TIOL-DDT 1946
20.09.2012
Thursday

BY an order dated 15 01 2009, the Bombay High Court dismissed 11 appeals filed by the Income Tax Department, as the appeals were horribly delayed by 411 to 883 days. The High Court had observed,

In performance of their functions, public officers or public servants have the duty to act judiciously, fairly and expeditiously. An officer can hardly justify that a file would lie on his table for months or days together and he would not act on the said file just because he claims to be preoccupied.

It is neither expected nor it can be a normal conduct of a public servant or a litigant that they would keep the files unmoved, unprocessed for months together on their tables.

Some extent of public accountability and responsibility will have to be the basis for looking into such conduct. The consequences of such inordinate delay can be very fatal besides rendering remedy barred by law also leads to loss of public exchequer. This aspect of the matter introduces larger responsibility and consciousness in the conduct of the affairs of the revenue department. Certain amount of leverage or relaxation for departmental functions would be permissible, but this cannot be extended to the limits protecting negligence and irresponsibility.

Wherever there is higher public revenue, greater is the responsibility to act with utmost expeditiousness. It cannot justify the conduct that you sleep over and ignore your statutory rights for years and then take up the plea of public revenue. The Court can also not completely ignore the interest of the assessee who might have succeeded in the previous proceedings leading to the filing of the Appeal.

The only apparent cause for such serious delay is callous, irresponsible style of functioning in the Department. The principle of public accountability makes the concerned officers responsible and liable for such omission. (Please see 2009-TIOL-98-HC-MUM-IT)

Naturally, the Department is aggrieved by the order of the High Court and has appealed to the Supreme Court -after 694 days.

The Supreme Court was not exactly happy about the enormous delay and on 2nd July 2012 asked the department to explain the delay and also as to what steps the Department intends to take to remedy such situations, which have been recurring in matters involving huge amounts.

Last week, on 14.09.2012, the Supreme Court in an order, expressed its dissatisfaction with the affidavits filed and asked the ASG whether the Department intends to hold a departmental inquiry for the delay. The Supreme Court observed,

In large number of cases, we find a peculiar phenomenon. In cases, where huge revenue/demand from the Department is involved, invariably, there is inordinate delay in filing appeals before the High Court under Section 260A of the Income Tax Act, 1961, and in filing special leave petitions before this Court. We do not know the reason why such inordinate delays take place only in matters of stakes. This aspect needs to be looked into. This aspect has been brought to the notice of the learned Attorney General as well as the Ministry of Law in the past. This is one such case. Even in the past, this Court has raised a similar query. Moreover, once a matter is dismissed on the ground of delay, it has a ricocheting effect.

In the above circumstances, we direct the Registry to forward a copy of this Order to the Hon'ble Finance Minister and Hon'ble Law Minister for doing the needful at the departmental level so that such cases of revenue leakages do not recur.

The case was posted for the ASG's Statement on 17th September 2012.

On 17th September, the Registry reported that the Court's order was delivered to the Hon'ble Finance Minister and Law Minister vide Registry's forwarding letter 15th September, 2012 and acknowledgment of which is enclosed.

The Court has directed the petitions to be posted on 24.09.2012.

It is to be seen how the Government will evade the Court on 24th September! The Blame Game is on. It seems the CBDT is already armoured - they want to blame the Attorney General for the delay.

In similar matters, the CBEC seems to be much better. They invariably try to appeal within time; otherwise, they don't file an appeal at all.

Please see the Supreme Court Order

Also, please see today's CobWeb

Customs - Exemption for LPG Imports by PSUs

AS per Sl. No 141 to the Table to Notification No. 12/2012-Cus dated 17.03.2012, propane, butane and LPG (LPG is a mixture of propane and butane) imported for supply to household domestic consumers at subsidised prices under the public distribution system (PDS) Kerosene and Domestic LPG Subsidy Scheme, 2002, as notified by the Ministry of Petroleum and Natural Gas, vide notification No.P-20029/18/2001-PP, dated the 28th January, 2003" attract nil rate of duty.

Now, the above coloured portion is substituted with, "by the Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited or Bharat Petroleum Corporation Limited for supply to household domestic consumers".

Notification No. 55/2012 -Cus , Dated: September 18, 2012

Central Excise - Exemption for LPG Supplies by PSUs

SIMILARLY, as per Sl. No 81 to the Table to Notification No. 12/2012-Cx dated 17.03.2012, propane, butane and LPG for supply to household domestic consumers at subsidised prices under the public distribution system (PDS) Kerosene and Domestic LPG Subsidy Scheme, 2002, as notified by the Ministry of Petroleum and Natural Gas, vide notification No.P-20029/18/2001-PP, dated the 28th January, 2003" attract nil rate of duty.

