SEBI : A Need for Revitalisation and Proper Justice

* Mr. Vinod Jain, FCA, FCS, FICWA, LL.B., DISA (ICA), Chairman, INMACS and Vinod Kumar & Associates. [email protected], [email protected], +91 9811040004

CA Vinod Jain*

SEBI : A Need for Revitalisation and Proper Justice

EDITORIAL

contd...Pg.4

Volume XXV, No. 8, August, 2014

The Securities and Exchange Boardof India was constituted more than20 years ago and has worked veryeffectively in a large number ofareas to improve disclosures,investors' protection, investors'education, upgradation of capitalmarket systems, rules andprocedures. The important roleplayed by SEBI in bringing Indian

Capital Market, among best capital markets in the worldneed very sincere appreciation.

Lok Sabha has recently unanimously approved TheSecurities Laws (Amendment Bill) 2014 to provide moreteeth to SEBI to enable them to take actions againstpromoters raising funds through ponzi scheme i.e. savingschemes, deposit schemes or collective investment schemeor other similar schemes collecting money from public atlarge, without proper registration, approval and complianceof regulatory procedures. SEBI has also been given powerfor search and seizure as well as attachment of assets.Powers to launch recovery proceedings, disgorgement ofamount and seek call-data records in its investigations ofsecurities-related offences has also been extended.

The amendments brought about to SEBI Act are with aview to address cases like Sahara or Saradha Chit Fundand similar other cases mushrooming in different namesand styles collecting money from public at large. The powerto regulate such schemes was very well needed. The

powers to search and seize are to be exercised with greatcare and only in very extreme circumstances and the rulesneed to be brought in to ensure adequate checks andbalances. SEBI need to work in a non-intrusive manner asper the thinking of the Central Government as committedby FM in his Budget speech. The detailed regulations needto be in place and need clarity of jurisdiction between MCA,RBI and SEBI.

It is however, very important for the government, includingthe legislature as well as judiciary to examine as to howfar it is necessary to concentrate so much judicial andadministrative power in one organization.

SEBI CURRENT POWERS

SEBI is currently empowered to bring out all necessaryrules, regulations and guidelines to protect the interest ofinvestors and to regulate the capital market, marketintermediaries, stock exchanges, companies raising debtand equity from the market as well as to regulate all kindsof raising of resources, except financial market, moneymarket and foreign exchange market which is currentlyregulated by Reserve Bank of India.

SEBI is empowered to undertake regular surveillance ofthe capital market and various participants including mutual

SEBI has not been able to ensure sustainedconfidence of the investors, intellectuals,bureaucrats as well as general public in the capitalmarket. The society at large still has majorapprehensions regarding risk of fraud andmanipulation from the capital market.

The investors' grievances redressal andcompensation to those who suffered losses due tomarket manipulation are not being adequatelyaddressed. The permission to co locate brokerservers, permitting algo trading, derivativerampant usage in highly excessive speculation andmanipulation of market and not restricting thesame to hedging, need for a positivity in regulatoryapproach and actions are some of the crucial areaswhich need visionary decision of Hon'ble FM andPM, in the interest of the country.

2 THE CHARTERED ACCOUNTANT WORLD – August 2014

LATEST IN FINANCE

2

LATEST IN FINANCE1.0 SCs / RCs – Clarifications –Willful Defaulters

Securitisation Companies (SCs)/ReconstructionCompanies (RCs) should put up in their website,at quarterly intervals, the list of suit filed accountsof willful defaulters.

2.0 BRICS Bank to be Set-up

The decision to set up a USD 100 billionDevelopment Bank by the BRICS countries is astrong signal to the rest of the world about thegrowing economic clout of Brazil, Russia, India,China and South Africa.

3.0 Govt developing flexible model to boostInfrastructure

Road, transport and shipping minister NitinGadkari said he would sort all issues related tostuck road projects by August 15 and in futureno road projects would be bid out withoutacquiring 80 per cent of the land. About 300projects are being readied with all clearances.

