TIOL-DDT 2401
22.07.2014
Tuesday

AS reported by DDT yesterday;

Article 114 of the Constitution deals with Appropriation Bill, which stipulates:

Appropriation Bills

(1) As soon as may be after the grants under article 113 have been made by the House of the People, there shall be introduced a Bill to provide for the appropriation out of the Consolidated Fund of India of all moneys required to meet

(a) the grants so made by the House of the People; and

(b) the expenditure charged on the Consolidated fund of India but not exceeding in any case the amount shown in the statement previously laid before Parliament.

The Lok Sabha is scheduled to discuss the Demands for grants for 2014-15 tomorrow at 6pm and if the demands are voted, the FM is to move the Appropriation (No. 3) Bill, 2014 and most probably will get it passed by Lok Sabha.

Third time Cess fiasco - 100% EOU clearances to DTA

MUCH has been written in these columns about the triple Cess and the so-called burial to the issue by the Tribunal Larger Bench decision in Kumar Arch Tech Pvt. Ltd. - 2013-TIOL-614-CESTAT-DEL-LB. See DDT 2209, 2086, 2047, 1885, 1690, 1584, 1354 & 1318.

At last the Government has felt a need to put the issue to rest in this budget.

So, Notification No. 18/2014-CE dated 11.7.2014 makes an appearance and amends Notification No. 23/2003-CE, dated the 31st March, 2003so as to avoid double levy of cess on DTA clearances of 100% EOUs.

The clarification given in the D.O. F.No. 334/15/2014-TRU letter dated 10.7.2014 in Annexure II under the head ‘Miscellaneous' at serial number 8 says:

"Education cess and secondary & higher education cess (customs component) is being exempted on goods cleared by an EOU into the DTA.

However, this appears to have inadvertently created some more fresh confusion of the issue. Let us examine the cess payable by EOUs on DTA clearances during different periods:

Finally, is it a case where an EOU is not required to pay any Cess? (Except in the cases of exceptions mentioned in Notifications No 18 & 19 Cus dated 11.07.2014 for which there is no exemption from cess on CVD component).

Will the case again go the Larger Bench/High Court and Supreme Court?

15 Crore Rupees for Income Tax Appellate Commissioners' offices - E-Appeals soon

WITH the approval of Chairman, CBDT, a proposal for up-gradation of offices of CITs(Appeals) has been included in the proposals under the 1% incentive scheme and an amount of Rs.15 crore has been earmarked for it. A Committee, comprising CsIT(Appeals) of different zones,constituted in this matter recommended installation of an E-Appeals system as a mandatory requirement and other office infrastructure as optional requirements. The Committee also recommended disbursement of a sum of Rs. 5 lakh to each CIT(Appeals) for the purpose.

But the Systems Directorate did not recommend an immediate roll out of the software throughout the country. It, however, opined that the E-Appeals software is a near perfect application on standalone basis. The reports created by the software are instantaneous and accurate and the reminders are also issued promptly to assessees (for hearings) and the AOs (for remand reports).

So, it was suggested that some CsIT(Appeals) could use the application in their offices for better control and disposal of their cases. Training, however, was indicated as an important component for using the software.

As recommended by the Systems Directorate, it is proposed to initiate the use or E-Appeals system, in selected CsIT(Appeals) offices in the country. Since this would require some initial training of the staff as well as the CsIT(Appeals) themselves, it has been decided to select the offices of CsIT(Appeals) for introduction of E-Appeals system on voluntary basis.

So, the Directorate of Income Tax, (Public Relations, Printing, Publications & Official Language) wants Chief Commissioners to convey the willingness of CsIT(Appeals) for introduction of the E-Appeals system in their offices, by 31st July.

When will CBEC think of something like this?

Directorate of Income Tax, (Public Relations, Printing, Publications & Official Language) F.No. PR-5(8)/PR,PP&OL/2011-12/ 511 Dated: July 18, 2014

Two Lakh appeals pending with CITs(A) - CAG

THE CAG in its report for the year ending 31.3.2013, has pointed out that Appeals pending with CIT(A) increased from 1.58 lakh in FY 2008-09 to 1.99 lakh in FY 2012-13. Only 85,049 appeals (29.9 per cent) were disposed of by the CITs(A) in FY 2012-13. The amount locked up in appeal cases with CIT(A) was Rs.2.59 lakh crore in FY 2012-13.

The CAG also reported that ITD completed 2.33 lakh scrutiny assessments in FY 2011-12, of which CAG checked 2.15 lakh cases. The incidence of errors in assessment checked in audit was 0.17 lakh which averaged to 7.9 per cent.

