Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Classification – Carpets containing jute, cotton and polypropylene- to be classified on basis of that textile material which predominates by weight over any other single textile material; Revenue cannot in Court argue a case not made out in its show-cause notice. – Supreme Court

IT is well settled that unless the foundation of the case is made out in the show- cause notice, Revenue cannot in Court argue a case not made out in its show-cause notice.

Income Tax

Penalty - if assessee makes a claim of deduction under a particular Section where such deduction is clearly not admissible, such claim to be treated as false and bogus and to attract penal provisions: Delhi High Court

WHEN can penalty u/s 271(1)(c) be imposed? The settled law is either in case of concealment of income or in case the assessee furnishes false particulars of income. In other words, in case of latter, if one submits fake documents to claim deductions, penalty will be attracted. But in this instant case the Delhi HC has widened the ambit of submission of false information by holding that if a claim of deduction is made under a particular Section where such deduction is clearly and undoubtedly not admissible, it is to be treated as 'false claim', and the same will attract the penal provisions u/s 271(1)(c). In other words, the HC has observed that in a case where no views are possible on the interpretation of admissibility of deduction under a particular Section, it is to be treated as bogus claim. And it will attract penalty provisions of the I-T Act.

Service Tax

Service tax on services received from outside India can be discharged from CENVAT Credit account – No exclusion provided in scope of 'output service' defined in Rule 2(p) of CCRs, other than GTA prior to 01.03.2008 – Pre-deposit of Rs. 3.3 crores waived and stay granted: CESTAT

THE appellants, M/s Toyota Kirloskar Motors Pvt. Ltd, received certain taxable services like intellectual property service, Commissioning & Installation Service, Maintenance & Repair Service from outside India. In addition to these services they were also recipients of GTA service. As a recipient, the appellants were liable to pay service tax on the services received from outside India in terms of Section 66A and for GTA in terms of Section 68(2) of the Finance Act, 1994. The total amount of service tax liable to be paid by the appellants during the period from April 2006 to August 2006 was Rs. 3.3 crores.

The entire amount of tax liability was discharged through their CENVAT Credit A/c. Revenue proceeded against the appellants on the ground that the services received from outside India cannot be regarded as ‘output service' and hence they cannot utilize their CENVAT Credit A/c for discharge of their tax liabilities.

See our columns Tomorrow for the judgements