4.0 Bank License Norms for Payment/Smallbanks

5.0 Development Finance Bodies may return forInfra funding

The Finance Ministry is considering revivingDevelopment Financial Institutions (DFIs) tomeet the long-term financing needs of theinfrastructure sector. IDBI, ICICI and IFCIpromoted by Government had played a verysignificant role in Public Financial Institution (PFI)for development of basic private sector, industrialinfrastructure for atleast four decades.

6.0 Industrial Licence Validity extended to3 years

India Inc has hailed the government’s move toextend the validity period of industrial license tothree years with a provision for further extensionof two years as a measure for ease of doingbusiness in India.

7.0 Loans against Gold Ornaments and Jewelleryfor Non-Agricultural End-uses- Relaxed

Banks, as per their Board approved policy, arenow at liberty to decide upon the ceiling withregard to the quantum of loans.

In this connection, it is also clarified that LTV of75 per cent shall be maintained throughout thetenure of the loan for all loans extended againstpledge of gold.

(vide RBI/2014-15/142, DBOD.No. BP.BC.27/21.04.048/

2014-15)

8.0 Flexible Structuring of Long Term ProjectLoans by bank for upto 25 years toInfrastructure and Core Industries

The Reserve Bank of India (RBI) has clarifiedthat it would not have any objection to banks’financing of long term projects in infrastructureand core industries sector provided that only termloans to infrastructure projects and projects incore industries sector, (viz., coal, crude oil,natural gas, petroleum refinery products,fertilisers, steel (Alloy + Non Alloy), cement andelectricity - some of these sectors such asfertilisers, electricity generation, distribution andtransmission, etc. are also included in theHarmonised Master List of Infrastructure sub-sectors) - will qualify for such refinancing.

At the time of initial appraisal of such projects,banks may fix an amortisation schedule (OriginalAmortisation Schedule) while ensuring that thecash flows from such projects and all necessaryfinancial and non-financial parameters are robusteven under stress scenarios.

Resident individuals/

professionals with 10

years of experience in

banking and finance,

NBFC’s and MFI’s

Undertake basic banking

activities of acceptance

of deposits and lending

to small farmers, small

businesses, micro and

small industries and

unorganised sector

entities

The maximum loan size

would be restricted to

15% of its capital funds.

At least 50% of its loan

por tfolio should

constitute loans and

advances of size up to

`25 lakh

Professionals from

banking/financial sector,

NBFCs and MFIs. Local

focus and ability to serve

smaller customers will be

key criterion

NBFCs, corporate

business correspo-

ndents, mobile tele-

phone companies,

super-market chains

Provide payments and

remittance services and

demand deposit

products to small

business and low-

income households

Payments banks will be

initially restricted to

holding a maximum

balance of ̀ 1,00,000 per

customer.

Payments banks in the

under-banked states/

districts in the

Nor theast, East and

Central regions of the

country

Who can set them

up?

What can they do?

What are the

l end ing /depos i t

limits?

Who will get

preferences?

Payment banks Small banks

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3A JOURNAL OF ALL INDIA CHARTERED ACCOUNTANTS’ SOCIETY

funds, venture capital funds REITs, InfrastructureInvestment Trust, listed companies, besides all othercapital market participants. SEBI is further empoweredto investigate into the affairs of the capital market, toenable SEBI to monitor compliance of all regulatoryguidelines and to ensure prevention of manipulation,fraudulent and unfair trade practices.

SEBI has been making substantial and commendableefforts in the aforesaid directions.

There are serious reservations amidst investors at largeand more importantly among the learned intellectualsof the country about safety of their investments in thecapital market. SEBI need to examine the major reasonsbehind such precarious situation and should initiatesome real positive action to ensure at least reasonablesafety of investment from manipulative practices andunfair trade.

FREE ISSUE PRICING- NEED FOR CHECKS ANDBALANCES

SEBI need to re-examine as to whether it is appropriateto continue complete freedom on issue pricing or thesame is required to be regulated by independentvaluation. In case full freedom of issue price is proposedto be continued, SEBI may consider mandatoryallotment of additional shares, if the share price of publicissue falls by more than 20% of the issue price, within1st year of the issue. On the basis of weighted averageprice in the 1st year of issuance, the correct issue pricecan be determined. (Market is the best to determinethe correct value-Price) and additional shares can beissued to the public shareholders, who bought suchshares at an exorbitant higher price so that the averagecost per share can be brought near to the real marketvalue. This will dilute the promoters' holding and thepromoters will be more careful in future. The promoterscan also be given an option to subscribe additional sharesat the same price, in case they do not wish to dilute theshareholding percentage.

