TIOL-DDT 2286
04.02.2014
Tuesday

IT is high time that we seriously think of doing away with this anarchy called pre-deposit, which is causing irreparable damage to the Industry and Trade. In the CESTAT, most of the cases heard on any day are stay matters and the only issue is ‘waiver of pre-deposit'.Though some cases are listed at the end of cause list for final disposal, they hardly reach the Bench. If things go like this, it will take decades before matters are finally settled and in trying to convince the Bench about the need to waive pre-deposit, elaborate arguments are made at the Stay stage that they look almost like final hearings.

And a major part of the department's activities consists of pursuing these irrecoverable arrears - attaching properties, bank accounts, going after missing assessees and even then not being able to recover even a small fraction of the huge arrears.

Should we waste the National time and talent in such totally unproductive activities? Pre-deposit is really not required now, because if the assessee loses the case ultimately, he has to pay the tax/duty with 18 percent interest and this is a wonderful investment for the Government. No Government investment brings in at least a third of that kind of returns. If the assessee ultimately wins, this pre-deposit is a huge unjust burden on him and is simply State torture. Let the Government consider this as a good investment for future, instead of blowing up all the money they have and even the money they don't have, on all kinds of wasteful expenditure.

Even if total waiver cannot be given, let us fix pre-deposit as a standard 10 percent of the duty/tax demanded with absolutely no discretion to any appellate authority- then appellate authorities, especially the Tribunal need not waste its time on Stay matters and final matters can be taken up and perhaps they can be decided in a couple of years.

This will also bring down the corruption levels considerably.

This is the best time for the Industry and Trade bodies to influence the political parties to bring in law providing for little or no pre-deposit. Political parties are offering all kinds of sops like free electricity and colour TVs to voters - with the taxpayers' money. It is time that the real taxpayers also demand and get some relief (at least a little less harassment). They should insist on political parties including these measures in their manifestos issued during elections - though this may not be very populist.

After all you give a lot of money to the politicians - make them listen to your woes - at least during elections. If you have tears, prepare to shed them NOW.

We had too much of politics running/ruling economics - let economics now dictate politics.

Please also read - "A Budget Mantra - solution for easy recovery".

Recovery even before time to appeal elapses - Highhanded

THE anxiety of the Revenue Officers to collect revenue by any means - fair or foul, knows no bounds. In a recent case, an order demanding about Rs. 22 Crores (with the mandatory interest and penalty) was passed by a Commissioner on 27.12.2013 which was received by the assessee on 02.01.2014. On 22.01.2014, the Assistant Commissioner demanded the assessee to pay up or else ……. The Assessee still had about 70 days to appeal, but the Assistant Commissioner did not have that kind of patience. The hapless assessee had to rush to the High Court.

The High Court said the action of the authority to say the least is high-handed. The High Court wanted the officers of the Revenue Department to realize that their job is much more than merely collecting the tax. They are officers of the State, administering the Finance Act, 1994 and fairness in approach to the taxpayers and acting in accordance with the Rule of Law is a sine-qua-non in discharge of all its functions. We will bring you this order tomorrow.

In another interesting case, out of the total demand of Rs. 414 Crores, the assessee paid about Rs. 380 Crores (about 92%). Nevertheless the Commissioner (Appeals) refused to grant waiver of pre-deposit of the balance Rs. 34 Crores. The High Court observed that the approach of the Commissioner would undoubtedly result in the petitioner's right to appeal being defeated [See 2014-TIOL-140-HC-DEL-CUS ].

No Budget; No GST; No DTC - but enough tinkering with taxing provisions

AS Parliament is meeting for the last session of the 15th Lok Sabha, it is assured that there will be no Budget in February and that GST and DTC (Direct Taxes Code) are forgotten concepts at least until 2015. But there is no guarantee that there will be no taxing changes. According to the FM, short of amending the Customs Act, CE Act, Income Tax Act, Finance Act 1994 - he can bring in any changes and he seems to be planning to bring in those changes - most probably they will be good ones - after all his party has an election to fight if not to win.

