>LEGAL DIGEST
Debt recovery only by tribunal
High courts should not exercise its writ powers to interfere in debt
recovery matters, the Supreme Court has stated in the case, T P Vishnu
Kumar vs Canara Bank. The bank moved the tribunal for recovering open
cash credit, packing credit and foreign bills of exchange. The firm
countered the move by demanding several documents from the bank. The
latter opposed the demand stating that they were not germane to the
case and it was made only to protract proceedings. This was accepted
by the tribunal. The firm moved the Madras high court against it and
succeeded before the single bench. The division bench, however, ruled
that the firm should have moved the appellate tribunal and not the
high court. The Supreme Court upheld this view. Chastising the single
judge bench, the Supreme Court stated that " if the correctness or
otherwise of each and every interim order passed by the tribunal is
going to be tested in a high court, it will only defeat the object and
purpose of establishing such tribunal."
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Sebi appeal dismissed
The Supreme Court last week dismissed the appeal of Securities and
Exchange Board of India ( Sebi) against the order of the appellate
tribunal in the matter of M/ s Informetics Valuation & Rating Ltd
which had applied for registration as a credit rating agency. Sebi was
not granting recognition as it felt there was discrepancy regarding
the creditworthiness of one of the promoters, Coment ( Mauritius) Ltd,
and audited accounts of previous years. The firm moved the tribunal
which set aside the Sebi order and asked it to reconsider the
application without requiring the firm to produce accounts of the two
previous years. Sebi therefore appealed to the the Supreme Court. Its
judgment observed that the board continued to give time to the firm to
remove objections beyond the prescribed limit, which was " wholly
unwarranted" and allowed the firm to take advantage of the latitude.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 'Hire and fire' policy illegal
The Supreme Court last week stated that it could not approve of the '
hire and fire' policy of Balmer Lawrie & Co and the terms and
conditions incorporated in the Manual of Officers. They are arbitrary
and cannot be enforced, the court stated while dismissing the appeal
case, Balmer Lawrie & Co vs Partha Sarathi. In this case, several
officers were terminated invoking a clause in the appointment letter
that the company shall have " the right, at its sole discretion, to
terminate service and without assigning any reason". This clause was
called "unconscionable" and arbitrary which violated the equality
provision in the Constitution ( Article 14). Though the company argued
that it was not part of the government and therefore, Article 14 was
not applicable to it, the Calcutta high court, and now the Supreme
Court, rejected this contention and affirmed that it was " state"
according to constitutional provisions.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> FERA penalty on travel agency
The Supreme Court has dismissed the appeal of Telestar Travels Ltd, a
travel agency, against the judgment of the Bombay high court in a case
of violation of the Foreign Exchange Regulation Act. The company
specialises in booking tickets for crew members in ships. Most
shipping companies are based abroad with their representatives based
in Mumbai. They would issue instructions to the company to arrange air
passages for the crew from different places. Since travel agents in
England offered cheap tickets, the company approached a Glasgow firm.
The payment for tickets was credited into the Swiss bank account of
Bountiful Ltd, registered in British Virgin Islands, which routed it
to the Indian company. It argued that it was a commercial arrangement
and there was no violation of the law. The Directorate of Enforcement
disagreed and maintained that Bountiful was a paper company and its
account was operated from India by members of a Desai family. The
Appellate Authority on Foreign Exchange imposed ₹ 20 lakh as penalty
on the firm and the Desais. The high court reduced the amount.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 'Indian MNCs have canine genes
The Delhi high court last week tried to coin a new phrase, '
Pomerainan gene', for the attitude of certain Indian multinationals.
In the second round of an arbitration case following the cancellation
of 2G spectrum licences by the Supreme Court, the high court remarked:
" Not only the earlier litigation fought between Viom Networks Ltd on
one side and Unitech Wireless ( Tamil Nadu) Ltd and Telewings
Communication Services Ltd on the other side but also the instant
litigation as also alarge number of other commercial litigations
witnessed by us in the recent past would evidence, if we may with
apology say a ' Pomeranian' gene in the Indian multinationals." When
the master picks up the leash, the dog jumps with joy to go out and
play, but when it finds darkness, it returns to the master to be
chained. The MNCs want to scamper free without government control, but
when they encounter an unknown territory, they want the safety of
government leash. The judges remarked: " We wonder when the Indian
multinational would cease to be a Pomeranian!"
MJ ANTONY
GST: Breakthrough, but bumpy road ahead
The proposal for the Goods and Service Tax is on the move again. The
Empowered Committee of State Finance Ministers ( EC) has apparently
made a breakthrough in its recent meeting at Bhubaneswar. The Centre
has reached an agreement with the states on the compensation for
phasing out of Central Sales Tax ( CST). The Centre would also
compensate the states for loss of revenue on implementation of GST.
These indeed raise the hope of an early arrival of GST.
Further, the idea of a Dispute Settlement Authority ( DSA) would be
shelved now. The GST Council would be empowered to decide about
disputes.
However, it would be difficult for the GST Council to handle the
interstate or Centre- state disputes on GST, which in course of time,
are likely to increase exponentially. The Council would have to set up
a forum for resolving such disputes. Further, the Centre has agreed to
set a floor rate for the tax with a narrow band within which the
States will retain the right to vary the Sate GST ( SGST).
Different SGST rates at different states will complicate input tax
credit scheme, and it might also encourage cross- shopping. True, more
than 50% of the countries administering VAT/ GST, including countries
in European Union do have multiple rates. But they are also facing
difficulty, the worst case being that of Brazil. If we opt for
multiple rates of SGST in different states, the scheme of Integrated
GST ( IGST) for inter- state movement of goods will have to be
reworked carefully.