JUDICIAL MECHANISM

SEBI is rightly empowered to make rules, regulationsand guidelines, to undertake surveillance and also toundertake a detailed investigation into any manipulated,fraudulent and unfair trade practices.

The government and the judiciary need to consider asto whether it is appropriate that the power to issue

EDITORIALSEBI : A Need ...

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show cause notice, the power to undertake an enquiry,the power to undertake adjudication of an offence andalso power to recommend punishment as well as powerto ultimately impose harsh penalty and heavy finesremain concentrated in one institution i.e. SEBI. Theinvestigating authorities, show cause issuer, enquiryofficials, adjudicating authorities, punishing authoritiesare all working under the supervision and control ofSEBI Chairman and Whole Time Member.

EDITORIAL / LATEST IN FINANCE


The tenor of the Amortisation Schedule shouldnot be more than 80% (leaving a trail of 20%) ofthe initial concession period in case ofinfrastructure projects under Public PrivatePartnership (PPP) model; or 80% of the initialeconomic life.

The bank offering the Initial Debt Facility maysanction the loan for a medium term, say 5 to 7years. This is to take care of initial constructionperiod and also cover the period at least up to thedate of commencement of commercial operations(DCCO) and revenue ramp up.

The repayment(s) at the end of this period (equalin present value to the remaining residualpayments corresponding to the OriginalAmortisation Schedule) could be structured as abullet repayment, with the intent specified up frontthat it will be refinanced by a set of banks. Thatrepayment may be taken up by the same lenderor a set of new lenders, or combination of both,or by issue of corporate bond, as RefinancingDebt Facility, and such refinancing may repeattill the end of the Amortisation Schedule.

Mere extension of DCCO would not beconsidered as restructuring subject to certainconditions, if the revised DCCO falls within the

The real issue is whether the role of SEBI as aprosecutor and also as judiciary, undertakingadjudication and awarding punishment isappropriate. The principles of natural justicemay be adversely impaired. The conflict ofinterest between the prosecutor and adjudicatormay effect free and fair trial, natural justice andappropriate punishment.

The purpose of this editorial note is not to levy anyallegations on Hon'ble institution like SEBI but the entirepurpose of this proposition or questioning is to ensure

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LATEST IN FINANCE Contd...

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LATEST IN FINANCE / CAPITAL MARKET / FEMA

FEMA1.0 LRS – Can be used to acquire Real Estate

outside India

It was decided vide A.P. (DIR Series) CircularNo. 138 dated June 3, 2014, to increase the limitof Liberalised Remittance Scheme (LRS) for allresident Indian Indivisiual to USD 125,000 perfinancial year (April-March) from USD 75,000.

Further, it is clarified that the Scheme can nowbe used also acquisition of immovable propertyoutside India.

(vide RBI/2014-15/132, A.P. (DIR Series) Circular No. 5)

2.0 Issue of Partly Paid Shares and Warrants byIndian Company to Foreign Investorspermitted

� Eligible instruments and investors

Partly paid equity shares and warrants issued byan Indian company in accordance with theprovision of the Companies Act, 2013 and theSEBI guidelines, as applicable, shall be eligibleinstruments for the purpose of FDI and foreignportfolio investment (FPI), Foreign InstitutionalInvestors (FIIs)/Registered Foreign PortfolioInvestors (RFPIs) subject to compliance withFDI and FPI schemes.

� Partly paid equity shares

The pricing of the partly paid equity shares shallbe determined upfront and 25% of the totalconsideration amount (including share premium,


period of two years and one year from the originalDCCO and the entire project debt amortisation isscheduled within 85% of the initial economic life of theproject or the concessional period.

The Amortisation Schedule of a project loan may bemodified once during the course of the loan (after DCCO)based on the actual performance of the project.

The above structure will apply to new loans toinfrastructure projects and core industries projectssanctioned after the date of this circular.