Maybe he can give a few clarificatory notifications to the effect that:

1. Works contract was not taxable prior to 1.6.2007

2. Certain services provided to the State (like water supply projects) are (and were always) exempted from Service Tax.

3. There will be no coercive action during pendency of appeals.

4. VCES declarants will not be targeted for attack.

5. When goods are sold at a loss, the price will be accepted as transaction value.

6. Service Tax on GTA for outward transport will be allowed as input service ...

The FM said his speech would be between 12 and 18 pages - what is important is whether those pages will have manna or hemlock.

This is the last session of the present Lok Sabha - will PC be in the Lok Sabha and if he is in, will he be the FM?

Arun Jaitley says,

Finally my friend Mr P Chidambaram, the Union Finance Minister appears to be planning life after the North Block. He is an extremely competent lawyer. Parliament's loss will be Supreme Court's gain.

From the kind of statements he is making and the academic questions he is posing to his opponents, I suspect that he is practising to get back to column writing. I am sure his columns will make an excellent reading.

"People who have faith in the future get loans" - P. Chidambaram

Customs - Illicit Import of Luxury Cars - CBI arrests key accused

IN March 2013, Central Bureau of Investigation registered a case under various sections of the Prevention of Corruption Act, 1988 in connection with a complaint that about 33 vehicles had been imported in Tamil Nadu and of these, certain vehicles are believed to have been imported and subsequently sold in violation of import provisions causing loss of up to Rs. 48 crores approx. to the exchequer.

The case has been registered against an importer and a Senior Intelligence officer of DRI who allegedly did not take any action even after identification of vehicles at the premises of certain users and unknown others. It appears that although the DRI launched a probe a couple of years ago, no action was taken to recover the tax evaded or confiscate the vehicles.

During the searches conducted 17 imported cars have been located and seized under Section 102 (3) Cr.PC.

Among the premises searched were the houses of Dravida Munnetra Kazhagam president M. Karunanidhi's sons, M.K. Stalin and M.K. Alagiri, who was a Union Minister in the UPA government until a day earlier.

But the one who actually imported the cars Alex C Joseph could not be reached as he was evading due process of law, right from the date of registration of the said case and was not responding to the notices for appearance, issued by CBI. High Court of Madras had also turned down his repeated prayers for grant of anticipatory bail and Alex C Joseph continued to evade investigation by CBI and was absconding. CBI had also issued “Look Out Circular” to all Airports to apprehend him. CBI formed various teams to trace him and sustained efforts taken by CBI revealed that the accused was hiding in Delhi.

Pursuing a specific lead, the CBI team of Chennai camping at New Delhi located Alex C Joseph in the Reception Hall of Hotel Taj Palace and he was immediately arrested on 01.02.2014. Yesterday he was produced before the Principal Special Judge for CBI Cases, Chennai and a petition is being filed for taking him to police custody for further interrogation.

What was Alex C Joseph doing in a 5 Star hotel? It seems he was there to meet an important politician. Alex, a villager with no college degree had been avoiding Customs and other law enforcement agencies for more than 25 years - all the while selling fancy imported cars to India's rich and famous. One such rich sports lover bought 11 cars from him all towed away by CBI and finally CBI got the elusive Alex - interesting stories may come out in the coming days.

Please also see 17 Imported luxury cars seized - CBI/DRI timing most unfortunate - PM in DDT 2071 - 22.03.2013.

Officers on Private Visit abroad - Vigilance Clearance required.

CBDT informs its officers that requirement of vigilance clearance is a pre-requisite for granting permission to the officers/officials (what is the difference?) on private foreign visit as advised by DOPT. Board stipulates that application for grant of ex-India leave should be sent to the Board at least one month in advance to enable the Board to complete the formalities.

CBDT F. No. C-29016/2/2014-Ad.VI(A)., Dated: February 03, 2014

CBI Chief at NACEN's National Seminar on Drug Law Enforcement

CBI Director Ranjit Sinha inaugurated the three-day National Seminar on Drug Law Enforcement for the officers of various enforcement agencies from all over India conducted by the National Academy of Customs, Excise & Narcotics (NACEN), on the 03 February 2014 at New Delhi. He emphasized on the importance of intelligence collection and coordination between the intelligence and enforcement agencies across the country in order to effectively tackle the menace of drug-trafficking and related crimes. Rashmi Verma, Additional Secretary in the Department of Revenue, in her key-note address expressed concern over the escalating rates of narcotics related crimes in India, while encapsulating the current scenario of narco-terrorism in the world. The Director General of NACEN, Dr. G. Sreekumar Menon welcomed the guests and participants to the seminar after explaining the contemporary relevance of the seminar.

