Monday, April 25, 2016
Saturday, April 23, 2016
BREAKING NEWS...
Shri Gautam Bhattacharya, Commissioner, Service Tax, Pune, collapsed in his office cabin today during morning hours. As some officers were present in his cabin, they admitted him to the ICU of Ruby Hall Hospital.
He is considered to be in a critical condition and has been advised bypass surgery. He was staying alone in Pune while his family was in Delhi.
CESA, Mumbai prays for his early recovery.
*************
As per the Chennai-CAT, the petitioners & the office bearers of the Promotee IRS Officers Assocn. were called for a meeting with the Chairman, CBEC, on the 21-Apr-2016 regarding the amendments of Grp-A RRs.
It is learnt that the Association has submitted a Memorandum to the Chairman. Details follow...
It is learnt that the meeting was fruitful and ended on a cordial & positive note.
*************
Friday, April 22, 2016
GRAFT CHANGED THE DRAFT ?????
CBEC,
after the FY 2015-16 ended, sincerely conveyed a big “THANK YOU” to all the
tax payers.
24th April is the deadline to serve Show Cause Notices
to whoever has been found to be in default or have evaded Service Tax. The officers of
the entire Service Tax Zone are busy with finalizing the SCNs so that the
revenue is protected and not time barred.
The
essence of the Gita can be summed up as “Do
your duty and do not expect for fruits.” It is the system who makes the officers
indispensable and thereafter a nexus gets developed between individuals, for
mutual self enrichment, but at the cost of compromising revenue.
In
our previous column, CESA Mumbai mentioned about the loss of revenue amounting
to Rs. 460 Crores of Kingfisher
Airlines. And now, we are going to unmask another case, which is equally
shocking...
Nowadays,
even a child is not safe in his own home… a horse is not safe in its own stable…
and revenue is not safe in the hands of a few officers in the Department, who
are at the fag end of their career...
In
Mumbai, when there were two Commissionerates of Service Tax, one Commissioner
was very receptive while the other was very vindictive. He was very autocratic,
arbitrary and not open to any sensible suggestions.
Mr
R Sekar joined in Service Tax-II Commissionerate in June, 2012 and continued to
be in charge till September, 2015. During his tenure in Service Tax, Mumbai, he
chaired several MCMs and each such MCM, he used to keep the subordinate
officers attending the MCM under tremendous mental pressure due to his habit of
humiliating them. Several officers were victimized due to such pressure tactics,
resulting in them suffering Heart attacks, increase in BP, Diabetes and other
health issues.
The
special audit group conducted an audit of M/s. Reliance Communications
Infrastructure Limited (RCIL) for the period 2009-10 to 2013-14 and the same
was placed before MCM for discussion and finalization. Reliance Big TV provides Broadcasting
Services in India. RCIL does the installation and commissioning of DTH
equipment at the premises of subscribers of Reliance Big TV. RCIL availed
Cenvat credit on Capital Goods viz. equipment (STB, LNB, Dish, etc.) required for providing such services by Reliance Big
TV. As per the Special Audit group, the Cenvat credit of Rs. 107 Crores availed by RCIL on such “Capital Goods” was
inadmissible. In the MCM dated 18.10.2013, the learned Commissioner observed
that:
“Regarding availment of CENVAT
credit on Set Top Boxes under the category of Capital Goods”, the goods are
classifiable under CH. 85 and falls within the scope of Capital Goods. Since
the goods are used for providing taxable service to M/s. Reliance Big TV (RBTV)
and the goods are classifiable under capital goods, there is no bar to avail
cenvat credit on Set Top Boxes under the category of capital goods. In view of
these facts it was decided that the objection raised is not sustainable and
the para is dropped”.
Subsequently,
Audit Party did not proceed further in the matter and the Final Audit Report (FAR) 40/2013
was issued to RCIL.
A whistle blower approached the DGCEI, Mumbai
on the same issue and they carried out their own investigation for the same
period and issued SCN bearing F. No. DGCEI/MZU/I & IS ‘C’/12(4)/151/2013 in
October, 2014, amounting to approximately Rs. 107 Crores, effectively reversing
the MCM findings. The said SCN was made answerable to the Commissioner, Service
Tax-VII, Mumbai. The same was taken up
for adjudication and was decided vide Order-in-Original No. 23/ST-VII/RK/2015-16 dated 22-Feb-2016.