(vide RBI/2014-15/126, DBOD.No.BP.BC.24/21.04.132/2014-15)

9.0 Levy of Foreclosure Charges/Pre-payment Penaltyon Floating Rate Loans – NBFC barred

The Reserve Bank of India has decided that as a measureof customer protection and also in order to bring inuniformity with regard to prepayment of various loansby borrowers of banks and NBFCs, it is advised thatNBFCs shall not charge foreclosure charges/pre-payment penalties on all floating rate term loanssanctioned to individual borrowers, with immediateeffect.

(vide RBI/2014-15/121 DNBS (PD).CC.No.399/03.10.42 /2014-

15 dated July 14, 2014)

10.0 Navratna, Miniratna PSUs can park surplus fundswith MFs, PSBs

Public sector enterprises such as Navratnas andMiniratnas are allowed to invest 30 per cent of theirsurplus funds in SEBI-regulated public sector mutualfunds; however, they must park at least 60 per cent ofexcess funds with public sector banks.

1.0 Expanding the Framework of Offer for Sale (OFS)of Shares through Stock Exchange Mechanism

Any non-promoter shareholder of eligible companiesholding at least 10% of share capital may also offershares through the OFS mechanism subject toguidelines.

Seller shall announce intention of sale of shares latestby 5 pm on T-2 day (T day being the day of the OFS)to the stock exchange. Stock exchanges shall informthe market immediately upon receipt of notice.

2.0 SEBI finalises Draft Norms for Infra InvestmentTrusts

Taking forward a proposal made in the Union budget,the Securities and Exchange Board of India (SEBI),came out with draft guidelines for InfrastructureInvestment Trusts (InvITs), which will enable creationof a new investment product for arranging long-termfinancing for infrastructure projects.

CAPITAL MARKET

These InvITs can be listed on the stockexchanges, will get tax benefits and will investthe funds collected from investors ininfrastructure projects, including PPP (PublicPrivate Partnership). The SEBI guidelines statethat the proposed holding of an InvIT in theunderlying assets shall be not less than ` 500crore, and the offer size of the InvIT shall not beless then ` 250 crore at the time of initial offer ofunits. The aggregate consolidated borrowing ofthe InvIT and the underlying SPVs shall neverexceed 49 per cent of the value of InvIT assets.However, this may exclude any debt infused bythe InvIT in the underlying SPV and further, forany borrowing exceeding 25 per cent of the valueof InvIT assets, requirement of credit rating andunit holders approval has been made mandatory.The draft guidelines in respect of Real EstateInvestment Trust (REITs) have been approvedby SEBI.


if any), shall also be received upfront. The balanceconsideration towards fully paid equity sharesshall be received within a period of12 months.

The time period for receipt of the balanceconsideration within 12 months shall not beinsisted upon where the issue size exceeds rupeesfive hundred crore. However, the investeecompany shall appoint a monitoring agency onthe same lines as required in case of a listed Indiancompany under the SEBI (ICDR) Regulations.

� Warrants

The pricing of the warrants and price/conversionformula shall be determined upfront and 25% ofthe consideration amount shall also be receivedupfront. The balance consideration towards fullypaid up equity shares shall be received within aperiod of 18 months.

The price at the time of conversion should not inany case be lower than the fair value workedout, at the time of issuance of such warrants, inaccordance with the extant FEMA Regulationsand pricing guidelines stipulated by RBI from timeto time. Thus, Investee company shall be free toreceive consideration more than the pre-agreedprice.

� The reporting of issue or transfer of partly paidshares shall be made in form FC-GPR and formFC-TRS respectively.

� Non-Resident Indians (NRIs) shall also be eligibleto invest on non-repatriation basis in partly-paidshares and warrants issued by Indian companiesin accordance with the provisions of theCompanies Act/ SEBI guidelines / Income taxprovisions, as applicable. Investments by NRIsin partly-paid shares and warrants on non-repatriation basis shall also be subject to termsand conditions stipulated in Schedule 4 toNotification No. FEMA. 20/2000-RB dated 3rdMay 2000, as amended from time to time.

