Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Irregular CENVAT Credit - penal clause would not be attracted to facts of every case unless a categorical finding of fraud, collusion, willful-mis statement etc. with intention to evade payment of duty have been recorded- High Court

PENALTY under section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. It is evident that penal clause would not be attracted to the facts of every case unless a categorical finding of fraud, collusion, wilful misstatement etc. with the intention to evade payment of duty have been recorded. In the absence of such a finding, the imposition of penalty is not automatic and cannot be levied.

Income Tax

Sec 195 - payments to non-residents - whether assessee-payer can decide taxability of income in hands of non-residents before he decides to deduct tax at source - assessee pleads for referring issue to Special Bench - since assessee's appeal relating to other AY already admitted by HC, no need to refer it to Special Bench: ITAT

WITH cross-border transactions becoming a routine affair for most business-doing entities in the economy, the Section 195 of the Income Tax Act has become one of the hottest issues for litigation. This Section states that tax is to be deducted at source from any payment made by way of interest, royalty, fees for technical services or any other sum to a non-resident. Now, the contentious issue is whether the assessee-payer has the liberty to decide the chargeability of income in the hands of the non-resident. If no, then TDS is to be made on all sorts of payments, including reimbursements, made to non-residents. If yes, the assessee-payer may consider the taxability of the payment being made to a non-resident before he decides whether TDS is to be made or not.

Customs

Forged licences, in law are no licences; Even goods attempted to be cleared on strength of forged licences, are liable to be confiscated; Redemption fine amount should not be just sufficient to wipe out profits but it should be more than that – High Court

WHERE import is not prohibited, adjudging officer has no choice or discretion and it is mandate of law that he shall give an offer to the party to pay fine in view of the confiscation. Even if the option of payment of redemption fine may be given to the importer, the fine amount should not be just sufficient to wipe out the profits but it should be more than that. If the person is required to pay only the amount which he has saved by not paying the premium for securing genuine replenishment licence, he will never feel pinch of being caught. He may commit same wrongs repeatedly and as and when he is caught, he may pay amount equivalent to the premium. In our considered opinion, redemption fine should be more than that.

See our columns Tomorrow for the judgements