out any work attracting the provisions of section 194C; Whether mere providing of the machinery without any manpower can be termed as carrying out of any work by the plant and machinery owners and Whether when a contract is for machinery hire and not for carrying out any work, the provision of section 194C get attracted. And the verdict goes against the Revenue. Central Excise It is for Revenue to prove clandestine manufacture - matter remanded: CESTAT A demand of almost Rs.50 lakhs has been confirmed & upheld by the Commissioner(A) against the appellant along with imposition of equivalent penalty and interest. The reason for this confirmation is the following allegation made by the Revenue - that the appellant has clandestinely removed the goods manufactured; that for such surreptitious manufacture & clearance they had received imported polyester chips on which duty liability was discharged by one M/s Shri Kami Enterprises. See our Columns Monday for the judgements Until Monday with more DDT Have a nice weekend. Mail your comments to vijaywrite@taxindiaonline.com |
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