TIOL-DDT 2467
31.10.2014
Friday

THE Government is feeling the heat and when the heat is more fiscal than political or judicial, it is for the Finance Minister to provide the coolant. Department of Expenditure has issued fresh guidelines on Expenditure Management. Obviously, the Expenditure Department is not to spend money, but to ensure that money is not spent - at least not spent unwisely. And they do this exercise every year.

Highlights of the new Guidelines:

- Additional expenditure over and above the prescribed approved ceiling for existing schemes will not be permitted.

- Every Ministry/Department is to effect a mandatory 10% cut in non-Plan expenditure.

- A 10% cut in the budgetary allocation for seminars and conferences has been imposed. The practice of holding meetings and conferences at five star hotels is to be discontinued.

- No purchase of vehicles except against condemnation.

- Domestic and Foreign Travel expenses - no First class and preferably have a video conference instead of travel. (The travel costs of senior babus are enormous. Just imagine an executive class ticket from Delhi to Chennai would cost about 45000 rupees while an ordinary class would cost 6000 rupees. Is there any justification for anyone to spend 40,000 rupees more for a two hour flight? And in these days of hi-tech communication facilities, what is the need for anyone to really travel?)

- No creation of new posts.

- Balanced Pace of Expenditure: Don't be frugal throughout the year and spend lavishly in March.

Will all these really help or rather who is going to follow this? More meetings will be held to discuss these matters and more money wasted on travel and paper! In any case, how much money is going to be saved in all these exercises?

But the Government should set an example in austerity in use of petro products. There was a time when even Supreme Court judges used to travel in pool cars. There is simply no logic in each officer using a separate car for coming to office and going home. You stand in front of any Chief Commissioner's office in the evening and you can see at least fifty cars leaving with just one passenger inside - right from Assistant Commissioner to Chief Commissioner, they all have individual cars, clogging the roads and wasting precious fuel. Why can't they share the cars? Be comfortable, but at least three officers can travel in one car. And every minister has a convoy of at least four vehicles.

MoF Dept. of Expenditure, Office Memorandum, Dated: October 29 2014

Should Customs Assistant Commissioners wear uniform?

NOT really an elementary question my dear, as DDT found out the hard way.

A Superintendent who was promoted last week as an Assistant Commissioner of Customs called me and informed me that he was going to call on his Commissioner in full uniform.

I asked him what the uniform was for the Assistant Commissioner (of Customs)? He was surprised and told me that he would wear whatever is the uniform. But what is it?, I insisted. He said that the just retired Assistant Commissioner had promised to give him the uniform articles. I called up the just retired Assistant Commissioner who told me that an Assistant Commissioner from Mumbai Air Customs gave him the uniform articles. I called up an Assistant Commissioner in Mumbai Air Customs and asked him whether there is any prescribed uniform for the Assistant Commissioner and whether he wears one. He didn't like my questions and told me that he was new to the job and I should ask the Commissioner.

This was getting curious.

I called up several Commissioners and Assistant Commissioners in several airports. Noted journalist Tavleen Singh recently wrote that she sent a text message to Finance Minister Arun Jaitley to call her. And he called her promptly. But a Commissioner is not an ordinary Finance Minister and I am no Tavleen. Getting through to the Commissioners was really as difficult as getting the Service Tax registration cancelled. I had to answer a number of questions from the protective private secretaries. Most of the Commissioners were busy in meetings but it must be fairly admitted that many of them were kind enough to call back. But the opinion was unanimous. Nobody knew whether a Customs Assistant Commissioner should wear a uniform.

All the Assistant Commissioners I spoke to avoided the direct question, "do you wear a uniform?", while one conceded that he wears one during protocol. I asked him to describe the uniform and he said he was not authorised to talk to me. Another Assistant Commissioner who wore a uniform told me that he did not know the authority which authorised him to wear a uniform - he just walked into the shop that sells uniform articles and bought all that the shopkeeper gave him.

The Commissioners too were not sure whether there is a prescribed uniform - some promised to call me back with the information, but were not available when I called them.

But then can I just leave the uniform confusion? And even one of our eminent commentators, Gururaj is in favour of a uniform for Customs, though not for Central Excise.

The Kolkata Custom House in February 2012 issued an Office order elaborating the uniform pattern as per the Preventive Manual. Where can I get this sacred manual? The DRI released a draft preventive manual more than four years ago and that draft is yet to be finalised even though the draft was approved by CBEC. The earlier manual is perhaps of 1897. And nobody seems to have a copy of that. An unauthenticated version of the Manual is doing the rounds. The latest draft manual is totally silent about uniforms.

This manual (the unauthenticated one) describes that the Uniform for Superintendents and Preventive Officers has been designed on the pattern of the Navy and explains each part of the uniform. For example:

Epaulettes: The epaulettes prescribed for Preventive Officers is 2 stripes in golden braid of 1/2 inch thickness along with golden Ashoka Pillar in the middle and a golden brass half-ball button with Ashoka emblem at the pointed end on a black background. The words ‘Customs' shall be inscribed in golden braid at the broad end. The Preventive Officers who have completed 10 years of continuous service in the grade shall wear 3 stripes on the epaulettes. [Note - for deployments at the International Airports, the background of epaulettes shall be blue]

The uniform for the Preventive Superintendent is identical to that of Preventive Officer except that the number of stripes on the epaulettes shall be four and the colour of the badge shall be silver white.

