News Update

CESTAT Allahabad Bench - High Court Still Monitoring

DDT in Limca Book of Records - Third Time in a row

11 01 2016

DDT 2751 23 12 2015 reported that the Revenue Secretary has been summoned by the Allahabad High Court on 05.01.2016. The Revenue Secretary did not attend but filed an affidavit. Affidavits were also filed by Mr. S. Bhowmick, Under Secretary, Department of Revenue, Registrar, CESTAT, Mr. Ajay Kumar Nema, Director, Head Quarters, Department of Revenue,Mr. Sanjay Rathi, Commissioner, Central Excise, Allahabad and Mr. Hasmukh Adhia, Secretary, Department of Revenue.

On 05.01.2016, the Court noted:

1. The Director, Head Quarters, Department of Revenue in his affidavit has indicated that the Ministry of Urban Development, Nirman Bhawan, Delhi has issued a letter dated 1st January, 2016 to the Ministry of Finance intimating that an appropriate space would be allotted to CESTAT no sooner after the completion of their building in October, 2017 at 34-A, M.G. Marg, Allahabad, which will house the permanent Bench of CESTAT.

2. The Registrar, CESTAT states that they require approximately 12000 sq. ft. of space for appropriate functioning of the Tribunal.

3. The Director, Head Quarters, Department of Revenue has further informed that a letter dated 1st January, 2016 has also been issued intimating the appointment of six persons as Member (Technical) in CESTAT.

4. Sri Hasmukh Adhia, Secretary, Department of Revenue has further indicated that an office memorandum dated 29th December, 2015 has been issued by the Central Board of Excise and Customs, Department of Revenue directing the transfer of entire old red building for temporary functioning of the CESTAT at Allahabad till such time as alternate accommodation is not made for shifting of their premises.

5. Sri Sanjay Rathi, the Commissioner posted at Allahabad in his affidavit has informed that possession of the entire red building has been given to Registrar, CESTAT.

6. A request was made by the Bar Association of the Tribunal for suitable space to be allotted to the Advocates practising and appearing before the CESTAT, Allahabad.

7. CESTAT has informed that the request of the Bar Association is under consideration and submits that their request would be suitably considered and a space would be allocated as far as possible by the Tribunal.

The High Court made the following directions:

1. Since a permanent place for establishing a permanent Bench of CESTAT has now been located, the Ministry of Finance to co-ordinate with the Ministry of Urban Development and ensure that appropriate space of 12000 sq. ft. is given to CESTAT so that the functioning of the Tribunal is not hampered on account of inadequate space. Necessary steps in this regard be taken by the two ministries and information be intimated to the Tribunal concerned as well as to this Court.

2. The President of CESTAT requested to pass appropriate orders for posting of members and ensure that adequate representation of members are made for proper functioning at Allahabad throughout the month. The Court be informed about the steps taken in this regard on the next date.

3. CESTAT will continue to function temporarily from the red building till it is finally shifted to the permanent building, which is under construction at 34-A, M.G. Marg, Allahabad.

4. Any space that is provided to the Bar Association would be only temporary in nature and that they would vacate the premises no sooner when the Tribunal is shifted to the permanent building.

The matter is posted for 4th April 2016 for further consideration when the Registrar, CESTAT will file a fresh status report. An affidavit will also be filed by the Ministry of Revenue.

Personal appearance of Sri S. Bhowmick, Under Secretary is dispensed with.

The exemption application of Sri Hasmukh Adhia is allowed.

DDT had extensively covered this issue.

1.  DDT 2596-13 05 2015: The Allahabad High Court directed the Union of India to make the Allahabad Bench of CESTAT functional w.e.f. 21-7-2015 and to list fresh matter before the said Bench.

2. DDT 2601-20 05 2015: The Allahabad High Court gave certain directions regarding accommodation for the Tribunal.

3. DDT 2663-14 08 2015:  The High Court gave certain directions to the District Magistrate regarding accommodation for the Tribunal.

4. DDT 2669-24 08 2015: The High Court gave certain directions  inter alia  that from the month of October, 2015 the Tribunal should function on a regular basis and not one week in a month.

5. DDT 2698-06 10 2015: The CESTAT Bench officially inaugurated at Allahabad on 1st October 2015.

6. DDT 2729-20 11 2015: The High Court gives further directions on accommodation.

7. DDT 2730-23 11 2015: The High Court observed, "the Ministry of Finance is not doing enough for setting up the permanent establishment of CESTAT. Nothing has been brought on record to indicate what steps they have taken subsequent to our order.

8. DDT 2751 23 12 2015: High Court summons Revenue Secretary

Cost of new CESTAT Benches

THE expenditure on establishing the Chandigarh Bench of the CESTAT is Rs. 1,01,36,884 till November 2015.

The Hyderabad Bench cost Rs. 2.12 crore. This includes 1.17 crore paid to CPWD and 70.5 lakh paid as rent for the period November 2014 to October 2015. Compared to these, the expenditure for setting up the Allahabad Bench was only Rs. 23.82 lakh.

The CESTAT gave this information in an RTI query.

This is certainly not big money, taking into consideration the huge amounts involved in litigation before the Tribunal.

