TIOL-DDT 2416
13.08.2014
Wednesday

DDT piece on 'Facilitation' yesterday, as expected drew mixed reaction. Some Revenue officers were very angry for the uncharitable criticism of Revenue's measures while many assesses and consultants were appreciative. Perhaps there is some difference in the language of Revenue and others. The word facilitation is understood by Revenue to be something that would help them in collecting more revenue by means, not always honourable or legal. The rest of us understand it in a different way.

Yesterday the Finance Ministry released its annual report for 2013-14 and the report mentions the draconian Circular No. 967/01/2013 dated 01.01.2013 as a trade facilitation measure. Let me quote from the report:

If you remember this is the draconian circular which made almost all the assesses scamper to the nearest lawyer/CESTAT Bench/High Court and which mandated that even if the Stay Application is pending with the Commissioner (A)/Tribunal or a Court, the Department should recover the confirmed demand. This single circular produced thousands of cases in the Tribunal and High Courts and virtually every High Court quashed it or stayed its implementation. I know several lawyers who bought swanky new cars with the fees they earned out of this circular. And perhaps the Government did not realise a single rupee out of this circular which must have cost the assesses a fortune.

And this they proudly call "Trade Facilitation" in their Annual Report. That is why I said, "Beware of more facilitation".

Central Excise department does not have any preferential charge over recovery

THE Assistant Commissioner, Central Excise, Allahabad intimated State Bank of India that in view of Section 11 of the CEA, 1944 empowering the department to recover government dues, the land, plant and machinery and also any property in the name of respondent company should not be brought/sold/leased/transferred by the petitioner without his permission.

Against this restraint order the bank filed a Writ Petition in the Allahabad High Court pleading that the said order be quashed.

The banker submitted that they being the secured creditor under Section 2(zd) of the SARFAESI Act have the first charge over the property and that there is no statutory provision under the Central Excise Act giving priority to the excise department to recover government dues over the debts owed to the petitioner bank; that the respondent CE department has no authority of law to restrain the petitioner from not recovering its dues.

The Counsel for the Central Excise department submitted that the CE dues were prior in point of time to the loan granted by the petitioner bank and since pursuant to the demand raised by them, the property has been attached, consequently, the Central Excise department had the first right to recover the amount.

The High Court observed that the Central Excise department had failed to show any provision by which government dues could be recovered as the first charge.

And, therefore, the Writ Petition was allowed.

Please see Breaking News.

Also see DDT 520/27.12.2006, 2006-TIOL-404-HC-MAD-CX-LB, 2008-TIOL-86-HC-MUM-CX & 2012-TIOL-803-HC-AP-CX.

Can an accused in a Narcotics case get bail?

THIS was the question before a batch of appeals decided by the Supreme Court yesterday. Section 37 of the NDPS Act stipulates that all the offences punishable under the Act shall be cognizable. It further stipulates that:-

(1) persons accused of an offence under Section 19, 24, 27A or persons accused of offences involved in "commercial quantity" shall not be released on bail, unless the public prosecutor is given an opportunity to oppose the application for bail; and

(2) more importantly that unless "the Court is satisfied that there are reasonable grounds for believing" that the accused is not guilty of such an offence. Further, the Court is also required to be satisfied that such a person is not likely to commit any offence while on bail.

In other words, Section 37 departs from the long established principle of presumption of innocence in favour of an accused person until proved otherwise.

We bring you this case today.

Please see Breaking News.

ICAI to implead in Tax Lawyers Association case

IN TIOL-DDT 2414 11.08.2014 we carried a report 'Only Advocates to appear before VAT Authorities'.

The Lucknow Bench of the Allahabad High Court on 6th August 2014 issued notice to the Advocate General and as an interim measure directed that any person, who is not a registered Advocate, shall not be permitted to appear before the Authority under the VAT Act.

It seems that the above has caused jitters amongst the other professionals who used to practice before the High Court in the VAT cases.

