SLP granted against HC's order holding reassessment after 6 years as time barred due to inapplicability of sec. 150
December 10, 2014[2014] 51 taxmann.com 377 (SC)
IT: SLP was granted against order of High Court where it was held that in absence of opportunity of hearing given to assessee, deeming provision provided in Explanation 3 to section 153 did not get attracted and, thus, notices for reopening were time-barred
Partiality with Tax Advocates since 1984
Mandeep Singh
Advocates are only recognized class for " Practice of law" under section 29 of Advocate act 1961. But they are regularly facing partiality in taxation matters since 1984.Changes are required in some areas of Income tax law to efficiently protect the interests of assesses and department as mentioned below.
1) Practice of law: - It is a prominent area to efficiently protect the interests of assesses . Authorized Representatives should be specialized in other laws like Local land law, Transfer of property act, Hindu law, Muslim law, Contract act, Power of attorney act, Drafting & pleading, Evidence act, Interpretation of laws, CPC and CRPC etc, study of only Income tax law is not sufficient to represent the assessees before Income Tax Authorities, to solve the disputes related to Income tax matters. How can Authorized Representative efficiently protect the interests of assessee. If he has no knowledge that such agreement is violating the provisions of other laws. Which agreement or affidavit is used to defend the case under income tax law. It is a crystal clear that only skilled persons in law should be Authorized Representatives for efficiently protect the interests of assesses.
2) Legal opinion:- There are number of forms in income tax act and certification of those forms is a part of legal opinion. Advocates are only recognized class for given legal opinion on any Indian laws . Form 3CD of Income tax act is related with the legal opinion on Income tax laws than how can be debarred Advocates from certify form 3CD. How can Non- Advocate give legal opinion on tax laws and this provision need to be amended.
3) Confliction of interests:- "Confliction of interests" is a professional misconduct as decided by Apex court and Advocate may be suspended from practice for two years. If he involves himself to represent conflicted interests. Now we understand what is a "confliction of interests"? Confliction of interests means if an Advocate represents any party in a case before any court and prior to this he was council of opposite party in same case than it is called " confliction interests" of both parties in litigation.
4) Confliction of interests in Income Tax Act: When a Auditor is auditing the accounts of assessee under statutory obligation on behalf of revenue to find out any concealment in the account books and further he represents same assessee before " Revenue authorities" than it can be amounted to "confliction of interests". Due to such act either assesses or Department interest will be effected . No AR can protect interests of both parties equally and ones right must be effected.
5) Difference between " Vakalatnama" and " Power of attorney:- Vakalatnama is a power of attorney for " Practice of law". Vakalatnama can be executed only in favour of Advocate. Power of Attorney under Powers of Attorney Act 1882 can be executed in favour of any person for "act". Vakalatnama is not covered under Powers of Attorney Act 1882. It is necessary to mention here right to " Practice of law" is different from right to "Act".
6) Audit of financial data:- Same cash book, day book, ledger and stock register is maintained by assessee to keep financial record of his business. What is need to verify same financial data again and again under different tax acts like Income tax, vat, service tax etc. It is an unnecessary financial burden on assesses and strict hurdle to widen genuine tax base.
Conclusion:- Representative clauses need be deleted from different acts and only Advocates should be authorized to represent legal matters related to tax laws before revenue authorities . Auditor should be barred from appear before revenue authority on behalf of assessee, whose accounts are audited by him to avoid confliction of interest under income tax act. It should be deemed proper compliance for other acts, if under any act financial data of the assessee is audited by auditor. These steps should be taken to protect the interests of assessee.
(ABOVE ARE THE PERSONAL VIEW OF AUTHOR)
Service Tax Audit by CA / CMA – Further Clarification
Circular No. 181/7/2014-Service Tax
Dated- 10th December, 2014
Sub: Audit of the Service Tax assessees by the officers of Service Tax and Central Excise Commissionerates
Section 94 of the Finance Act, 1994 deals with rule making powers of the Central Government in relation to service tax. Sub-section (2) of section 94, dealing with specific purposes for which rules can be made, was amended with effect from 06.08.2014, vide Section 114(J) of the Finance Act, 2014, and a new clause (k) was added to sub-section (2) of section 94, which is reproduced below –
"(k) imposition, on persons liable to pay service tax, for the proper levy and collection of tax, of duty of furnishing information, keeping records and the manner in which such records shall be verified."
2. In exercise of the rule making powers under clause (k) of sub-section (2) of section 94 of the Finance Act, 1994, the Central Government has inserted a new rule 5(A)(2) in the Service Tax Rules, 1994 vide notification no. 23/2014-Service Tax dated 5th December, 2014. This rule, interalia, provides for scrutiny of records by the audit party deputed by the Commissioner. Such scrutiny essentially constitutes audit by the audit party consisting of departmental officers.
