Jurisprudentiol- Tomorrow's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Income Tax

Harshad Mehta case - Banks plead - Special Court scales down tax liability of Mehta and directs Income tax to refund Rs 546 Cr - If banks claim sum is wrongly included in Mehta's income, they need to show nexus between decreed amount and amount included in Mehta's income: Supreme Court

THIS case goes back to the first mega Securities Scam which had upset the entire economy. Yes, late Harshad Mehta was the trigger point for this scam. The then Govt had reacted strongly by enacting the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. Mr Mehta was notified under Section 11(2)(a) of this Act, and his properties were attached. A custodian was appointed to look after them. Mr Mehta fought a legal battle against the custodian which was decided by the Apex Court. In this order, the first priority to tax dues of income tax department was approved by the Bench, followed by others like banks and mutual fund. So, what is this dispute all about? In this appeal the Revenue has challenged the order of the special court, directing it to deposit Rs 546 Cr with the Custodian along with 9% interest. Such an order was given in response to applications filed by banks. While holding that at this stage Mr Mehta's tax liability does not appear to be in excess of Rs 140 Cr, the Special Court decided that since the sum kept with the Custodian may not serve any useful purpose, the same was directed to be deposited with the SBI and other banks.

Central Excise

Appeal against remand order of the Tribunal - No substantial question of law - Cross examination to be allowed - Commissioner's inaction not appreciated: High Court

THE High Court found that the impugned order was passed two years ago. No stay was sought or granted. Still, the Commissioner has failed to carry out the direction of the Tribunal, by which the Commissioner was bound, only on pretext that appeal was filed. Such conduct of the Commissioner can hardly be appreciated.

One who committed breach of the conditions of the Notification is not entitled to blame other party to the transactions: Tribunal allows appeal by majority

According to this complexly worded notification, the manufacturer is required to utilize whole of the Cenvat credit available on the last day of the month under consideration for payment of duty on goods cleared and pay the balance amount of duty in cash. The duty paid in cash is refundable and for this purpose, the Notification has two alternative procedures. The appellants have opted for self-credit procedure under clause 2a (now clause 2C (a)) of the Notification which allows the assessee to take credit of duty paid in cash and submit a statement to the jurisdictional Asstt. Commissioner/Deputy Commissioner and the A.C/D.C shall determine the amount correctly refundable to the manufacturer and intimate the same to the manufacturer. In case, the self credit taken by the manufacturer is in excess of the amount determined by the A.C/ D.C, the manufacturer is required to reverse the credit within 5 days from the receipt of the said intimation. The self-credit taken in the PLA can be utilized for payment of duty in the manner specified in rule 8 in the subsequent months and such payment shall be deemed to be payment in cash.

See our columns tomorrow for the judgements

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