During the
Personal Hearing RCIL gave reference of the MCM minutes and produced a copy of
the FAR 40/2013 and the decisions of the MCM chaired by the then Commissioner
Mr R Sekar. On the basis of the said report the adjudicating authority was
constrained to drop the demand of Rs 100,05,10,375/- relating to the extended
period from 2009-10 to 2012-13 (upto Sept-2013) and confirmed only Rs.
7,20,67,400/- for the normal period. In
a nutshell, due to the decisions of the MCM chaired by Mr R Sekar, there is a
revenue loss of Rs. 100 Crores. Had Mr R Sekar let the Audit group to proceed and/or referred the matter to the Anti Evasion, the Department would have not lost
Rs. 100 Crores.
Now,
as regards to the issue of wrong availment of CENVAT credit on Capital goods, the
stand taken by Mr R Sekar was motivated with malafide interest as the DGCEI,
Mumbai has rightly reversed the stand of the MCM and issued the SCN and
subsequently the adjudicating authority upheld the merit of the same.
Who
will be held accountable for the loss of Rs.100 Crores of revenue ???????
Presently
major parts of our country are facing the worst draught situation over the
years. Had the Rs.100 Crores of revenue been protected, at least 20,000 bore
wells could have been dug or any other project for the welfare of the people of India…………
This
is only a tip of the iceberg, many more skeletons are in there in his cupboard...
Is it possible that this was a "THANK YOU" extended by Mr Sekar towards the
company which provided him with their guesthouse during his initial stay in Mumbai
from June to …... ? You be the judge…
Had there been any small lapse on the part of
a junior officer, the administration under Mr R Sekar would have pounced on
the officer without even giving him an opportunity of natural justice.
CESA
Mumbai demands the most stringent & exemplary action to be taken against
Mr Sekar, as well as to unearth the nexus between the corporate giants and the
corrupt officials.
**********************
Saturday, April 16, 2016
TYPES OF FISHING...
For thousands of years, fishermen in China & Japan have been using the amazing fishing ability of the bird called the cormorant. Cormorants are long-necked diving birds with long, hooked bills. After catching the fish, they come up to the surface to eat it. Cormorants have been trained to catch fish from a boat and return to it. They are often tethered with a long cord and a leather collar around the throat prevents the bird from swallowing the catch. The fisherman gently squeezes the bird's neck so that it disgorges the fish...
Common Cormorants are among the world’s greediest birds. They swallow fishes of great size including a 2.5 meter long eel, though they may die of exhaustion in doing so. Fishermen train these birds to catch fishes for their livelihood. In Sunderbans too, a few tribes do fishing with Cormorants...(https://youtu.be./JNEplaYZtpI)
There are so many big fishes (defaulters), which the Anti-Evasion and Audit Officers of our Department, by putting in their best efforts, in adverse working conditions, detect and issue SCNs. But the authorities, instead of garnering and safeguarding the revenue, play a negative role, which are coming to surface as each day passes. There is no check and balance at higher levels and complaints galore everywhere. The concern shown for revenue by the junior officers is too dedicated, while the same zeal is lacking at senior levels, barring a few.
Can the Administration adopt the method used in the case of Cormorants by the above said fishermen, to safeguard the revenue at higher levels. Trust, honesty, integrity, sincerity, reasonable belief etc. should not remain mere dictionary words, but the conduct and action of senior officers should speak for itself and reflect these qualities in the work they do, so that respect is automatically commanded and not demanded.
"Flowers blossom even in forests,
where there is nobody to admire their beauty"
Let us continue our good work honestly, even when nobody appreciates us.
***********************
Tuesday, April 12, 2016
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.
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...
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…
***************
Monday, April 11, 2016
ALLAHABAD CAT JUDGEMENT - MYTH & REALITY...
