Jurisprudentiol–Thursday's cases

By Vijay Kumar

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

No penalty can be imposed under section 11AC of Central Excise Act, 1944 in respect of non-payment of amount due under Rule 6(3)(b) of CENVAT Credit Rules, 2004: CESTAT

RULE 12 of the CENVAT Credit Rules provide that where the CENVAT credit has been taken or utilized wrongly or erroneously refunded the provisions of the Section 11A or 11AB shall apply mutatis mutandis for such recovery. Neither Explanation-II to Rule 6(3) refers to Rule 13 for imposition of penalty if the manufacturer does not pay the amount due under this sub-rule nor Rule 13 provides for penalty in this regard.

Income Tax

Transfer Pricing - determination of arm's length price - TPO can invoke proviso to Rule 10B (4) for using prior years' data provided such data influences determination of transfer price - otherwise, it is mandatory for TPO not to ignore data relating to pertinent financial year in which transactions with associated enterprise take place: ITAT

WITH each passing month, the tally of TP cases has been getting taller, and greater clarity in the Transfer Pricing Regulations being achieved in India. It has now become important for the Revenue to deal with TP cases with greater accountability towards judicial decisions. Since TP -related disputes involve in-depth and critical analysis of high volume of data for determining Arm's Length Price for transactions with associated enterprises, the TP laws do prescribe certain guidelines for relying on them. In this case the Revenue had ignored the data of current year provided by the assessee and relied more on previous two years data without giving justification, the assessee was aggrieved and the Tribunal has held that the Rule 10B (4) is quite clear and specifies that the data to be used in analyzing the comparability of an uncontrolled transaction with an international transaction shall be the data relating to the financial year in which the international transaction has been entered into.

CESTAT

ROM is permissible even while the matter is pending with the Third Member – Tribunal has to frame points for determination and each point has to be answered. It is the cardinal duty of Court or Tribunal to do complete justice: Bombay HC

AN application for rectification would be maintainable even when a reference is made to a Member. Apart from the language of the provisions it would be a more constructive and purposeful method of answering the issue. Holding otherwise, and accepting the stand of the revenue would be to delay the proceedings and may also again lead to other points being referred once again.

While hearing and deciding an appeal the Tribunal is bound to frame points for determination which are relevant for deciding the issue in controversy in the appeal. Once the points for determination are fixed the members are bound to answer the points so framed. It is only on the points on which there is difference of opinion, then only is there a need to refer to a third member those points for determination. It is in that context while disposing of appeals the tribunal is bound to fix points for determination and answer the said points.

See our columns Tomorrow for the judgements