TIOL-DDT 2748
18 12 2015
Friday

DDT 2744 14 12 2015 reported that CBDT has enhanced the monetary limits for filing appeals by the Department before the Tribunal and High Courts. This was done with retrospective effect for pending appeals. DDT asked, "Will CBEC follow suit?".

CBEC did.

CBEC issued an instruction yesterday amending the earlier instruction in F.No.390/Misc./163/2010-JC, dated, 17.08 2011

Appeals have to be filed in the following cases irrespective of the monetary limits:

a) Where the constitutional validity of the provisions of an Act or Rule is under challenge.

b) Where Notification/ Instruction/ Order or Circular has been held illegal or ultra vires.

c) Classification and refunds issues which are of legal and/or recurring nature.

The above clause (c) was added yesterday.

The Board has not clarified whether these instructions are applicable for pending cases, as done by CBDT.This issue by itself could generate further litigation. Without waiting for litigation to mount, CBEC should clarify that the limits apply to pending litigation also. Please don't create litigation on litigation.

CBDT has directed that Pending appeals below the specified tax limits may be withdrawn/not pressed. Based on the CBDT instruction dated 10.12.2015, the ITAT, Ahmedabad passed an order on 15.12.2015 dismissing 251 Revenue Appeals in one stroke on the single ground that the tax effect in each of the appeals was less than 10 lakh rupees. The ITAT was all praise for the CBDT observing,

"we need to take note of a very pragmatic initiative, taken by the Central Board of Direct Taxes last week, for reducing litigation in direct taxes. Vide circular no. 21/ 2015 dated 10th December 2015, the Central Board of Direct Taxes has, inter alia , announced that, subject to certain exceptions- which are not relevant in the present context, henceforth, no departmental appeals will be filed against relief given by the CIT(A), before this Tribunal, unless the tax effect, excluding interest, exceeds Rs 10,00,000. What is even more important is that not only that such a taxpayer friendly measure will be implemented in all future tax litigation, even the pending appeals, wherever the tax involved in the appeals does not exceed Rs 10,00,000, shall not be pressed or withdrawn. In effect thus, irrespective of the year to which the departmental appeal before the Tribunal pertains, as long as such an appeal is pending before the Tribunal, this will be a legal nullity.

The ITAT further observed,

It is indeed heartening to note that in one stroke, the Government has not only prevented, but withdrawn, thousands of appeals before this Tribunal and before Hon'ble High Courts. In Ahmedabad benches and E-Court alone, as a result of this laudable initiative, almost 1,500 such appeals are listed for hearing this week, and will hopefully go off ITAT pendency dockets. We are sure this will allow everyone to concentrate on really important work and contribute to speedier resolution of serious and more important tax litigation. In an environment in which retrospectivity was attached only to the taxation and not to tax reliefs or concessions, such a paradigm shift in approach is unprecedented and possibly a game changing initiative heralding a new era in thoughtful litigation management .

CBEC and CESTAT should follow the example set by CBDT and ITAT.

The other day, I saw in the CESTAT a DR fairly concede that a part of the demand was not sustainable and if that amount is deducted, the rest of the demand was less than 5 lakh rupees and so below the monetary limit.

Also see DDT 2674 dt. 31.08.2015 & 2015-TIOL-2512-HC-MAD-ST.

CBEC Instruction in F. No.390/Misc./163/2010-JC., Dated: December 17 2015

CBEC and CBDT Merged?

THERE was panic in the Revenue corridors - have they merged the two Super Boards? It needs a little explanation.

The Government's expenditure is voted by Parliament for various departments under ‘demands for grants'.

The Demand No. 43 is for the Department of Revenue and the expenditure takes care of Revenue Headquarters, Central Economic Intelligence Bureau, Financial Intelligence Unit (FIU-IND), Principal Chief Controller of Accounts, CBDT, Principal Chief Controller of Accounts, CBEC, Pay & Accounts Office (Revenue), Competent Authorities under Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act and Narcotics Drugs & Psychotropic Substances Act and Committee of Management. Provision is also made for implementation of Value Added Tax (VAT) Scheme including activities to improve VAT implementation, phasing out of Central Sales Tax (CST) and setting up of Tax Information Exchange System (TINXSYS), Grant-in-Aid to the Empowered Committee (EC) of State Finance Ministers for meeting administrative/miscellaneous expenses and setting up of Income Tax Overseas Units in various countries.