Following the inaugural ceremony, the technical sessions commenced with an address by Vice-Admiral Anurag G Thapliyal, Director General of Coast Guard, who elaborated upon the various facets of maritime security. Jayadev Ranade, Member National Security Advisory Board, Rohit Chaudary, ADGP, Punjab Police, P.K. Dash, DRI Mumbai, Devesh Malladi, IDMA, were amongst the distinguished speakers who inspired the delegates with their presentations covering a wide range of issues from national security, Indo-Pak border issues, Synthetic Drug Smuggling, Controls over drugs, etc. and interacted with them during their sessions. The day wrapped up with the address by Lt.Gen.(Rtd.) P.C.Katoch that focused on challenges in dealing with Afghanistan related drug-trafficking. The seminar saw robust participation from enforcement officers across the country. The following two days will consist of insightful sessions on a variety of topics including United Nations Drug Conventions, Indian Land Borders, Money-laundering and Counterfeit currency.

The Top Brass of CBEC was nowhere to be seen in the Seminar. Why?

Jurisprudentiol - Wednesday's cases

Service Tax

Recovery proceedings even before expiry of time to appeal (three months) - high-handed - Revenue officers should realise that their job is much more than merely collecting tax: HC

IN case, the Revenue is allowed to adopt coercive measures and/or if the assessee is required to pay tax determined immediately, it would lead to injustice to an assessee, as his opportunity to obtain a stay from the appellate authority would stand foreclosed. Moreover, the inherent right of an appellate authority to stay the order being appealed against would be rendered futile.

The officers of Respondent Revenue would do well to realize that their job is much more than merely collecting the tax. They are officers of the State, administering the Finance Act, 1994 and fairness in approach to the taxpayers and acting in accordance with the Rule of Law is a sine-qua-non in discharge of all its functions.

Income Tax

Whether if assessee-Trust which has listed out many charitable activities as objectives, has been able to organise only Yoga camp, Section 80G benefits continue to be available to it - YES: HC

THE assessee Trust had filed an application against the original rejection of application filed u/s 80G. The appeal before the Tribunal was filed against the order of CIT denying the recognition u/s 80G(5)(vi). Tribunal had remanded the proceeding back to the CIT for fresh consideration. The CIT by his order dated 15 February 2012 declined to grant recognition on the ground that (i) the assessee trust was not carrying out all the charitable activities listed in its objects; (ii) no other activity except for Yoga Camps had been commenced; and (iii) though the dominant object was to establish hospitals and to impart medical treatment, those activities had still not commenced.

The issues before the High Court are - Whether if the assessee-Trust which has listed out many charitable activities as objectives, has been able to organise only yoga camp, Section 80G benefits are not available to it; Whether the statute requires that in order to acquire the status of a trust, assessee should carry out all the activities which are mentioned in the objects clause and Whether the activity of conducting Yoga Camps constitutes a charitable activity. And the answers go in favour of the assessee.

Customs

If the Customs authorities do not want appellant to take vessel out of India, they should pass written order stating reasons therefor and cannot pass any oral instructions - AR to ascertain facts and inform: CESTAT

THE Tribunal had passed a Stay order dated 17.05.2013 wherein stay was granted and pre-deposit of the dues adjudged against the appellant was waived and all further proceedings pursuant to the adjudication order was stayed subject to the appellant keeping the Bond for Rs.96,56,83,838/- and the Bank Guarantee for the duty demand of Rs.9,24,04,082/- alive.

The appellant complied with the said directions but the Customs Authorities were not permitting them to take the vessel out of India for executing certain urgent work.

So, the appellant is before the CESTAT praying that suitable directions be given to the Customs authorities.

See our Columns Tomorrow for the judgements

Until tomorrow with more DDT

Have a nice day

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