TIOL-DDT 2799
03 03 2016
Thursday

THE CBDT has amended the Income Tax Rules to stipulate that appeals to the Commissioner (Appeals) has to be made in Form 35 electronically. Documents accompanying the appeal should also be filed electronically. A new Form 35 is also prescribed.

In the appeal, the Statement of Facts has to be presented in not more than 1000 words. Each ground of appeal should also not exceed 100 words. It is not known what would happen if the grounds are more than 100 words. Will the appeal be rejected? Perhaps the System will not accept more than 100 words.

When will CBEC follow suit?

CBDT Notification No. 11/2016., Dated: March 01 2016

Income Tax - guidelines for stay of demand at the first appeal stage

CBDT has issued modified guidelines to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assessee as a pre-condition for stay of demand disputed before CIT (A).

In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, except in the following situations:

(a) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount higher than 15% is warranted (e.g. in a case where addition on the same issue has been confirmed by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on credible evidence collected in a search or survey operation, etc.) or,

(b) the assessing officer is of the view that the nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier years or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee. etc.), the assessing officer shall refer the matter to the administrative Pr. CIT/CIT, who after considering all relevant facts shall decide the quantum/ proportion of demand to be paid by the assessee as lump sum payment for granting a stay of the balance demand.

In a case where stay of demand is granted by the assessing officer on payment of 15% of the disputed demand and the assessee is still aggrieved, he may approach the jurisdictional administrative Pr. CIT/CIT for a review of the decision of the assessing officer.

The assessing officer shall dispose of a stay petition within 2 weeks of filing of the petition.

CBDT Office Memorandum in F.No.404/72/93-ITCC., Dated: February 29 2016

Promotion of Payments through Cards and Digital Means

GOVERNMENT wants to provide access to financial payment services to every citizen along with ability to conduct card/digital transactions and digitalize Government collections by equipping each collection point with a method to accept card/ digital payments. Government has issued detailed guidelines for this goal.

1. Department of Electronics & Information Technology shall formulate an action plan to ensure Government Departments/Organisations introduce appropriate acceptance infrastructure and facilitate collection of all revenue, fee, penalties etc., through card/ digital means beyond a specified threshold, through 'PayGov India' or other mechanisms.

2. Department of Electronics & Information Technology shall develop 'Pay Gov India' as a "single unified portal" across central, state governments and their public sector undertakings for collection purposes.

3. Department of Revenue shall take steps to remove double taxation, if any, on service tax currently paid on MDR by the acquiring bank and on interchange fee by the issuing bank.

4. Department of Revenue/Department of Economic Affairs/Department of Financial Services shall grant tax rebates/incentives or introduce mechanisms for cash back/lottery or any other measures to incentivise transactions through cards and digital means.

At present, the fee for filing appeals before CESTAT, is to be paid by Demand Draft in the name of Assistant Registrar payable at New Delhi. This is a very cumbersome process, even for the CESTAT to monitor the DDs and their validity periods. Why can't they allow online payment?

MoF Department of Economic Affairs Office Memorandum in F.No-01/02/2015-Cy.I., Dated February 29 2016

Useful Budget clarifications

IN the midst of the Budget Making exercise, the TRU also found it prudent to come out with some clarifications and make a mention in its D.O letter rather than issuing a Circular and making a big issue of it.

DDT feels that these may go un-noticed if not highlighted.

Here are some of them as appearing in D.O.F. No. 334/8/2016-TRU dated February 29, 2016.

Clarification by TRU

Central Excise

++ A doubt has been raised with reference to the area based excise duty exemption for the North Eastern Region including Sikkim vide notification No.20/2007-CE dated 25.04.2007, as to whether an industrial unit which is presently availing of the said excise duty exemption, again undertakes substantial expansion by not less than 25% before 31.03.2017 and satisfies the conditions as stipulated under Para 5 and Para 6 of the said notification, will again be eligible for excise duty exemption from such expanded capacity with effect from the date commencement of commercial production for a further period of 10 years. It is clarified that in absence of a provision to the contrary, the area based excise duty exemption presently available to the North Eastern States including Sikkim vide notification No.20/2007-CE dated 25.04.2007 [for which the sunset clause is 31.03.2017] will be available to an existing unit on second substantial expansion as well, provided that the concerned unit commences commercial production from such expanded capacity not later than 31.03.2017. [Page 34, Sr. no.3]

Netizens may also see Is there rampant misuse of Notification Nos 49 & 50/2003-CX?