Demand No. 44 is for ‘Direct Taxes'. The Demand provides for the requirement of Income-Tax Department, which administers all direct taxes levied and collected by the Central Government, namely, taxes on income (including income of the corporate sector), wealth tax, security transaction tax etc. For the purpose of collection, the country has been divided into charges. The Department has also got separate Directorates for scrutiny of cases involving large scale evasion, inspection, research, statistics and publications. The expenditure also relates to purchase of ready-built office buildings and ready built residential buildings in respect of Direct Tax organization. Expenditure voted for 2015-16 amounts to 5406 crores.

Demand No. 45 is for ‘Indirect Taxes'. Expenditure voted for 2015-16 amounts to 5664 crores. Demand for grants include expenditure for:

(i) Establishment and other expenditure of Customs, Maintenance of Anti-Smuggling Equipments, Modernization of Chemical Laboratory etc. (ii) Payment of proportionate charges to the Central Excise Department for customs work done by it at Minor Ports. (iii) Payment of commission charges to Postal Department towards the cost of collection of Customs Duty on inward foreign letters and parcels. (iv) Contribution towards Customs & Central Excise Welfare Fund and Customs Special Equipment Fund for acquisition of anti-smuggling equipments etc. (v) Establishment of Central Excise Department and its other expenditure for collection of Union Excise Duties and Service Tax. (vi) Recovery of proportionate charges from Customs Department for the Customs work performed at various Minor Ports by Central Excise Department. (vii) Maintenance and Repairs of Departmental residential accommodation.

Now the Demand Numbers 44 and 45 are merged into Demand No. 43 of Department of Revenue. That is there would be only one demand for grants for the Revenue Department and no separate grant for CBEC and CBDT. Cause enough to worry?

MoFDept of Economic Affairs Office Memorandum No. F. 2(41)-B(CDN)/2015., Dated: December 09, 2015

Year End Review: Highlights of Achievements of the Department of Revenue - Denial of Balance CENVAT Credit?

The Department of Revenue has published the highlights of its achievements. On the Central Excise side, the Press Note mentions, in order to achieve the objective of minimum government and maximum governance to improve the ease of doing business, the following measures have been taken:

(i) Reduction in number of levies: Education Cess and Secondary & Higher Education Cess on excisable goods have been subsumed in Basic Excise duty. It is not mentioned that the CBEC has most unfairly, unjustly and illegally denied the utilization of the balance of CENVAT Credit of education cess available with the assessees. And leading to a mega litigation. The achievement on the Service Tax side claims, “Cenvat Credit Rules, 2004 have been amended so as to allow credit of Education Cess and Secondary and Higher Education Cess (subsumed under Service tax with effect from 1st June, 2015) paid on inputs/input services and capital goods to be utilized for payment of service tax in specified circumstances. ”

(ii) Electronic payment of duty: The facility of electronic payment of duty was extended to all the Central Excise assessees. But isn't this mandatory? The poor assessees were never told that this was a facility.

(iii) Time limit for taking CENVAT: Time limit for taking CENVAT Credit of duty/tax paid on inputs and input services was increased from six months to one year. But why restrict it to one year?

(iv) Payment of arrears in installments: Instructions have been issued to allow Chief Commissioners, Commissioners to allow payment of arrears in installments. Will the Government reject arrears paid in installments, if not permitted by the Commissioner?

Customs - New Exchange Rates from Today

CBEC  has notified new exchange rates for Imported Goods and for Export Goods with effect from 18th December 2015. The USD is at 67.20 Rupees for imports and 66.20 Rupees for exports.

Notification No. 144/2015-Cus (NT)., Dated: December 17, 2015

Until Monday with more DDT

Have a nice weekend.

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