A panic situation has been created by
constant messaging of abolition of 58 posts from Central Excise quota. When
more than 1500 posts are lying vacant since long, the Board, on one or the
other pretext, is not able to hold the DPC and filling the posts. Frustration is
already at its peak and this message of siphoning of 58 posts have aggravated
the feelings even more.
The judgement of the Allahabad CAT – 93/2015 dated
04-Mar-2016 is as under :-
A direct appraiser Shri S J
Singh of 1982 batch who subsequently was promoted as Asstt. Commissioner in
1994, in 1998 as DC, in 2005 as JC and since 2007 is serving as ADC, on being
aggrieved by the publication of revised select list dated 04-Feb-2013 which has
been published for regular promotions to Grade VI of Indian Customs and Central
Excise Service Group ‘A’ for the period 1980 to 1996-97 (at page 60 of OA)
based on the said revised select list dated 04-Feb-2013 on various grounds.
Subsequently, a Misc.
Application was filed by the Direct Recruit Appraisers’ Association for
impleadment / intervention in the Original Application, which was allowed.
Their
prayer was 'Appraiser-specific'. They asked corrections in the regularisations
of promotions (of Appraiser stream) made to JTS during period 1979 to
1996-97 (which was originally done in Nov-2000 in 6:1:2 ratio as per SC order of
Nov-1996 in WP No.306/88). They also sought changes in select list (which was
revised in Feb-2013, for period 1979 to 1996-97; only i.r.o. Appraiser turned
Grp-A).
They
prayed for [1] treating the direct recruit JTS posts (which were restricted to
25 nos. by a decision taken in 1995 by CBEC under Secretary(Rev) instructions)
in excess of 25 diverted for recruitment by Promotion, to be treated as regular
instead of treating as 'adhoc'. [2] deleting names of retired Appraising
officers retired/VRS from the select list of respective years. They got the order accordingly.
In the judgement, Paras 20, 24
& 29 are the crucial paras. Para 20 & 24 deal with the dispute among
the promotee and the direct recruit appraisers in their slots, in their
placements in their final seniority list, in the respective panel years. Para
29 deals with the distribution of promotee vacancies and Direct recruit
vacancies diverted for appointment of promotes amongst three streams as per SC
judgement dated 21-Nov-1996. There they have calculated that there is a loss of
AC’s vacancy to appraisers equal to 550 less 492 = 58 posts. Loss of AC’s
vacancy to Supdt. of Customs (Prev) equal to 275 less 150 = 125 posts. Total =
183 posts.
The calculations carried out or
presented to CAT appears to be incorrect and partisan in nature. As on date, it
can be seen from the Civil List of Jan-2015, that the working strength of
Appraisers (both Direct & Promotee) are 3%, share in promotion as per
13:2:1 is 6%. Their share in Promotee Grp-A (JC & ADC) is 148 out of 160,
in DC, it is 158 out of 200. In AC/DC (excluding Temporary posts) the
appraisers are 195 out of total 341.
Now the time has come to point
out that though the present ratio is grossly inadequate to the Central Excise cadre,
the Board should not only negate the Allahabad CAT judgement but
also devise a mechanism so that all the stakeholders get adequate
representations at each level in Grp-A posts.
However, the Direct IRS Association filed an Appeal(Writ) in the
Allahabad High Court against the said order and obtained an interim order,
wherein the process (as directed by CAT) has been allowed but restraining its
actual implementation. Impleading petition in the said writ petition has also
been filed by Shri Ashish Bajpeyi, Jt. Secretary, AIACEGEO.
Matter
is now posted to next month for admission and final hearing. CESA, Mumbai
appeal to one and all not to panic. In all the jugglery that is taking place,
it appears that the ultimate beneficiaries will be the Examiners & Appraisers,
although their numbers are small, but their jumps are too high in the matter of
career progression and the Board is always favourable to them and unkind to the
other stakeholders.
***********************
Tuesday, April 5, 2016
VAT - OK... EXCISE - NOT OK !!
Today, the Jewellers strike
enters its 34th day across the country. Huge banners have been put
up in all the prime locations of main cities in India, about the imposition of
excise duty on jewellery. In Mumbai, at each & every railway station,
banners have been displayed about the imposition and of their determination to
continue the strike until the levy is withdrawn.
