Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Once it is held that the allegation of suppression of fact with an intend to evade duty of goods was sustainable, it is axiomatic that such levy of penalty as provided under Section 11AC should be equal to amount of duty levied – HC

THIS appeal was entertained on the following substantial question of law:

"Whether the penalty amount mentioned in Section 11AC of the Central Excise Act, 1944, is the discretion of the Quasi Judicial Authority viz., the Tribunal."

The High Court perused the judgements of the Supreme Court in Union of India v. Dharmendra Textile Processors - 2008-TIOL-192-SC-CX-LB and Union of India vs. M/s.Rajasthan Spinning and Weaving Mills - 2009-TIOL-63-SC-CX.

And concluded that when once the application of Section 11AC to a case is imperative, thereafter there could be no discretion in quantifying the amount of penalty, but the penalty must be imposed equally to the duty determined under Section 11A(2) of the Act.

Income Tax

Sums paid on voluntary retirement to extent of rupees five lakhs are exempted from being charged to tax by reason of section 10(10C). Jurisdictional High Court Order has to be followed by Tribunal - if two views are possible, a view which is favourable to the assessee has to be adopted – ITAT – by majority

THE following question was referred to the Third Member.

"That the CIT(A) erred in law in deleting the disallowance of the assessee's claim of exemption of Rs.5,00,000/- u/s. 10(10C) on the ground that Hon'ble Madras High Court in their order dated 12.03.2008 made on similar issue has ordered that no deduction u/s. 10(10C) is available to the employee if the schemes framed are not in accordance with the requirement of Rule 2BA of the I.T.Rules. The exemption of tax u/s. 10(10C) is available on the amount received under a scheme of voluntary retirement/voluntary separation framed in accordance with the guidelines prescribed and specified in Rule 2BA and that the Bombay High Court in their order reported in 300 ITR 180 decided that the monetary limit fixed administratively will not apply to the cases of substantial question of law."

Service Tax

CENVAT Credit not available on repairs, maintenance, civil construction, manpower recruitment and cleaning services provided for residential colony: CESTAT

IT is held that, as the respondent has not established nexus between any of the four services and the manufacture or clearance of excisable goods, the benefit of CENVAT credit in respect of such service cannot be allowed. It is ordered accordingly. However in a case of this nature, the assessee should not be penalised. This case involves rival interpretations of a provision of law. In typical cases of interpretative nature, penalties have been waived by this Tribunal. In this view of the matter, the order-in-original is sustained except in respect of penalty imposed by the original authority…

See our columns Tomorrow for the judgements