Now, the above coloured portion is substituted with, "by the Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited or Bharat Petroleum Corporation Limited"

Notification No. 36/2012 -Cx , Dated: September 18, 2012

Customs - EOU Exemption - Goods rejected by Foreign Buyer

AS per Sl. No 15 of the Annexure-I of Notification No. 52/2003-Cus dated 31.03.2003, goods reimported by the EOUs within one year from the date of export due to failure of the foreign buyer to take delivery, are exempted from Customs duty.

Now, it is clarified that the goods for which there is failure of the foreign buyer to take delivery shall include goods rejected by the foreign buyer.

Notification No. 53/2012 -Cus , Dated: September 13, 2012

Central Excise Commissioner Challenges Transfer - CAT Grants Stay

AFTER the Income Tax Commissioners, it is now the turn of the Commissioners in CBEC to challenge their transfer orders. By a transfer Order dated 12.09.2012, the CBEC transferred Mr.BN Singh, Commissioner of Central Excise, Lucknow to Allahabad as Commissioner (Appeals). Mr Singh is before the Central Administrative Tribunal with the following grounds:-

(1) As per professed policy dated 5.4.2011 officers having less then three years of service before superannuation may be considered for posting at the place of their choice, as far as possible, as envisaged in para-9.4. He was working as Commissioner of Appeals, Central Excise, Kanpur w.e.f. 25.8.2008. Since the applicant had only three years to retire, he gave the choice stations namely, (1) Kanpur, (2) Mumbai, (3) Nasik, (4) Lucknow and (5) Pune. Accordingly, he was given the4th choice and was posted at Lucknow as Commissioner, Central Excise vide order dated 28.5.12.

(2) In the same transfer policy, categorization of posts of sensitive and non-sensitive has also been made according to which the post of Commissioner is a sensitive post which the applicant is now holding. Out of 30 years of service, the applicant had been posted on non-sensitive post for about 22 years. As per para-7.2 of the policy, ordinarily, the tenure of an officer on a sensitive post shall be two to three years at one stretch. But, in breach of these guidelines, also he is being shifted within 4 months and that too on a non-sensitive post of Commissioner Appeals, Central Excise, Allahabad, which is also not one of the stations of his choice.

(3) Under para-2-(g) of the policy, all those transfers orders are required to be issued by 30th April and in any case, not later than 31st May of the year. But, in the present case, this norm has also been violated and the transfer order has been passed in the month of September, 2012 and again there is not even a whisper about it.

The CAT has stayed the transfer order till the next date of hearing on 02.11.2012.

What is a sensitive posting? Why is the post of Jurisdictional Commissioner sensitive and that of Commissioner (A) non-sensitive?

Just yesterday, a Commissioner told me that the Chairman had written about him that he was an exceptionally outstanding officer and he should be given a suitable posting. Within a few days, he was posted as Commissioner (Appeals)!!

Mails from CBI - Be careful

CERTAIN instances of some e-mails with malicious and misleading content purported to be sent from CBI have come to the notice of Central Bureau of Investigation. The Sender(s) falsely claim that Central Bureau of Investigation is monitoring financial transactions of individuals and authenticating/proposing to take action on such transactions.

Some IDs from which these malicious & misleading e-mails have been sent in the recent past are:

statepoliceservice@gmail.com
cbi.policedesk.india@gmail.com
cbi-desk@indiapolice.in
csa@cbi.gov.in

The general public is cautioned that Central Bureau of Investigation does not send such mails, and they should not respond to such e-mails.

Anyone receiving such e-mail(s) should bring it to the notice of the Central Bureau of Investigation, New Delhi at e-mail ID: information@cbi.gov.in

Transfer of PANs of Non-Resident Assessees

JURISDICTION over non-resident assessee lies with the AOs under administrative control of DGIT (Intl. Tax). It has been observed by DGIT (Intl. Tax.) that PAN of many non-resident assessees are lying with the AOs who do not have jurisdiction over them.

PAN not lying in correct jurisdiction poses many operational and administrative difficulties, e.g. in some cases where AAR report is required to be sent and if, PAN is not in correct jurisdiction, the situation often leads on to incorrect and erroneous report. Similarly, AO cannot view the e-filed returns of an assessee if the PAN is not with them. As a result they cannot examine their returns for selection of scrutiny, survey, TDS monitoring, grievances handling etc.

