Jurisprudentiol–Tomorrow's cases

By Vijay Kumar

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

See-saw battle on welding electrodes continues – Credit available on welding electrodes used in maintenance and repair of machinery in terms of Hindustan Zinc Ltd. vs. Union of India: CESTAT

SIMPLIFICATION of rules and procedure in Central Excise is a misnomer especially going by the multiplicity of disputes on eligibility or otherwise of CENVAT credit on various inputs, capital goods and input services (after introduction of service tax). Some disputes never refuse to die even after decent burials by Tribunals/High Courts. One such dispute is the eligibility of credit on welding electrodes used in maintenance and repair of machinery.

Income Tax

Sec 14A has no application to insurance business which is governed by special provisions of Sec 44; Sec 14A also creates an exception for deductions allowable under Ss 28 to 43B: ITAT

SECTION 14A is an interesting provision which gets attracted for making disallowance of expenditure in the case of non-taxable income. However, in an equally interesting and significant decision the ITAT has held that Sec 14A has no application to insurance companies which are governed by the matrix of provisions of Sec 44 - a special provision coupled with non-obstante clause. It further rules that Sec 14A contemplates an exception for deductions permissible under Ss 28 to 43B of the Act. Sec 44 applies notwithstanding anything contained within the provisions of the Income-tax Act relating to computation of income chargeable under different heads and that there is no requirement for head-wise bifurcation while computing the income u/s 44 of the Act in the case of a insurance company.

Customs

Detention of Goods - no liability, civil or criminal, may be attracted so long as power exercised by Customs is in good faith and not in colourable exercise of power – Burden to prove malafide is on importer: Delhi HC

THERE is always a presumption in favour of the Administration that its exercise of power shall be in good faith and for public benefit. Therefore, the "burden is on the individual to produce sufficient material to suggest of the mala fides of the authority concerned and it is not easy to discharge the same". There is a presumption of bona fides in favour of the Authority. The burden of proving mala fides is on the individual alleging it. Indeed, it is a heavy burden which can be discharged ordinarily by initiation of civil proceedings.

Service Tax

Confusion prevailing in industry on liability of service tax on recipients for services received from offshore service provider prior to 01.01.2005 – Provisions of Sec 80 applicable – No penalty leviable when tax paid before issue of SCN: CESTAT

WHEN the Appellant have discharged tax liability from October 2004 to March, 2005 period along with interest, while in view of Tribunal's Judgement in case of M/s. Hindustan Zinc Ltd. (Supra), they were liable to pay the tax only w.e.f, 1.1.05, it would be illogical to impose penalties on them u/s. 76, 77 & 78.

See our columns tomorrow for the judgements