And there is no mention about the uniform for the Assistant Commissioner!

This is a strange department. There is a prescribed uniform for the Central Excise Assistant Commissioner, but when the same officer works as a Customs Assistant Commissioner, he has no uniform, or nobody knows whether he has a uniform or he wears one that is supplied by the all-knowing shopkeeper!

Long ago, I asked Swamy Chinmayananda, "why do all sadhus wear the saffron uniform and who prescribed that dress code for them?"

The Swamiji replied that it is only for identification and there is no manual as such.

CBEC Chief Shanti Sundharam retires today

CBEC Chairperson Shanti Sundharam retires today after being in the Board for three years, nine months of which was as Chairman. In these eventful nine months, though she was not very high in the popularity rating, she could achieve certain things to be proud of. The large scale promotion of Superintendents as Assistant Commissioners is an unbreakable record.

She was the one who discovered that the Board has financial autonomy. She was liberal in expressing her views and when she said that she (Board) was not consulted on GST, the voice echoed in Parliament. She also said, "The Department of Revenue doesn't always consult CBEC. There should be appropriate consultation so that legal, fiscal and administrative issues are sorted out at the central level."

On transfer of data to GST-N, she said, "CBEC had done a pilot project in which we got data from some of the states and our database of dealers and assesse. GST-N wanted to take-over this pilot project from CBEC. That was part of the Cabinet note too but at that time nobody had gone into what it contained. The asset is not the hardware; the asset is what is inside the server, and that is database. It is kept by us in a fiduciary capacity. Where is the legal authority of the department to hand it over to someone else? Taxpayers can take me to court for that."

She wanted to introduce an invoice verification scheme for CENVAT Credit; she stated publicly that 30% interest in Service Tax was only for tax collected and not paid (wrong - notification does not say so).

She was strongly against the setting up of NACEN at Hindupur.

A packed tenure indeed - Wish you a happy retired life Madam.

CBDT Chief Chowdary too

THE CBDT Chairman KV Chowdary also retires today after a three-month tenure as Chairman. Addressing a meeting in Mumbai recently, Chowdary said,

- If industry expected retrospective amendments to be undone, it was too much of an expectation.

- Should we allow multinational enterprises to not pay tax in any jurisdiction?

- Should a developing nation like ours not gain tax from appreciation of Indian assets?

- Shouldn't MNCs accessing large markets also contribute to the economy of those countries?

- When a law is evolving, some cases are part of the learning process.

- Some of the large corporates have deducted tax and not remitted to government account. Amounts involved are quite huge.

- For appeals filed on similar issues in different jurisdictions, Department is in the process of making a database to bring uniformity

- For cases where two views are possible based on first appeals authority order, a Department View Committee has been formed. Department View Committee will ensure that we are not blowing both hot and cold.

It is heard that Chowdary is being immediately appointed as an advisor in the Ministry to assist the Special Investigation Team on Black Money.

Happy re-tyred life Sir.

Jurisprudentiol-Monday's cases

Service Tax

Exemption for maintenance and repair of Navy Vessels - Just because appellant paid Service Tax on portion of gross receipts, exemption cannot be denied: CESTAT

THE decision of the Commissioner that appellant is not eligible for the benefit of notification just because they happened to collect service tax on a portion of the gross receipt and paid it to Government, renders them ineligible for exemption is totally unfair and incorrect. Just because an assessee shows some amount as service tax, collects the same and pays it to Government, if the whole activity is not liable to tax, just because he paid the tax would not render him ineligible for such exemption. Therefore the decision taking a view that exemption notification benefit is not available to the appellant in respect of services rendered to Indian Navy cannot be sustained.

Income Tax

Whether system software which enables assessee to conduct business more efficiently, forms part of profit-making apparatus and thus is capital expenditure - NO: ITAT

THE Assessee-company, engaged in the business of manufacturing of piston ring, casting ring, gaskets and semi finished plastics, furnished its return of income disclosing income. During the assessment proceedings, on a perusal of the Tax Audit Report, the AO found that an amount was shown as expenditure of capital nature, that out of the said expenditure a certain sum was added back to the total income of the assessee by itself and the remaining sum was claimed by it as revenue expenditure. After considering the explanation of the assessee in this regard, the AO held that the balance amount was capital in nature and could not be allowed as revenue expenses.

The issue before the Bench is - Whether system software forms part of the profit-making apparatus of the assessee where the business of the assessee was that of manufacturing of piston ring, casting ring etc. and the Software was an enterprise resource and it facilitated the assessee's trading operations or enabled the management to conduct the assessee`s business more efficiently or more profitably. NO is the answer of the Tribunal.

Central Excise

Rule 5 of CCR, 2004 - It is clear that it would not be possible for an assessee to get double benefit under new FTP 2009-14 - Appellant is entitled to claim refund of CENVAT credit accumulated & unutilised on export of finished goods which appellant was not able to utilise otherwise: CESTAT

THE appellant filed claims for refund of credit of duty paid on PTA & MEG used in the manufacture of PSF exported during the period July 2009 to December 2009 under Rule 5 of CCR, 2004.

A SCN was issued proposing rejection of the refund claim on the allegation of duty free imports and double benefits.

See our Columns Monday for the judgements

Until Monday with more DDT

Have a nice weekend.

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