Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Wrongly availed exemption notification, no mens rea proved by Revenue – no cause for imposition of penalty under section 11AC of the CEA,1944 – Revenue Appeal Dismissed - CESTAT

As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis -statement or suppression of facts are concerned, they are clearly qualified by the word 'wilful', preceding the words " mis -statement or suppression of facts" which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty'. Therefore, there cannot be suppression or mis -statement of facts, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11A . Mis -statement of fact must be wilful".

Income Tax

Electricity Board sells energy saving devices after taking them on lease – Department alleges sham transaction - It cannot be said that any and every attempt of tax planning is illegal – no question of Law: High Court

Only contention raised by the learned counsel for the revenue is that the machinery was integral part of the boilers and the same continued to be with the assessee in spite of sale. The fact remains that the sale consideration was received by the assessee and lease rental was paid by the assessee. Merely because tax liability was reduced could not be conclusive of arrangement being sham of a device. The assessee was entitled to arrange his affairs to reduce tax liability, without violating the law.

Service Tax

Service Tax – Laying of pipelines for drinking water supply projects, prima facie not leviable to tax under Commercial or Industrial Construction Service – Pre-deposit of Rs. 15 Crores towards duty and penalty waived and stay granted – CESTAT

It is very clear that the Board primarily executes water supply and sewerage works for the benefit of both the rural and urban communities excluding the municipal corporations. The water is supplied at highly subsidized rate. In view of these circumstances, we are of the view that the activity of laying of pipelines for the said Board by the appellants cannot be considered as services of ‘commercial or industrial construction'. Prima facie, we feel that the appellants have made out a strong case on merits. Hence, we order waiver of entire dues demanded in the impugned order. The stay application is allowed. There shall be no recovery of the amount even after expiry of 180 days from the date of this order.

See our columns Tomorrow for the judgements