My major apprehension relates to the proposal to give flexibility to
the states to join or exit GST on the ground that the states had
similar option while implementing VAT. But GST is quite different from
VAT in structure as well as in its administration.
GST intends to create a common economic market for the entire country.
There will always be inter- state movement of goods and services,
taxation of which would be destinationbased.
If one state refuses to adopt GST, how will the taxman compute the tax
for the goods & services destined for or moving out of that state?
Further, would Central GST be leviable in nonGST states? What would be
the fate of CST and Service Tax in non- GST States? Will non- GST
states have voting right in the GST Council? These issues did not
arise while implementing VAT because VAT was an internal tax on sale
of goods in a particular state. The inter- state movement of goods
were covered by CST. Therefore, VAT could be implemented by one state
after another. But GST surely has to be ushered in together by all the
states and the Centre.
One welcome decision of Bhubaneswar Meet is the future prospect of
bringing crude and petroleum products within the ambit of GST.
The present Constitutional Amendment Bill contains a clause excluding
these items. It has now been agreed that these would not be excluded,
constitutionally. Denial of input tax credit for these essential
industrial inputs by keeping them outside GST would bring distortion
in GST structure.
This positive step will have to be further pursued to keep these items
within GST. The same economic sense should compel bringing of alcohol
in the GST net, as has been decided for tobacco.
The EC also approved the report of asub- committee set up by Union
Finance Minister P Chidambaram on "GST Design". The report recommends
lot of follow- up action for enabling finalisation of GST design.
Three panels have therefore been formed for addressing following
pending issues: (i) Integrated GST for inter- state movement of goods
& services and VAT on imports, ( ii) Revenue Neutral Rates (RNR) and
Place of Supply Rules, ( iii) Thresshold for the tax and Dual Control
for small traders.
On inter- state movement of goods and services, a new model dealing
with only the state GST aspects of interstate transaction is being
examined.
On RNR, a report prepared by R. Kavita Rao of National Institute of
Public Finance and Policy which brings out state wise analysis of
revenue implications of GST and estimation of RNR would help the new
panel.
The issue of threshold and dual control for small traders arises from
the fact that currently there are varying thresholds based on the
annual turnover, for determining the incidence of different taxes like
Central Excise duty, Service Tax and VAT. It is good economics to
suggest that in the GST regime, the taxes of both the Centre and
states should have a common incidence and hence common threshold.
Varying thresholds would disturb the tax base and hence the RNR, which
would ultimately effect the rate of GST. Smaller the tax base, higher
would be the RNR.
Therefore, threshold has to be common.
On the question of dual control over the small traders on whom
currently only the States have control, one view is that the states
may be authorised to collect even the Central GST for the taxpayers
below the present threshold of ₹ 1.5 crore, so as to avoid dual
control.
However, this won't be a wise move.
Keeping them out of the radar of Central GST authorities altogether
would be fraught with imbalance in compliance and revenue risk like
issuance of fake invoices for unlawful availment of tax credit etc.
The solution lies in administering GST with robust IT support. That's
why GST Network ( GSTN) has been envisaged to provide IT support for
business processes like e- registration, efiling of returns, e-
payment and computer aided cheques. This will significantly reduce
physical interface with taxpayers.
Further, compliance requirements like audit, inspection etc may be
minimised for such small tax- payers through administrative
directions. Besides, it is not the small traders alone. The small
service tax payers who are currently under control of only Centre
would also come under the dual control of states and the Centre.
Therefore the answer lies in minimising the dual role for small
taxpayers and not in doing away with it.
Thus, the road ahead is still bumpy. But the current breakthrough at
the Bhubaneswar meet has shown some rays of light at the end of the
long tunnel. The Centre and states need to start aligning their
business processes immediately. GST is a good idea, and no one can
stop its progress. But it would be wise not to fix a hasty target for
its implementation. After all, the introduction of GST would be as
much a political decision as an economic one.
The author is Indirect Tax Ombudsman, Delhi, and former Chairman,
Central Board of Excise & Customs. Views are personal
SUMIT DUTT MAJUMDER
THINKSTOCK
--
CS A RENGARAJAN,, B.Com ,FCS, LLB, PGDBM
Company Secretary, Chennai
CONVENOR, CHENNAI WEST STUDY CIRCLE ICSI-SIRC
email csarengarajan@gmail.com
http://www.csarengarajan.blogspot.com
http://companysecretarytalent.blogspot.com/
http://companysecretarybenevolentfund.blogspot.com/
http://csvacancies.blogspot.com/
mobile 093810 11200
CS Benevolent Fund is a collective effort towards extending the much
needed financial support to the community of Company Secretaries in
times of distress Let us lend support and join for noble cause.
SHARING KNOWLEDGE SKY IS THE LIMIT
This mail and its attachments (if any) are confidential information
intended for persons to whom the email is planned for delivery by the
sender. If you have received this mail in error please notify the
sender of the error by forwarding the email and its attachments (if
any) and then deleting the mail received in error and the relevant
email trail in this connection without making any copies or taking any
prints.
------------------------------------
receive alert on mobile, subscribe to SMS Channel named "aaykarbhavan"
[COST FREE]
SEND "on aaykarbhavan" TO 9870807070 FROM YOUR MOBILE.
To receive the mails from this group send message to aaykarbhavan-subscribe@yahoogroups.comYahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/aaykarbhavan/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/aaykarbhavan/join
(Yahoo! ID required)
<*> To change settings via email:
aaykarbhavan-digest@yahoogroups.com
aaykarbhavan-fullfeatured@yahoogroups.com
<*> To unsubscribe from this group, send an email to:
aaykarbhavan-unsubscribe@yahoogroups.com
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
No comments:
Post a Comment