Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Appellant taking credit on Goods Transport Services even in respect of exempted goods but reversing same subsequently – since credit taken after clearances of exempted goods, rule 6 of CCR, 2004 not applicable – Penalty sustainable: CESTAT

RULE 6 of the Cenvat Credit Rules, 2004 never ceases to mesmerize us. The department is always quick to invoke the contents of rule 6(3)(i) and ask the manufacturer to pay the “amount” of 10% [now 5%] of the value of the exempted goods the moment it sees that although common inputs/input services have been used in the manufacture of dutiable and exempted final products, no separate accounts have been maintained. There is never a thought spared to see the date on which the Cenvat Credit was availed on the common inputs/input services and whether there were any clearances effected of exempted goods after that date. Or for that matter, whether the Cenvat Credit on the said “common input/input service” was eligible in the first place!

Income Tax

Transfer Pricing - Sec 92CA(3) - Is personal hearing obligatory before AO makes adjustment in ALP? - Supreme Court directs Revenue and assessees to go to Alternate Dispute Resolution panel mooted in Budget 2009

IN Moser Baer India Ltd Vs The additional Commissioner of Income-tax (2008-TIOL-647-HC-DEL-IT), the assessee Moser Baer and others like HCL Ltd filed writ petitions before the Delhi High Court seeking to quash the orders of adjustment passed by the TPO on the alleged ground of non-observance of the principles of natural justice. In these cases, although number of hearings did take place, the plea taken was that an oral hearing in terms of section 92CA (3) was not accorded by the TPO before making the alleged adjustments. The Income-tax department argued that oral hearing was not a necessary facet of natural justice. A right to effective representation would suffice and that was complied with in all the cases. However, the High Court, in this group of cases, held that the provisions of sub-section (3) of section 92CA cast an obligation on the TPO to afford a personal hearing to the assessee before he proceeds to pass an order of determining of the ALP. The High Court directed the TPO to afford opportunity to the taxpayers and decide the matters within three days.

Customs

Once adjudication proceedings exonerate accused on merits on a given set of facts, criminal prosecution based on identical set of facts cannot be allowed to continue – All proceedings arising out of criminal complaint filed against petitioner quashed: Delhi HC

THE petitioner approached the Delhi High Court challenging the dismissal of his discharge application filed under Section 245 (2) of Cr PC by the ACMM, New Delhi in a DRI case involving clandestine possession/dealings of foreign exchange and sought for quashing of all criminal proceedings against him. The High Court allowed his petition on the ground that when adjudication proceedings against the petitioner exonerate him on merits on a given set of facts, then criminal prosecution on identical set of facts cannot be pursued.

See our columns Monday for the judgements