12.11.2014
Wednesday
STRANGE are the ways of Revenue and stranger are the ways they employ to collect taxes, which they are NOT supposed to collect. In this mission, they are ready to flout all rules and orders and resort to even illegal means.
An interesting case was decided in the Mumbai ITAT recently.
The Tribunal had granted Stay of collection of outstanding demand against an assessee. In spite of the Stay granted by the ITAT, the AO adopted an innovative method to collect tax. He obtained a consent letter from the assessee and realised Rs. 16.64 crores of the outstanding demand.
The hapless assessee is before the Tribunal.
The Tribunal called the AO who had collected the revenue by flouting the directions of the Bench. The Officer appeared before the Bench and tendered an unconditional apology for his conduct and submitted that it was collected with the consent given by the appellant vide letter dated 23.04.2014.
The Tribunal clarified that neither the assessee nor the Revenue has the right to flout the decision of the Tribunal and being an officer functioning under the Government of India it is his obligation to follow the directions of the superior authority and even if there is consent he should not have collected the amount.
The Tribunal noticed that in some other cases also similar consent letters were obtained or the Department has collected tax despite the stay order passed by the ITAT.
The Tribunal observed, "We deplore this practice and direct the Chief Commissioner of Income Tax to issue a letter to all the concerned Assessing Officers not to adopt this kind of approach of obtaining consent letters and to respect the order passed by the Tribunal as otherwise the Tribunal would be constrained to view the conduct of the Department adversely."
The Tribunal directed the AO to refund the amount collected contrary to the order passed by the ITAT. The amount along with interest is be refunded within 15 days and the AO is directed to furnish the proof of refunding the amount before the Bench.
Please see 2014-TIOL-846-ITAT-MUM
Taxman - your job is to collect correct Tax - Not a Penny More - Not a Penny Less
WHY are our taxmen obsessed with revenue collection by any means - fair or foul? Is there some secret code in the Department that as long as you collect Revenue by means legal or otherwise, you are safe? Are they taught in the high profile academies that 'yours is not to question why; yours is but to collect'? Even young officers out in the field resort to all kinds of arm-twisting to collect that extra rupee in the name of revenue.
In this process, they actually don't collect any excess revenue, they collect tremendous amount of bad name for the Government. Even it is not economically wise, as they ultimately end up paying interest, as it happened in the above case. If they want to project that they are loyal servants of the Government, what they ultimately turn out to be are enemies of the State. They lose the Revenue as well as the honour.
A senior revenue officer told me, "at the end of the day we are revenue officers; we are here to collect revenue." But are you supposed to collect what is not yours by law? Is it not mercenary extortion?
And what is the consent of an assessee - to be exploited? Which assessee will voluntarily give a letter stating that he is glad to pay the amounts which he is not required to pay and the collection of which has been stayed by a court?
The Central Excise Audit teams have a knack of getting spot payments - even before a Show Cause Notice is issued. Some assessees actually keep some amounts for spot payments to please the audit parties - as a part of tax planning.
Central Excise and Service Tax officers have kept refund claims amounting to hundreds of crores pending because it is a standard practice in the department that refund should be given only if all means of denying it have failed. And then they proclaim that the patriotic assessee has requested them not to give interest on the delayed refunds.
While reporting a case, when I wrote that by denying the refund, the officer ensured that the Department had to pay interest and suffer some embarrassing situations in the High Court, the highly agitated Assistant Commissioner wrote to me that department's interest was protected by not paying the interest - the assessee had agreed to take the amount without interest. What can the poor assessee do after five years of litigation and a case in the High Court?
Mr.Modi and Mr.Jaitley - give these officers some more promotions and have a cadre review every month; create more posts like Additional Principal Chief Commissioner, Deputy Principal Chief Commissioner, Assistant Principal Chief Commissioner, Additional Chief Commissioner, Deputy Chief Commissioner, Assistant Chief Commissioner and so on - but don't allow them anywhere near the assessees, if you want your revenue properly and legally.
The Prime Minister talks about more governance and less government - his babus ensure that anarchy prevails in the name of Government.
IT - TDS on Deposits ordered by Courts - Delhi High Court quashes CBDT Circular
THE Delhi High Court yesterday quashed the CBDT Circular No. 8/2011 dated 14.10.2011. In the Circular, CBDT had stipulated that Banks shall deduct TDS on the interest accruing on deposits directed by Courts on one or more litigants.
Earlier the Himachal High Court had struck down this Circular in 2014-TIOL-1815-HC-HP-IT. DDT had covered this in DDT 2458 -17.10.2014.
Please see : 2014-TIOL-1933-HC-DEL-IT
Income Tax Offices to remain open this Saturday
THE Income-tax Offices throughout the country shall remain open on 15th November (Saturday), during normal office hours, for conducting the administrative work related to implementation of the restructuring of jurisdictions across the country, which is coming into effect from 15th November, 2014. This direction is issued for administrative convenience by the Central Board of Direct Taxes.
The cadre restructuring in CBEC silently came into effect from 15th October. They don't need to work on a Saturday as they find it difficult to find work even on other days. Right now the newly promoted officers are frantically searching for places to sit.
CBDT Order in F.No.225/298/20114/ITA.II, Dated: November 11 2014
GST Threshold Limit to be 10 Lakhs
THE Empowered Committee of State Finance Ministers on the Goods and Services Tax (GST) met in New Delhi yesterday and it is heard that they decided that the threshold limit for GST should be Rs. 10 lakhs which is the current limit for VAT in many States. The Centre wanted the limit to be enhanced to Rs. 25 lakhs. The Empowered Committee wants the States to be given the legal powers to collect tax from businesses with annual turnover of uptoRs.1.5crore. Those below the turnover threshold of Rs.1.5crore would pay their taxes to States, which would subsequently pass on to the central exchequer. This will avoid dual control at least for the small traders. They also want petroleum, alcohol and tobacco out of the purview of GST.
