2017 (9) TMI 432 - HC - Central Excise

Collection of un-dated/post-dated cheques - Seizure/detention of goods - provisional attachment of property - Held that - the conclusion in para 4.4 that the responsibility of accepting undated cheques from the assessee cannot be fixed on any individual officer since they have acted in the best interest of Govt. revenue being contrary to fact and law cannot therefore be accepted. Administering a mere warning to the officers involved underplays the seriousness of the issue. Learned counsel appearing for the CVC referred to Section 8 of the Central Vigilance Commission Act, 2003 (CVC Act) which delineates the functions and powers of the CVC. The Court directs that a copy of the affidavit be filed by the Revenue be served on the counsel for the CVC to examine if the report dated 25th May 2017 of the Superintendent (Vigilance) of the anti-evasion enclosed with it as Annexure A/2 discloses the commission of an offence which may be punishable under the Prevention of Corruption Act, 1988. The Court requests the CVC to place before it, before the next date, a note on what possible regulatory framework can be put in place to strengthen the vigilance system in the Ministries and Departments of government concerned with collection of indirect taxes, with particular reference to excise duty, customs duty and service tax.

Summary

Issues:
1. Compliance with court's order regarding collection of cheques for duty payment
2. Enquiry into the actions of officers regarding acceptance of cheques
3. Legality of accepting undated cheques as payment
4. Accountability of officers in collecting undated cheques
5. Examination of potential offense under Prevention of Corruption Act
6. Strengthening vigilance system in tax collection departments

Comprehensive Analysis:

1. The judgment addresses the compliance with the court's order related to the collection of cheques for duty payment. An affidavit was filed by the Commissioner stating the instructions issued to stop the practice of collecting cheques from the assessee for duty payment. The report detailed the actions taken by the officers and the conclusion that no show cause notice was required if the assessee paid duty voluntarily. The officers were warned to be careful in future matters.

2. An enquiry was conducted into the actions of officers regarding the acceptance of cheques. The report concluded that the officers acted in the best interest of government revenue and no individual officer could be held responsible for accepting undated cheques. However, the court raised concerns about the officers' actions and the transparency in recording proceedings during such visits.

3. The judgment delves into the legality of accepting undated cheques as payment. The court emphasized that tendering undated cheques did not constitute actual payment of duty as required by the Central Excise Act. It questioned the officers' decision to accept undated cheques as security and highlighted the lack of statutory provisions permitting such actions.

4. The accountability of officers in collecting undated cheques was a significant issue. The court disagreed with the conclusion that the officers acted in the best interest of government revenue. It noted that the officers' actions resulted in delaying potential payments to the government exchequer, benefiting the assessee. The court emphasized the need for proper accountability and transparency in such matters.

5. The judgment also addressed the examination of a potential offense under the Prevention of Corruption Act based on the report of the Superintendent (Vigilance). The court directed the Revenue to serve a copy of the affidavit to the counsel for the Central Vigilance Commission (CVC) to determine if any offense was committed under the Act.

6. Lastly, the judgment focused on strengthening the vigilance system in tax collection departments. The court requested the CVC to propose a regulatory framework to enhance vigilance in Ministries and Departments involved in tax collection. The court emphasized consulting senior officials and legal practitioners to establish independent audit mechanisms for better oversight.

In conclusion, the judgment covers various issues related to compliance, legality, accountability, potential offenses, and system strengthening in tax collection departments, highlighting the importance of transparency, accountability, and adherence to statutory provisions.