BRAKE-LESS VEHICLE... RECKLESS ADMINISTRATION...

 

In our previous blog, we have mentioned about the red-carpet treatment given to the owner of Kingfisher Airlines. The matter does not end there. There are several other officers who have played a “crucial role” and paved the way for the ‘King of Loot’ to reduce the amounts shown as “Outstanding Liabilities” from their Balance Sheets. The incident narrated below is a shocking one which bleeds the exchequer to the tune of Rs. 460 Crores... 

When the premiere anti-evasion agency, DGCEI, Mumbai, detected the evasion by Kingfisher Airlines from 2005 to 2012, three Show Cause Notices were issued as follows:

1.    01.10.2005 to 31.03.2006 – issued by DGCEI

2.    01.04.2006 to 31.03.2008 – issued by DGCEI

3.    01.04.2008 to 31.03.2012 – issued by Mumbai ST-I Commissionerate.

All the three SCNs were issued for the services viz. Business Auxiliary Services, Commercial Training or Coaching Services, Business Exhibition Services, Event Management Services, Business Support Services, Online Information and Database access and retrieval services, Management or Business Consultant’s Services, Management, Maintenance or Repair Services.

The first two SCNs demanding Rs.103,22,96,421/- and Rs.60,77,90,283/- were adjudicated and dropped by the Commissioner(Adjudication) vide O-i-O Nos. 03/ST/HB/12-13 dated 21.05.2013 and 04/ST/HB/12-13 dated 31.05.2013 respectively. Both the O-i-Os were erroneous and reviewed by the Committee of Chief Commissioners and thereafter Departmental appeals were filed before the Hon’ble CESTAT vide Order No 30/Review/CCO-I/MCX/2013 and 31/Review/CCO-I/MCX/2013.

The third SCN demanding Rs. 309,96,58,076/- was adjudicated by Shri R Sekar, the then Commissioner, Service Tax-V, Mumbai, vide O-i-O No. 02/ST-V/RS/2015 dtd. 24.04.2015. The learned Commissioner has mentioned in Para 8.1 that the earlier two SCNs were decided on the basis of the SC order in the case of Association of Leasing and Financial Services Company, wherein it was held that ‘Operating Lease’ (unlike Financial lease) is neither classifiable as Business Support Service nor any other service, being liable to Sales Tax and as such outside the purview of the Finance Act, 1994.

In Para 8.2, the learned Commissioner has also mentioned that the Committee of Chief Commissioners vide their order No. 31/Review/CCO-I/MCX/2013 dated 19-09-2013 has reviewed the earlier dropped order and an appeal has been filed before CESTAT.

Thereafter, after recording his findings, he dropped the SCN vide his order dated 24.04.2015.

Now the questions that come to mind are :-

a)    if the previous period SCNs which were dropped by a Commissioner and thereafter reviewed by the Committee of Chief Commissioners to be appealed against in CESTAT, why did Shri Sekar take up this SCN, when the issue is pending before CESTAT ?

b)    Why was the said case not transferred to the Call Book register as per the norms prescribed by the Board ?

c)    Was there any pressure on Shri Sekar not to transfer this case to Call Book and to adjudicate the same ?

d)    What was the reason for the haste shown by Shri Sekar in adjudicating the case when the assessee has submitted in writing that they did not desire a personal hearing in the matter and that the matter should be decided on the basis of their written submissions ?  

e)    How come it appears that Kingfisher Airlines were so confident that they did not hire even a small time consultant / laywer for presenting / defending their case, which is involving more than Rs. 309 Crores ?

f)     Being a senior officer, what stopped the Commissioner from cross-examining the investigating officers who had booked the case or calling for their comments in the matter ? 

g)    Is this not a sheer waste of govt. resources, in terms of time & energy of officers and money of the investigating Department to prepare such a voluminous demand notice, where the end result is zero and then filing an appeal in CESTAT, where the pendency is now stretching to 10 years ?

h)   Also, the most important question is that when Shri Sekar has dropped so many cases and when some of these cases have been reviewed by the Committee of Chief Commissioners and appeals filed in Mumbai CESTAT, and now that Shri Sekar has been posted to Mumbai CESTAT, on what grounds will he defend these cases ?... and is the Revenue in safe hands ?

As a matter of probity, Shri Sekar should not have been posted to CESTAT, Mumbai, which covers the same jurisdiction where he has worked as an executive commissioner and will be handling the very same cases which he has disposed off.

As a Commissioner, Service Tax, Shri Sekar always used to ask his subordinate officers offending & demeaning questions like :- are you hand in glove with the trade ? who pays your salary ? are you on the payroll of the assessees ? why are you arguing on behalf of the client ? are you a mouthpiece of the assessee ?

Now it is the time to ask the same questions to Shri Sekar...

Will the Administration take any cognizance of the revenue loss caused by Shri Sekar ? When you are due for rotation, apparently stakes may be very high, thus he dared to break judiciary discipline, causing perpetual revenue loss...

If this type of activity was done by any of the lower officers, what would have been their fate ? Would the Administration remain silent and would no action be taken  against them ? The same punishment should be meted out to Shri Sekar which he apparently deserves... 

This is the time for submitting APAR – every senior officer submits a detailed resume of the work done by them during the previous FY, which includes a list the number of cases adjudicated by them. However, no one bothers to check how many of these adjudication orders are reviewed by their senior officers / Committee of Chief Commissioners and whether they are major contributors to the litigation that are clogging the judicial system and blocking the revenue.

CESA, Mumbai feels that those who have paved the way and helped the ‘King of the Loot’ should be brought to justice and they should be held accountable, whether they are in service or otherwise.

Kingfisher cases are only the tip of the iceberg…more to follow…

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