CBDT Chairman has directed that all such PANs should be transferred by 24.09.2012.

F.No. Addl. DIT/ Intl. Taxation/2012-13; Dated: September 19, 2012

Correction Fluid - Inhaled By Street Children - Government Directive

A Notification has been issued by the Ministry of Health & Family Welfare, Government of India in the Gazette of India Extraordinary, Part l, Section 1, No. 163 dated 17.7.2012 on the directions of the Punjab & Haryana High Court, Chandigarh in CWPNo.1332 of 2010 - Vyakti Vikas Kender Vs. Union of India and others for regulating the manufacture/trade of correction fluid/thinner liquid, which are chemical substances generally used in offices, and other similar chemical substances. These have been reported to being widely misused by children/street children as intoxicating substance/drug by inhaling them to get stimulating effects like drugs. All State/Union Territory Governments and various Central Ministries/Departments have been requested to take immediate necessary action for enforcement of the measures contained in the said notification, by sensitizing the industries producing them and the traders/shop distributing/selling them. The measures mentioned in the said notification to be enforced include:

(i) Banning of production of bottled Correction Fluids as well as bottled Thinners, of any chemical composition, both for ink erasing purposes as well as for use as Nail Polish removers and similar other purposes for retail sale.

(ii) Banning of sale of; bottled Correction Fluids as well as bottled Thinners, of any chemical composition, both for ink erasing purposes as well as for use as Nail Polish removers and similar other purposes.

(iii) Permitting sale of Correction Fluids as well as Thinners, of any chemical composition, both for ink erasing purposes as well as for use as Nail Polish removers and similar other purposes in the form of pens or similar devices which allow limited amount of the chemicals to come out of those devices when used.

(iv) Mandatory warning should be made on the application devices (pens or otherwise) of correcting fluids/thinners regarding the effects on health on inhalation of vapor/consumption of the chemicals contained therein.

Jurisprudentiol – Friday's cases

Service Tax

Refund - Notfn. 17/2009-ST - Supplier discharging service tax liability on ‘documentation charges' under category of ‘Clearing & Forwarding Agency service' - officers in-charge of appellant's factory (recipient of service) have no jurisdiction to deny refund claim on ground that ‘documentation charges' are not covered under 'C&F Agency service' - Appeal allowed with consequential relief: CESTAT 

THERE is no dispute about the fact of service tax liability having been discharged on the documentation charges under the category of Clearing and Forwarding Agency. Suppliers invoice submitted by the appellant clearly reveals this fact and a copy of the same is available in the records of the case. If that be so, the officers in charge of the appellants factory (who is the recipient of the services) has no jurisdiction to deny the refund claim on the ground that the documentation charges are not covered under Clearing and Forwarding Agency Service. The denial of refund claim of the service tax paid on account of documentation charges to the appellant is not sustainable in law.

Income Tax

Whether when assessee incurs certain expenditure on an aborted business, to claim it as part of existing business, assessee is necessarily required to satisfy that new business had common elements like unified administration, resource sharing and common funding - YES: HC

THE issues before the HC are - Whether when the assessee incurs certain expenditure on an aborted business venture, to claim it as part of the existing business, the assessee is necessarily required to satisfy that the new business had common elements like unified administration, resource sharing and common funding - Whether when the new business was not even permitted and the JV partner is unknown, even then expenditure incurred in this connection can be claimed as expenditure of the existing business - Whether the liability arising out of the Provident Fund, ESI arrears etc can be allowed as deduction u/s 43B if the liability accrued in the AY though the mode and manner of payment was deferred. And the verdict partly goes in favour of the Revenue.

Central Excise

Kraft board - Notification 4/2006, sr. no. 90 as amended by notfn. 4/2008 prescribing Nil rate of duty is a conditional exemption and not an absolute one - assessee had before 01.03.2008 chosen to pay duty in terms of sr. no. 90 and after amendment paid duty in terms of sr. no. 93 as applicable to all goods - stay granted: CESTAT

THERE was a time when demands used to fly in the Central Excise formations for denying the benefit of an exemption notification claimed by a manufacturer. Those were the in the early nineties. In the recent past, since the month of May, 2005 to be precise, there is a change in this mentality - nowadays show cause notices are issued asking the assessee to avail the exemption notification and not to pay duty. Not that these SCNs are without any duty demands - they are, in fact, in double doses - first is the demand for denial of CENVAT credit availed and the second is in terms of section 11D of the CEA, 1944. Obviously, manufacturers choose to pay central excise duty by utilizing the CENVAT credit to recover the duties suffered on inputs!

See our columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a Nice Day.

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