++ Notification No.108/95-CE, dated 28th August, 1995 provides full exemption from excise duty to goods supplied to the projects financed by the UN or an international organization and approved by the Government of India subject to certification by the authorities concerned that the said goods are required for the execution of the said project. A doubt has been raised as to whether the benefit of excise duty exemption is intended to be restricted to direct supplies by the contractor to the project. In this regard, it is clarified that the exemption from excise duty, under notification No.108/95-CE dated 28.08.1995 is also available to sub-contractors for manufacture and supply of goods for or on behalf of the main contractor (who has won the contract for the supply of goods to the projects financed by the UN or an international organization and approved by the Government of India) for execution of the said project, subject to compliance of other specified conditions, if any. [Page 34, Sr. no.4]

The Madras High Court in the case of Caterpillar India Pvt. Ltd. - 2013-TIOL-562-HC-MAD-CX while dismissing the Revenue appeal against the CESTAT order - 2005-TIOL-423-CESTAT-DEL had observed -

"8. We do not find any justifiable ground to interfere with the order of the CESTAT based on a factual finding and there was no material placed by the Revenue on the allegations of the possible misuse of the goods for unintended purposes by the Sub-Contractors. Secondly, being the beneficial Notification issued in public interest and the project itself being executed fully by the Contractors as per the directions of the Project Implementing Authority, the fact that the machineries were not given directly to the project implementing authority but given to the agency executing the work in fact cannot go against the assessee's claim. Thus ultimately, as the machineries had been put in use by the sub-contractors, who were given the job of execution the claim for exemption cannot be denied. The use of the phrase 'supplied to the projects financed by the said United Nations or an International Organisation and approved by the Government of India' clearly shows that the condition for grant of exemption is supply of the goods towards the project and nothing beyond. …In the circumstances, we do not find any justification to introduce any condition or read in a restrictive manner."

In a similar case of Sunbeam Generators Pvt. Ltd. - 2015-TIOL-1146-CESTAT-MAD, the CESTAT had allowed the appeal of the assessee by relying upon the High Court order (supra).

Presumably, the aforementioned High Court decision has been gracefully accepted by the Board. Nonetheless, this clarification is a step in the right direction.

Incidentally, it is understood that the Supreme Court had on 1st March 2016, a day after the Budget, dismissed the Revenue Appeal in the Caterpillar case.

CESTAT President retires

CESTAT President Justice Goda Raghuram retires today after three years of distinguished service in the Tribunal.

When he was appointed in March 2013, DDT 2058 05.03.2013, wrote,

Justice Raghuram was heading the Tax Bench of the AP High Court for quite some time. A No-Nonsense Judge, Justice Raghuram had been a judge of the High Court for the last 14 years. His command over tax matters is commendable and he is recognised as an expert in Constitutional Law. A strict but kind judge, who would give a patient hearing to the Lawyers appearing before him, but would not budge an inch as far as the Law or procedure is concerned, Justice Raghuram brings to the CESTAT experience of a tax expert and sagacity of a Solomon.

CESTAT is not really in good shape and badly needs a respectable leader, which we hope Justice Raghuram would eminently provide. With the appointment of Justice Raghuram as President of CESTAT, assessees and advocates of Andhra Pradesh are hopeful of a CESTAT Bench at Hyderabad, which it seems is already sanctioned, but for which the former President Justice Ajit Bharihoke was not very keen.

Well, in these three years, he was able to establish three new benches at Hyderabad, Allahabad and Chandigarh.He also had the unique situation of delivering a minority judgement in a five-member Bench presided by him, where three technical members ruled against his classic, masterly erudite judgement. In an identical case, the Supreme Court held the same view as that of Justice Raghuram.As a leader he was happy that his Members had the independence to write judgements against his own judgement, instead of blindly agreeing with him.

Justice Raghuram is a captivating orator and a master jurist and in the three years that he was in the Tribunal acquired unparalleled knowledge in tax laws, especially Service Tax. It would be useful if the department continues to get benefitted from his knowledge and wisdom.

In a speech he said,

Look at the complexity of human organ - ten thousand trillion cells - It is something that even the most complex commissioner cannot add zeros to.

If ten thousand trillion cells in each human body can behave themselves during the lifespan, can you imagine that two members of tribunal cannot agree?

The Government seems to have not yet decided on the new President.

Please also see:

1. Judicial Discretion is with LAW, not Judge - Justice Raghuram, President Designate, CESTAT - DDT 2061

2. Departmental Adjudication is pathologically mediocre - CESTAT President - DDT 2520

3. GST Bill - a mind boggling constitutional complexity

4. Works Contract Service - Taxable Even Before Enactment - Major Division in CESTAT

Central Excise Superintendent Arrested for a bribe of Rs. 1500

NEWS comes in from a small town Nanded that a Central Excise Superintendent of Nanded Range near Nagpur was arrested for demanding and accepting a bribe of Rs. 1500 for giving a Service Tax registration certificate. Service Tax registration seems to be big business for some officers for its sheer volume. 3000 rupees seem to be the normal rate for a registration. This Superintendent must be getting a salary of about 75000 rupees and he has just ruined his life for 1500 rupees.

Until Tomorrow with more DDT

Have a nice day.

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