3.0 Foreign Direct Investment (FDI) in India -Issue/Transfer of Shares or ConvertibleDebentures - Revised pricing guidelines

� In case of listed companies

The non-resident investor shall be eligible to exitat the market price prevailing on the recognisedstock exchanges subject to lock-in period asstipulated, without any assured return.

FEMA / DIRECT TAXATION� In case of unlisted companies

The issue and transfer of shares includingcompulsorily convertible preference shares andcompulsorily convertible debentures with orwithout optional clauses shall be at a price workedout as per any internationally accepted pricingmethodology on arm’s length basis. Thus, theguiding principle will be that the non-residentinvestor is not guaranteed any assured exit priceat the time of making such investment/agreementand shall exit at a fair price computed as above atthe time of exit subject to lock-in periodrequirement as applicable.

DISCLOSURE IN FINANCIAL STATEMENT

An Indian company taking on record in itsbooks any transfer of its shares or convertibledebenture by way of sale from a resident to anon-resident and a non-resident to a resident shalldisclose in its balance sheet for the financial year,in which the transaction took place, the detailsof valuation of share or convertible debentures,the pricing methodology adopted for the sameas well as the agency that has given/certifiedthe valuation. (A.P. - DIR Series, Circular No.86 dated January 9, 2014, issued by RBI)

1.0 Govt. yet to take a View on Continuance ofGAAR Post-2015

The Revenue Secretary, Government of India hassaid that the new government still needs to take aview on GAAR and will clarify its stand shortly.

2.0 No Pass-through Status for AlternativeInvestment Funds

The Central Board of Direct Taxes has statedthat in cases where the trust deed neither namesthe investor nor specifies the beneficial interests,the entire income of the fund would become liableto be taxed at the maximum marginal rates in thehands of trustees.

3.0 Section 37(1), read with section 28(i), of theIncome-tax Act, 1961 - Business expenditure- Allowability of (Corporate guarantee)

In the ITAT Mumbai Bench 'B' it was held thatwhere assessee furnished guarantees to differentbanks against extension of credit facilities to itsJV company, in view of fact that JV did notperform well and said guarantee came to devolve

DIRECT TAXATION


1.0 Company Law Settlement Scheme 2014(CLSS 2014)

Companies who have not filed their annual reports,financial statements and related documents duefor filing on or before 30/06/2014 can file thesedocuments before 15/10/2014 and avail of thefollowing:

� Pay only 25% of Payable additional Fee and

� Immunity from Prosecutions

� Directors will also not be disqualifiedu/s 164 (2) of the Companies Act 2013

2.0 India Inc gets relief on Related PartyTransactions

The Ministry of Corporate Affairs clarified theterm ‘Related Party’ referred in the Section 188

will need to be construed with reference only tothe contract or arrangement for which the said‘Special Resolution’ is being passed.

3.0 Companies Law: Private firms seek moreExemptions

A large number of unlisted private companieshave sought relief from the stringent provisionsof the new company laws as part of their feedbacksought by the ministry of corporate affairs, whichis reviewing exemptions that can be granted toprivate companies.

4.0 Central Council of Cost Accountants of Indiaresigns

The row over the Cost Audit Rules introducedunder the Companies Act has reached a flash pointas the entire central council of the Institute ofCost Accountants of India (ICAI) submitted itsresignation to Finance Minister Arun Jaitley, whoalso has the charge of the corporate affairsministry. Amid concerns raised by costaccountants over provisions in the new CostRecords and Audit Rules, the government set upan expert committee to look into this matter.

5.0 Cheque Bouncing: SC settles law on whereto File a Complaint

The Supreme Court (SC) ruled that a complaintabout a bounced cheque must only be filed at theplace where the bank dishonoured it, settlingdoubts raised by its own earlier conflictingjudgments on the jurisdiction of a magistrate.

6.0 Gifted Property need not be handed over

The Supreme Court has stated that a gift ofproperty would not be invalid if the possession isretained by the donor. The judgment said thatthere is no provision in law that ownership inproperty cannot be gifted without transfer ofpossession of such property.

CORPORATE & ECONOMIC LAWS

DIRECT TAXATION / CORPORATE & ECONOMIC LAWS / INSURANCEon assessee which was settled at a discount byway of one time settlement (OTS) entered intowith creditors, amount so paid under OTS couldnot be allowed as business expenditure or businessloss

LML Ltd. vs. Joint Commissioner of Income-tax, Special

Range-3, Mumbai [2014] 46 taxmann.com 377.

