Jurisprudentiol–Monday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

Tribunal has to pass reasoned orders - reasons are like the bricks with which the edifice of justice is built. If bricks are not in place, or are missing, entire edifice comes crashing down – Copy of the Order to be sent to CESTAT President: Gujarat HC

THE High Court observed that an order made by the Tribunal is required to be made after giving an opportunity to the parties, of being heard. While making an order under Section 35C of the Act, the Tribunal must keep in mind that the proceedings before it are likely to have far-reaching financial implications so far as parties, i.e. the assessee as well as the Revenue are concerned and it is, therefore, essential that the order made by the Tribunal should reflect an application of mind before fastening of liability upon an assessee or granting relief against the Revenue.

Income Tax

Income Tax – cash sales of over Rs 1 Crore – Some evidence of sale generating extraordinary income of about 100% in hands of a loss making company required to be placed by assessee - Mere entries of sale to justify credit of Rs 1,00,04,855 were not good enough: ITAT by Majority

ON account of difference between Members of ITAT, this matter has been placed before the President as Third Member with the following questions:

1. Whether, on the facts and in the circumstances of the case, the addition of Rs.1,00,04,855/- on account of cash credited in the books of accounts of the assessee is justified?

2. Whether, on the facts and in the circumstances of the case, investment in cash of Rs.51,65,820/- is explained satisfactorily on the basis of material placed on record?

3. Whether, on the facts and circumstances of the case, the issue relating to source of investment in purchases should be restored back to the file of the A.O for fresh decision as proposed by the Ld. A.M.?

Service Tax

CENVAT Credit – Service Tax paid on Erection and Commissioning at Buyer's premises – Entitled for Credit - Rules does not require that service has to be rendered at the factory of the manufacturer for the purpose of eligibility for service tax credit - CESTAT

IN this case erection and commissioning charges have been included in the cost of the machines sold. The appellants have selected the agency to do this work and once the purchaser enters into an agreement for supply of the machine including the erection and commissioning charges, the responsibility for erection and commissioning is of the manufacturer. Therefore what is happening in this case is that the supplier of the machine is not only selling the machine but is also providing the service of erection and commissioning. Once erection and commissioning cost is included in the transaction value, the natural conclusion that would emerge is that the processes undertaken in the buyer's premises are actually incidental to manufacturing activity undertaken in the manufacturer's premises. What has been sold in this case is the complete machine duly erected and commissioned and operational.

See our columns Monday for the judgements