This is not enough. We need more Benches, more Members, more infrastructure. The Registrar informs the High Court that he needs 12,000 sq.ft of space for the Allahabad Bench. Keeping the future in mind, we should have double that space, because once you establish, it is very difficult to acquire additional space and facilities. The Principal Bench of CESTAT in New Delhi is a classic example. In Bangalore, the Members do not have attached toilets to their chambers and there are no proper toilet facilities for the lawyers and litigants. Once a lawyer was frantically searching to find the toilet in the CESTAT building and the only toilet he discovered was locked. He sought my help in finding the toilet. I took him to the Proper Officer who had the key to the toilet and helped him in locating it. I was able to make a great impression about myself on this lawyer (who is now a sitting judge of a High Court), all because of my immense knowledge on how to get to the only toilet and then get it opened.

CESTAT Pendency

THE number of pending cases in CESTAT is still alarming. As on 1.12.2015, there were 98817 regular appeals and 2389 stay matters pending before the CESTAT. Assuming that 1500 cases are disposed in a month, it will take more than six years to clear the pendency and assuming that 1500 new appeals are filed every month, the pendency will remain at over one lakh forever.

The ITAT also has about one lakh cases pending but they have 63 Benches spread over 27 towns, while CESTAT has 16 Benches. Maybe CESTAT should have at least 32 Benches, if we ever hope to clear those pending cases. Just constituting Benches is not enough; the Government should appoint Members as a large number of posts remain vacant. Though the Revenue has affirmed before the Allahabad High Court that six technical Members are appointed, this is nowhere near the solution. The CESTAT has a sanctioned strength of 33 Members and now there are only 22 working Members; four Members will retire this year. Unless the Government fills up the vacancies as and when they arise, vacant Benches will mockingly stare at the system.

The CESTAT President will retire in another two months. We don't know whether they have started the search for a new President. Keeping the office of the President vacant can cause severe damage to the institution.

CESTAT Member Gets Relief from CAT against eviction from quarters

A newly joined Member of the CESTAT has been allotted a residential accommodation in Delhi by the Director of Estates of the Ministry of Urban Development.

Recently, on 5.3.2015, the Government had taken a decision that Chairman and Members of Quasi-judicial bodies (like CESTAT) shall not be eligible for residential accommodation from General Pool in Delhi. It has been decided to create exclusive accommodation for Chairman and Members of Quasi-judicial bodies in Commonwealth Games Village Complex, New Delhi.

Maybe ignorant of this new policy, the Directorate allotted a house to the CESTAT Member from the General Pool. They reacted sharply and quickly. On 4.11.2015 they cancelled his allotment and on 13.11.2015, they gave him eviction notice. For the mistake of the Directorate, they wanted to evict the Member from his legitimately allotted accommodation.

The aggrieved Member approached the Central Administrative Tribunal (CAT). The CAT stayed the cancellation as well as eviction and posted the case for hearing on 7.1.2016.

On 7.1.2016, the Ministry was not prepared and the case is now adjourned to 10.2.2016.

This is the way, an Hon'ble Member of the Tribunal, whom we call Lordship, is treated by a Department of the Government. The might of the Government does not leave judges. If a Member of the Tribunal has to go round lawyers and courts to be allowed to stay in the house allotted to him, how can he peacefully discharge his duties as a Tribunal Member? This perhaps amounts to contempt of court on the part of the concerned babu in the Ministry of Urban Development.

Black Money Outflow from India 33 Lakh Crores

IN its recent report, Illicit Financial Flows from Developing Countries: 2004- 2013, Global Financial Integrity states that during the period 2004-13, the illicit financial outflow amounted to 510,286 Million US Dollars - that's about 35 lakh crore rupees - more than the budgets of all the States in India put together.

This is only a conservative estimate as the Study did not cover misinvoicing involving services trade.

The Study reports,

"The primary tool for transferring IFFs is trade misinvoicing-according to this report, trade misinvoicing accounted for 83.4 percent of measurable IFFs on average, an average of USD 654.7 billion per year. The misinvoicing of trade is accomplished by misstating the value or volume of an export or import on a customs invoice. Trade misinvoicing is a form of trade-based money laundering made possible by the fact that trading partners write their own trade documents, or arrange to have the documents prepared in a third country (typically a tax haven), a method known as re-invoicing. Fraudulent manipulation of the price, quantity, or quality of a good or service on an invoice allows criminals, corrupt government officials, and commercial tax evaders to shift vast amounts of money across international borders quickly, easily, and nearly always undetected.

Cash transactions, same-invoice faking, misinvoicing in services and intangibles, and hawala transactions are simply not registered directly in available economic data. Thus, we characterize the estimates presented here as likely to be very conservative.

Illicit financial flows from developing countries are largely facilitated by continued opacity in the global financial system. This opacity reveals itself in many well-known ways: tax havens and secrecy jurisdictions, anonymous trusts and shell companies, bribery, and corruption. There are countless techniques to launder dirty money, including the misinvoicing of trade, which is used to shift proceeds of criminal activity across national borders."

During the reported period, India must have received about 20 lakh crore in FDI and what we lost must be more than double.

Of course India is not the top loser. We rank fourth. China, Russia and Mexico are ahead of us in the top three positions.

The President of (GFI) says,

Research shows that developing countries collect significantly lower levels of tax, as a percentage of GDP, than do wealthier states. This will need to change under the current circumstances and with the high bar established in the two development agreements. One way for poor states to collect more revenue is to close the so-called "policy gap." That is, put in place laws and regulations that close loopholes, eliminate contradictory statutes, and establish new categories of activity to tax in order to make the revenue system more efficient and fair. The second way to collect more revenue is to close the "compliance gap." For this governments must make efforts to improve the technical capability and efficiency of various departments to ensure proper amounts of tax are paid by those who owe it. The findings of this report are extremely valuable to governments seeking to close the compliance gap.

Until Tomorrow with more DDT

Have a nice day.

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