Note :- The decision would be different ifguarantee commission charged

4.0 Section 115JB: Minimum Alternate Tax -Amount withdrawn from Provision

The Cochin Bench of ITAT has held that in termsof section 115JB it is only amount withdrawnfrom provision made for meeting unascertainedliabilities and credited to profit and loss accountwhich is liable to be deducted from net profitwhile computing book profit.

Assistant Commissioner of Income-tax, Circle-1 (1), Kochi

vs. Covema Filaments Ltd. [2014] 47 taxmann.com 52.

5.0 Section 2(22): Deemed dividend - Loans orAdvances to Shareholder

The High Court of Karnataka has held that deemeddividend is to be taxed in hands of shareholder,whose name is entered in register of shareholderand, not in hands of beneficiary firm.Commissioner of Income-tax, Bangalore vs. Namdhari

Seeds [2014] 46 taxmann.com 441.

INSURANCE1.0 Corporate Bond Market- Permission to

Insurers for membership in SEBI approvedStock Exchanges for proprietary tradingInsurers are now allowed to become a proprietarytrading member of a SEBI approved stockexchange for carrying out trades in the debtsegment.

7A JOURNAL OF ALL INDIA CHARTERED ACCOUNTANTS’ SOCIETY 7A JOURNAL OF ALL INDIA CHARTERED ACCOUNTANTS’ SOCIETY

FINANCIAL INDICATORSCurrent Rate* Month Ago 3 Month 6 Month

3 Month LIBOR (%) 0.24 0.23 0.22 0.24

3 Month MIBOR (%) 8.97 8.79 9.17 9.52

SENSEX 25329.14 25,373 22994.23 20334

NIFTY 7568.55 7,568 6858.80 6053

CRR (%) 4 4 4 4

REPO (%) 8 8 8 8

REVERSE REPO (%) 7 7 7 7

Gold (per 10 gm) 28576.00 28,677 29725.00 29881

Silver (per kg) 43800.00 45,903 41251.00 44585

Crude (USD/bbl) 105.02 108.67 107.97 108.35

` vs USD 61.14 60.28 60.04 62.34

` vs Euro 81.94 81.82 82.49 85.06

` vs 100 Yen 60.93 59.18 58.93 61.03

` vs RMB 9.91 9.70 9.64 10.29

` vs Pound 102.57 103.01 101.03 102.36

MCX Aluminium 124.20 112.90 103.15 103.95

MCX Copper 430.00 427.65 405.05 444.45

*As on 10th August 2014 (Sources: MoneyControl, NSE, BSE, RBI, MCX)

1.0 Manner of distribution of Common InputService Credit under rule 7(d) of the CenvatCredit Rules, 2004Credit of service tax attributable to service usedby more than one unit shall be distributed prorata on the basis of the turnover of such unitsduring the relevant period to the total turnover ofall its units, which are operational in the currentyear, during the said relevant period.

2.0 Impact of FIAT India Case-Central ExciseThe Hon’ble Supreme Court, in the Fiat Indiacase, has cautioned against drawing generalconclusions and inferences, quoting the truismstated by Lord Halsbury that “a case is only anauthority for what it actually decides and not forwhat may seem to follow logically from it”.

After examination of the issue as to whether thedeclared transaction value can be rejected in allcases where the transaction value is lower thanthe manufacturing cost and profit, the Ministryhas clarified vide Circular No. 979/03/2014-CXdated 15th January, 2014 that mere sale of goodsbelow the manufacturing cost and profit cannotbe taken as the sole basis for rejecting thetransaction value. The Supreme Court, in the FiatIndia case, has not ruled that the subsidycomponent provided by the Government wouldtantamount to consideration flowing from thebuyer to the seller and therefore, should beincluded in the assessable value of an excisablegood in terms of the extant Valuation Rules.

It is, therefore, clarified by Central Board ofExcise & Custom (CBEC) that in respect offertilizers for which subsidy is provided by thegovernment, the excise duty will be chargeableon the MRP and not on the subsidy componentprovided by the Government.

