Jurisprudentiol– Friday's cases

By Vijay Kumar

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

An expenditure which is deductible under Income Tax is towards a liability actually existing at the time, but setting apart money which might become expenditure on happening of an event is not expenditure allowable under law: ITAT Special Bench

It is not necessary for the Commissioner of Income-tax to make further enquiries before cancelling the assessment orders of the Assessing Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Assessing Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. Unlike the Civil Court which is neutral to give a decision on the basis of evidence produced before it, an Assessing Officer is not only an adjudicator but is also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further enquiry.

Service Tax

Section 80 of Finance Act, 1994 - Ignorance of law cannot be accepted as a reasonable cause for failure to pay service tax. Any tax is a compulsory levy and, therefore, a new levy is raised by the Government only with prior notice to the public - CESTAT.

This awareness of law is further evidenced by the fact that they paid all the penalties imposed on them by the Assistant Commissioner. The appellant might have had their own reasons for such payment. It, however, cannot be denied that they were aware of the penal provisions. Yet another factor to be recognized in this context is that the appellant did not choose to claim the benefit of section 80 in answer to the show cause notice issued by the Assistant Commissioner. That show cause had proposed penalty under section 76 also.

Central Excise

Oil giant pleads financial hardship – Tribunal directs M/s HPCL to pay Rs.3.5 Crores as pre-deposit in Naphtha case.

Goods supplied to M/s RCF in terms exemption notification 6/2006-CE as amended by notification 48/2004-CE and not being put by M/s RCF for the intended purpose viz. manufacture of fertilizers – Onus is upon M/s HPCL to ensure that goods are exclusively used for manufacture of fertilizers - Duty liability cannot be resisted by M/s HPCL – condition of following CT-2 procedure done away with when notification 6/2002-CE was amended by notification 48/2004-CE and this position continues in Notification 6/2006-CE.

See our columns tomorrow for the judgements