Since Budget-2016, several
rounds of talks have taken place with various authorities and all apprehensions/fears
of the jeweler community were clarified, right from the Hon’ble FM, Revenue
Secretary, Chairman-CBEC, to the Chief Commissioners of the local Central
Excise Zones, etc. Even then, it appears that the jewelers are not able to get
over their apprehensions/fears.
When the Govt. is very much
clear about the levy and is granting them so many oppurtunites to have their
fears addressed, and have even constituted a Sub-Committee, chaired by Dr.
Ashok K. Lahiri, Chief Economic Adviser, Ministry of
Finance & Company Affairs, Government of India, which
will include 3 representative of the trade, one legal expert, one officer from
the Ministry of Commerce and a high level officer from CBEC and is to submit
their report within 60 days of the constitution of the committee. (Circular No.
1021/9/2016-CX dated 21-Mar-2016).
All the trade associations are
to be given an opportunity to submit representations before the sub-committee
in writing and the all India associations to state their cause in person.
Also, as per the above mentioned Board’s Circular, till the
recommendations of the Sub-Committee are finalized, the following directions are
to be adhered :
a) All payments of central excise duty will be
based on first sale invoice value;
b) The central excise authorities
will not challenge the valuation given in the invoice
provided
the caratage / purity and weight of the gold/silver with precious stones; and
carats of
diamond/precious stones are mentioned on the invoice;
c) The central excise officers will not visit the
manufacturing units/ shops/ place of
business/residence of the jewelers;
d) No arrest or criminal prosecution of any
jeweler will be done;
e) No search or seizure of stocks by any central
excise official will be effected;
f) Exporters will be allowed to export on
self-declaration and submission of LUT to
customs without the need to get LUT ratified by central excise.
Prevailing system will
continue.
The Govt. of India is so open
to the concerns of the Jewellers’ and every apprehension raised were clarified,
but still jewellers wants the Govt. to withdraw the levy. The prolonged
agitation may become a subject in a Management Institute as to how the trade
can sustain such a lengthy strike and how their low level employees/daily wage
earners are still tight-lipped about how they are able to survive alongwith
their families…
What is their hidden agenda… what
do they want to hide….and from whom…, when no one is asking them whether the
jewellery is made from smuggled gold / stolen gold / whether the gold is purchased
under bill. They are also not being
asked whether the artisans making the gold jewellery belongs to this country or
otherwise.
As on date, when majority of
the jewelers are literate and computer savvy, what is the hitch to make all
their transactions bonafide & legal. It is surprising to learn that they
are subject to state VAT but are opposing levy of central excise duty.
Historically, the Central
Excise levy came into existence in 1944, on salt. Since then, so many industries
and thereafter services have been included under Central Excise & Service
tax. Now the Govt. is including some of the trades into its ambit. The future tax regime will be document based
as envisaged under GST and the Govt. is trying its best to set the ground for
the easy rollout of GST in the future.
Yesterday those who were in
favour of GST, now they are opposing the levy on their trade !!
Our Directorate of Publications
& Publicity came out with several advertisements in the line of the Budget-2016
declarations. Our senior officers also held meetings with the trade and as well
as press conferences in almost every city in the country, and tried to assure
the jewelers about the good intentions of the Department, but it appears that all
was in vain, and the strike continues.
Blaming the Department and
tarnishing its image will not yield any result except bitterness. When the entry of officers into their
premises/residences have been barred / no search, seizure or arrest is to be
done, they have exemption upto Rs. 6 Crores (SSIs have exemption of only Rs. 3
Crores) what more do they require ?
The jewelers should also realize
that the Department has gone far ahead in terms of acceptance/adoption of
technology from the days of Gold Control. Now, everything is online and can be
accessed from anywhere over the internet – filing of Registrations, submission
of Returns, duty payments are online and the requirement of interacting with the
officers is totally reduced and may not be even required.
As the advertisement says “Nation
progresses when taxes are paid”, so, pay your taxes honestly and be a proud
partner in our Nations’ progress !!
******************
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