3.0 Announcement on Court Verdict Pronouncedon 6 August 2014, by the Lucknow Bench ofthe Allahabad High Court on VATWith reference to the order passed by theLucknow Bench of the Allahabad High Court inthe matter of Tax Lawyers Association & Anr.v/s State of U.P. & Ors. whereby only registeredadvocates are permitted to appear before theAuthority under the VAT Act in the State of U.P.,The Institute of Chartered Accountants of Indiais seized of the matter and taking all steps toensure that the status quo ante is restored in thematter and interest of the profession is preserved.

INDIRECT TAXATION / TELECOM

INDIRECT TAXATION

TELECOM1.0 TRAI releases its Recommendations for a

New DTH Licensing Regime

� The period of DTH license to be increased from10 years to 20 years, renewable by 10 years at atime.

� One time entry fee to be retained at Rs. 10 crore.

� Existing license fee to be reduced from 10% ofGross Revenue (GR) to 8% of Adjusted GrossRevenue (AGR) in line with the telecom licenses.

� The existing DTH licensees to be permitted tomigrate to new regime at any time during thecurrency of their existing licenses.

As a first step, it is proposed to implead ICAI inthe aforesaid matter as ICAI is not a party to thesaid case.

4.0 Section 73A: Recovery of sums collected inexcess of duty/taxThe New Delhi Bench of CESTAT has held thatwhere Service tax collected by builders frombuyers is deposited with Revenue by contractorbeing job worker for builders, revenue cannot beallowed to receive service tax again in respect ofsame construction activities from buyer by takingresort to section 73A.

Jaipuria Infrastructure Developers (P.) Ltd. vs.Commissioner of Service Tax, Delhi, [2014] 46taxmann.com 432.


� Contact details : Dharampal (9013363257) All India Chartered Accountants’ Society - CFO World 909, Chiranjiv Tower, 43, Nehru Place,New Delhi-110019. Ph: 26223712, 26228410, 26226933 E-mail:[email protected] / [email protected] � EDITOR: Pankaj Gupta, LLB, FCSE-mail: [email protected] � PUBLISHED & PRINTED: At New Delhi by Satish Chandra, Administrative Officer, on behalf of All India CharteredAccountants’ Society, 4696, Brij Bhawan, 21A, Ansari Road, Darya Ganj, New Delhi-110 002 Phone 23265320, 23288101 E-mail : [email protected] at: EIH Ltd., Unit : Printing Press, No. 7, Sham Nath Marg, Delhi-110054. Views expressed by contributors are their own and the Society does not acceptany responsibility.

If undelivered, please return to :All India Chartered Accountants’ Society4696, Brij Bhawan 21A, Ansari Road,Darya Ganj, New Delhi-110 002

Date of Printing : 12th August, 2014R.N.I. No. 50796/90Posting Date: 14/15 August, 2014

Registration No. DL(c)-01/1268/2012-14Licenced to post without prepayment No. U-(C)-82/2012-14

higher credibility to the entire exercise being undertakenby SEBI and to ensure internal control on possibility ofmisuse of power.

It is therefore very important that the power to issue showcause notices, the power to make enquiries, power to makeadjudication and most importantly power to levy penaltyare decided by independent judiciary. It is important thatthe entire judicial power, being currently exercised byAdjudicating Officer and Whole Time Member of SEBIare all assigned to an independent judicial system.

It is also very necessary that investors are adequatelycompensated for the loss incurred by them due to fraudulentand manipulative practices.

so that appropriate action can be initiated against erringunscrupulous promoters and market participants and justicereach near the investors and not concentrated at Mumbai.

CONFIDENTIALITY:

SEBI also need to consider that various investigations,show cause notices, adjudication and punishments are keptcompletely confidential at least till the final penalty is levied.In case the investigation or interim actions are made public,even innocent persons credibility and image can getadversely impacted, specially if at same stage it isdetermined that the person or company was not actuallyguilty. Transparency needs balancing in the interest ofjustice.

SEBI can consider recommending constitution of multilevelInvestors' Courts on the lines of consumer courts atnational, regional and district level.

EDITORIALSEBI : A Need ...

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