3. Verification of records mandated by the statute is necessary to check the correctness of assessment and payment of tax by the assessee in the present era of self-assessment. It may be noted that the expression "verified" used in section 94(2)(k) of the said Act is of wide import and would include within its scope, audit by the departmental officers, as the procedure prescribed for audit is essentially a procedure for verification mandated in the statute.
4. It may also be noted that the Hon'ble High Court of Delhi in the judgment dated 04.08.2014 in the case of M/s Travelite(India) [2014-TIOL-1304-HC-DEL-ST] had quashed rule 5A(2) of the Service Tax Rules, 1994 on the ground that the powers to conduct audit envisaged in the rule did not have appropriate statutory backing. This judgment can now be distinguished as a clear statutory backing for the rule now exists in section 94(2)(k) of the said Act.
5. Departmental officers are directed to audit the Service Tax assessees as provided in the departmental instructions in this regard. Difficulty, if any, in implementing the circular may be brought to the notice of the Board. Hindi version will follow.
(Himani Bhayana)
Under Secretary (Service Tax)
CBEC's race with Service tax audits
CA Sumit Grover
Less than a week ago, CBEC had empowered CAs & CMAs(nominated u/s 72A) to conduct service tax audits on behalf of service tax department, by setting aside the verdict pronounced by Hon'ble Delhi High Court in case of Travelite (India) Vs. Union of India & Ors., wherein the court took the view that the service tax audits are not backed by any statutory provisions, therefore rule 5A(2) of Service Tax Rules, 1994 is bad in law.
And accordingly amendment was introduced vide Notification No. 23/2014- ST dated- 05.12.2014, and rule 5A(2) was amended, the pronouncement of Hon'ble Delhi High Court was overlooked and CAs/CMAs were made authorized to conduct service tax audits.
Now, subsequently, clarification has been issued by CBEC vide Circular no. 181/7/2014- ST dated 10th dec'14, by drawing attention towards clause (k) to section 94(2),inserted vide Finance Act,2014(applicable w.e.f. 6th Aug'14) which used the expression- "the manner in which records shall be verified".
Department clarified that the words verification includes the audits as well.
Henceforth, the audits are now fully backed by statutory provisions.
Comment:
It's the never ending practice of the department to nullify the judicial pronouncements by amending the provisions. One thing is appreciable that they didn't bring the amendment retrospectively.
One interesting point needs to be taken into consideration is that since the amended provision(referred in the circular) are applicable from 6th Aug'14, should it be interpreted that all the audits initiated prior to the said date, be declared as void? The department needs to be very cautious before bringing such amendments which might prove negative for them.
(Author can be reached at Sumitgrover.ca@gmail.com, +91-9910946323)
Full Judgment copy attached here before.
Merely because respondent is State, delay in filing appeal cannot be mechanically considered
AMALENDU KUMAR BERA & ORS. v. STATE OF WEST BENGAL (SUPREME COURT OF INDIA), Civil Appeal No. 2677 of 2013, Dated 22.03.2013
Allowing the appeal, the Hon'ble Supreme Court HELD Merely because the respondent is the State, delay in filing the appeal or revision cannot and
shall not be mechanically considered and in absence of sufficient cause' delay shall not be condoned.
shall not be mechanically considered and in absence of sufficient cause' delay shall not be condoned.
In the instant case as noticed above, admittedly earlier objection filed by the Respondent-State under Section 47 of the Code was dismissed on 17.8.2010. Instead of challenging the said order the Respondent-State after about one year filed another objection on 15.9.2011 under Section 47 of the Code which was finally rejected by the executing court. It was only after a writ of attachment was issued by the executing court the respondent preferred civil revision against the first order dated 17.8.2010 along with a petition for condonation of delay. Curiously enough in the application for condonation of delay no sufficient cause has been shown which entitle the respondent to get a favourable order for condonation of delay. True it is, that courts should always take liberal approach in the matter of condonation of delay, particularly when the appellant is the State but in a case where there is serious laches and negligence on the part of the State in challenging the decree passed in the suit and affirmed in appeal, the State cannot be allowed to wait to file objection under Section 47 till the decree holder puts the decree in execution. As noticed above, the decree passed in the year 1967 was in respect of declaration of title and permanent injunction restraining the Respondent-State from interfering with the possession of the suit property of the plaintiff-appellant. It is evident that when the State tried to interfere with possession the decree holder had no alternative but to levy the execution case for execution of the decree with regard to interference with possession. In our opinion their delay in filing the execution case cannot be a ground to condone the delay in filing the revision against the order refusing to entertain objection under Section 47 CPC. This aspect of the matter has not been considered by the High Court while deciding petition for condoning the delay. Merely because the Respondent is the State, delay in filing the appeal or revision cannot and shall not be mechanically considered and in absence of 'sufficient cause' delay shall not be condoned.
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