In the above context, The Institute of Chartered Accountants of India has made an announcement on its website which reads -

This is with reference to the order passed by the Lucknow Bench of the Allahabad High Court in the matter of Tax Lawyers Association & Anr. v/s State of U.P. & Ors. whereby only registered advocates are permitted to appear before the Authority under the VAT Act in the State Of U.P. The Institute is seized of the matter and taking all steps to ensure that the status quo ante is restored in the matter and interest of the profession is preserved. As a first step, it is proposed to implead ICAI in the aforesaid matter as ICAI is not a party to the said case.

Call it coincidence, but the Lucknow Bench of the Allahabad High Court in another case has held that the Service Tax officers have no power to audit the assesses and Audit can be done only by Chartered Accountants and in the case of PSUs by the CAG. We carried this report in DDT 2283/31.01.2014.

Zero Tolerance Against Corruption - MoS to CBEC Chief Commissioners

ADDRESSING the Chief Commissioners of CBEC yesterday, the MoS Nirmala Sitharaman said that the present Government has zero tolerance towards corruption. She said that the Government wants greater transparency, accountability and efficiency in the system including in tax administration.

She said that the Commerce Ministry is willing to share its properties lying idle to provide space for the offices of Customs, Central Excise and Service Tax Department in the field. She said that the Government is in favour of trade facilitation in which the role of customs department will be central.

She said that Goods and Services Tax (GST) will be a reality soon as consultation process with the State Governments is now in final stages; that GST will result in simple and unified tax structure which will bring transparency and efficiency in tax administration; that GST will boost revenue collections for both Centre and the States.

But why are the Commerce Ministry's properties lying idle? Didn't they have a cadre review at all?

Jurisprudentiol - Thursday's cases

Service Tax

Appellant cannot provide output service of ‘training & coaching' without having faculty available for same - Expenses incurred by appellant by way of brokerage for finding accommodation for its faculty is, therefore, an Input service: CESTAT

DURING the course of scrutiny of records, it was observed by the Revenue that the appellant had availed CENVAT Credit in respect of the following services viz. (a) maintenance of pond and garden (b) Extension of Road (c) Brokerage amount on account of purchase/lease of flats for faculty (d) Fabrication, fencing of compound (e) Jogging Track repairs.

Taking a view that these services do not appear to be input services for the output services rendered by the appellant a SCN was issued for recovery of CENVAT credit of Rs.2.01 lakhs & by invoking the extended period of limitation.

Income Tax

Whether when subjective satisfaction was arrived at by AO for initiation of proceedings u/s 158BD on basis of materials found during Search, it can be said that initiation of proceedings was vitiated - NO: HC

WHEN the subjective satisfaction has been arrived at by the Assessing Officer for initiation of the proceedings under section 158BD of the Act on the basis of the material collected during the course of search/inquiry, it cannot be said that satisfaction arrived at by the Assessing Officer while initiating proceedings under section 158 of the Act has been vitiated in any manner;

There is ample material on record, so mentioned in the satisfaction note, against the respective assessees and Goyal Industries Ltd and another. It is required to be noted that even the said Rajendra Goyal is the Director of Goyal Industries Ltd. and the Company i.e. Goyal Industries Ltd. is run through its Director/Manager/employees etc. Considering the material on record and in the facts and circumstances of the case and the satisfaction Note, we are satisfied that no error or illegality has been committed in issuing notice under section 158BD of the Act;

Pursuant to the interim order passed by this Court, the block assessment proceedings were permitted to be concluded, however, are not served and implemented upon the assesses.

Central Excise

CENVAT - Clearances of Cement to 'contractors' of developers of SEZ under cover of ARE-1 without payment of duty are to be treated as an export - amendment to rule 6(6)(i) made on 31.12.2008 is clarificatory - no demand survives u/r 6(3)(i) of CCR, 2004: CESTAT

THE issue is - Whether the supplies of cement manufactured by the appellant to the contractors of developers of SEZ under the cover of ARE-1 without payment of duty and the tax demanded on the same by the adjudicating authority and upheld in the impugned appellate order is legal and valid.

See our Columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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