Jurisprudentiol– Monday's cases

By Vijay Kumar

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

If penalty is imposed under section 11AC of the CEA , 1944, further imposition of equivalent penalty under rule 173Q of CER , 1944/rule 25 of CER , 2002 is not warranted – Tribunal.

THE Tribunal observed that as against a total duty demand of Rs.2 ,52,553 /- the cumulative penalty imposed of Rs.5,25,606 /- was excessive. The Bench accordingly held that wherever penalties under section 11AC of the CEA, 1944 were imposed, further imposition of equivalent penalties under rule 173Q is not warranted. So saying, the simultaneous penalties imposed under rule 173Q were set aside. The Bench also justified this conclusion by pointing out to the contents of clause 2.2, Part III to the Chapter 13 of the CBEC's Excise Manual of Supplementary Manual which said so.

Income Tax

India-UK tax treaty - assessee receives technical services from non-resident lead managers for GDR issue - management and sale commissions are fees for technical services under I-T Act and DTAA but since they were not 'made available' to assessee they are not taxable; such income to be treated as business profit under Art 7 of DTAA but not taxable as non-residents have no PE in India: ITAT Special Bench

TDS - tax deduction at source - is a major instrument of tax collection for the Revenue in any country. It is preferred to many other tools of revenue collection as it carries greater element of certainty in collection like the advance corporation tax. But, is it deductible on all sorts of payments? Does it have any nexus with the tax liability of the payee? Should it be deducted irrespective of the tax liability of the income recipient? There are many similar questions which came up before the Special Bench of the Tribunal in a case in which the Indian company had failed to deduct tax at source u/s 195 before making payments to non-resident lead managers from the UK who had provided various sorts of specialised services to the assessee's GDR and FCCB's issues for mopping up funds. The Revenue had held the assessee in default u/s 201(1) and also demanded interest u/s 201(1A).

And in a landmark decision the Tribunal has held that what is pre-requisite for the Revenue to satisfy before treating an assessee in default is to find out whether the payee's income is liable to tax or not?

Service Tax

Self assessment - When no order capable of being appealed against, had ever been passed, it cannot be said that assessee could file appeal against assessment order - Refund sanctioned proper: Tribunal

THE brief facts of the case are that the amount of Service Tax payable was self assessed and paid by the assessee. The return in form ST-3 for the period October 2006 to March, 2007 was also filed. Later, they filed a refund claim of Rs.2 ,29,010 /- and which was sanctioned by the lower authority and this order was upheld by the Commissioner(Appeals).

See our columns Monday for the judgements