CAG noticed that ITD disposed of an average of 59 per cent of the grievances within stipulated period during FY 2011-12. CAG noticed 7,167 instances of grievances which were pending for disposal by the concerned AOs as on 31 March 2012. The pendency of these grievances ranged from two days to more than 10 years beyond stipulated period of 60 days as on 31 March 2012. The pendency of grievances shows that there are various flaws in the system and in the administrative mechanism. The internal control for monitoring of redressal of grievances in ITD was not proper as prescribed registers/monthly reporting system was deficient.

From CAG's report for the year ending March 2013.

Govt looking for a new CVC

THE DoPT Secretary has written to all the Secretaries to the Government of India to suggest names for appointment of Central Vigilance Commissioner and a Vigilance Commissioner in Central Vigilance Commission. The present CVC Pradeep Kumar will be completing his tenure on the 28th September, 2014. The CVC is selected by a Committee consisting of the Prime Minister, Home Minister and the Leader of Opposition - now that there is no leader of opposition, it has be seen as to who would fill the place.

DoPT D.O. No.399/15/2014-AVD-III, Dated: July 21, 2014

Hindon, Ghaziabad notified as Customs Airport

CBEC has notified Hindon, Ghaziabad in Uttar Pradesh as a Customs Airport for the purpose of unloading of imported goods and loading of export goods or any class of such goods related to Ministry of Defence, Government of India .

This notification will be in force from 31.07.2014 to 30.05.2015.

Hindon Air Force Station is an Indian Air Force base under the Western Air Command (WAC) and is close to the Hindon river. It is the biggest and largest air base in Asia and 8th in the world.

Strangely, although the notification is issued on 21.07.2014, it would be effective from 31.07.2014 to 30.05.2015 & not the last day of the month of May, 2015. Stratagem?

Notification No. 54/2014-Customs (N.T.), Dated: July 21, 2014

Jurisprudentiol - Wednesday's cases

Service Tax

Tribunal had shown sufficient indulgence to appellant by granting time to deposit part of tax demanded and had also granted an extension of time for compliance - Tribunal had, therefore, rightly dismissed appeal for non-compliance: HC

THE appellant had filed an appeal before the Tribunal challenging the order passed by the CCE & ST, Trichy wherein a service tax demand of Rs.3,02,46,974/- was confirmed apart from imposition of penalty and interest.

By an order dated 23.1.2013, the Tribunal, taking note of the fact that the appellant already deposited a sum of Rs.77,32,903/-, directed the appellant to pre-deposit a further sum of Rs.1.20 Crores within a period of six weeks and report compliance for obtaining stay from recovery of the adjudged dues.

The appellant deposited only Rs.20 Lakhs and filed an application seeking extension of time. The Tribunal allowed this application and directed the appellant to deposit the balance amount of Rs.1 Crore within a period of eight weeks. In the said order, the Tribunal observed that if the appellant does not deposit the amount within the stipulated period, the appeal will be dismissed.

The appellant deposited a further amount of Rs.25 lakhs.

Noting that the appellant had failed to comply with its order, the Tribunal dismissed the appeal

Income Tax

Whether in case of sale and lease-back deal where sales tax was paid, depreciation can be disallowed merely because Central Excise papers treat machinery as 'not for sale' - NO: HC

THE assessee, a finance company, had entered into a Sale and Lease back agreement with the manufacturer of a machinery, to acquire ownership of machinery for consideration and thereafter lease the said machinery to the same company. The machinery was manufactured by that company and sold to the assessee and on the transaction, sales tax was levied and collected from the assessee and paid out to the Government. On the leased out machinery, assessee had received rental income and it was disclosed in the return as business income of the assessee.

THE issues before the Bench are - Whether in a case of sale and lease-back deal where sales tax was paid, depreciation can be disallowed merely because the Central Excise papers treat the machinery as 'not for sale' and Whether the rental income earned from leasing of such assets is to be treated as business income. And the verdict goes in favour of the assessee.

Central Excise

Re-quantification of demand - When the first and last page of SCN indicates that notice was issued on 09/07/1998 it is very strange and also not understandable as to how Revenue has come to the conclusion that SCN has been issued on 19/06/1998 - ground to file appeal is totally frivolous - appeal dismissed: CESTAT

THIS is the 2nd round of litigation.

In the earlier round, the Tribunal had remanded the matter back to the adjudicating authority with a direction to re-quantify the duty for a period of six months after allowing the benefit of MODVAT credit, for which purpose the appellants would produce the relevant documentary evidence.

The ground taken by the Revenue to file the appeal is totally frivolous and on this ground itself the demand is not sustainable.

See our Columns tomorrow for the judgements

Until tomorrow with more DDT

Have a nice day.

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