GST Bill which is likely to be presented in the winter session of Parliament is yet to be given to the Committee. The Bill needs to be passed by two-thirds majority in Parliament and has to be approved by more than half the State legislatures. It needs support of all parties.
Abhishek Singhvi's Income Tax - Did he buy 1250 laptops?
ABHISHEK Manu Singhvi is one of the most expensive lawyers in India. He is also one of the highest Income Tax paying lawyers in India. He now has the dubious distinction of being the lawyer with the highest Income Tax penalty on him.
In June 2013, the Indian Express reported that Singhvi had approached the Settlement Commission with a disclosure of Rs. 11 crore undeclared income and sought for immunity. The Settlement Commission which gave its verdict recently did not accept his declaration and imposed nearly Rs. 60 crores as penalty.
The Jodhpur Income Tax Commissioner found heavy cash withdrawals from his account. Singhvi is said to have claimed that he had purchased laptops worth Rs 5 crore, on which he claimed Rs 1.5 crore as depreciation. The Income Tax department estimated that based on average cost of Rs 40,000 for a laptop, the lawyer would have purchased 1,250 laptops for 14 advocates and professionals hired by him. It is reported that after being unable to furnish documentary proof to back his expense claims, Singhvi had told the Commission that a termite attack on the premises of his chartered accountant in December, 2012, had destroyed all records and expense vouchers and documents.
The Settlement Commission's order is under Stay by the Jodhpur Bench of the Rajasthan High Court.
Singhvi is reported to have stated that the Settlement Commission's order suffers from "legal malice and perversity".
After disclosing an undeclared income of Rs.11 crores, if you are gifted with a penalty of Rs. 60 crores, you certainly cannot be in a thankful mood!
Torture to be a Judge
"IT is torture to be a judge. One is better off on the other side, as a lawyer. We find it difficult to endure this torture. That is why recently six persons from Gujarat High Court refused to become judges. Clever persons are those who choose to remain lawyers. At least there is no retirement. ”
- Justice S J Mukhopadhaya in the Supreme Court yesterday
Jurisprudentiol-Thursday's cases
 Service Tax
Appellant appointed by foreign clients to provide repair & maintenance service during warranty period on their behalf to buyers in India - service qualifies as Export - Appeal allowed with consequential relief: CESTAT
THE appellant is providing services which are taxable under the category of Business Auxiliary Service. As per agreement the appellant are operating as distributor for sales and after sales service of Hitachi Analytical product. Initially the appellant paid service tax but thereafter realised that they are covered by the Export of Services Rules, 2005. And so, they claimed refund of the ST paid of Rs.50.40 lakhs during the period August 2005 to July 2006.
On the ground that the services rendered by the appellant does not fall under the Export of Services Rules, 2005 the claims were rejected.
Income Tax
Whether assets or cash seized u/s 132 is adjustable against any existing liability, including advance tax payable - NO: ITAT
SEARCH and seizure operation was carried out on the premises of the assessee during the financial year 2008-09 which was related to A.Y. 2009-10. At the time of search cash was found at different places and seized by the Revenue authorities. On 29.4.2008 a letter addressed to Additional Director of Investigation requesting that the seized cash may kindly be adjusted and appropriated against the tax liability in respect of the income of the A.Y. 2008-09 which was offered as the income in the statement made u/s 132(4). Letter dated 30.06.2008 addressed to Assistant Director Investigation was also filed stating the fact that the assessee had discharged its more than 60% of tax liability in the form of seized cash which had been requested to be adjusted towards the tax liability for the A.Y. 2008-09 and also paid first installment of the tax. AO denied prayer of the assessee that the adjustment of seized cash should be given from the date of search i.e. 29.4.2008. AO gave adjustment of seized cash towards demand from 23.2.2011. AO levied interest u/s 234A & 234B.
The issue before the Bench is - Whether the assets or cash seized u/s 132 of the Act is adjustable against the amount of any "existing liability" under the Act which does not include "advance tax" payable in accordance with the provisions of Part 'C' of Chapter XVII of the Act. And NO is the answer.
Customs
Notfn. 45/2013-Cus dated 17.09.2013 is not clarificatory, hence not retrospective - appellant is not eligible for benefit of exemption from safeguard duty and anti-dumping duty in r/o ex-bond B/E filed on 09/05/2013 although DFIA authorisation was transferred on 09/04/2013 - Appeal dismissed: CESTAT by Majority
THE appellant purchased 10.5 MT Phosphoric Acid from Desmo Export Ltd. out of the total quantity of 110.25 tons of Phosphoric Acid imported and warehoused under bill of entry dated 25.04.2013. The said goods were assessed and anti-dumping was imposed under Notification 19/2012-Cus dated 04.04.2012. The appellants filed ex-bond bill of entry on 09.05.2013 and claimed the benefit of Notification no. 98/2009 dated 11.09.2009 based on the valid DFIA dated 21.05.2012, which was transferred in the name of the appellant as per the provisions of the Foreign Trade Policy on 09.04.2013. As per the said DFIA, the appellant were allowed import of goods of the quantity and value mentioned therein without payment of duties of customs including Anti-Dumping Duty within the validity period of 36 months.
See our Columns Tomorrow for the judgements
Until Tomorrow with more DDT
Have a nice day.
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