Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Asstt. Director (Cost) is an employee of the department and is not a Cost Accountant entitled to carry on the profession in terms of Sec.2(1)(b) read with Sec.2(2) of the Cost and Works Accountants Act, 1959 read with Explanation 1 to Sec.14A of the Central Excise Act - He should not have been appointed under Sec. 14A of the Act to estimate the cost of production, let alone the assessable value of the goods – 90 lakhs demand and equivalent penalty set aside on ROM application - CESTAT

AN independent Cost Accountant practising his profession in accordance with the provisions of the Cost and Works Accountants Act alone should have been engaged for the purpose under Sec.14A of the Act. This legal position was made abundantly clear by this Tribunal in the case of Bausch & Lomb (India) Ltd (vide supra.) It is apparent from the records that the decision pertaining to the second part of the period of dispute was not taken with due regard to the legal provisions supported by the case law.

Income Tax

Sec 271D - purchase of flat - Assessee receives cash payment from a company - pleads cash payment was towards 40% share of company in flat - AO treats same as unexplained cash in hand of assessee and also loan from company - Contradiction in AO's order negates satisfaction for levy of penalty: ITAT

IT is common knowledge that most property transactions involve cash payments. And any cash payment above Rs 20,000 is prohibited under Sec 269SS. If one violates it, the assessee attracts penal provisions u/s 271D. But how the AO goofed up a good case can be seen in the instant case. The assessee is an HUF. It earns its income from house property and other sources. It buys a flat in Bandra area. Revenue conducts a search u/s 132 and finds that a cash payment of Rs 46 lakh was also made on various dates. The cash payment had come from a registered company. Assessee takes the plea that the cash payment was made by the company towards its 40% share in the flat and the sum was to be utilised for the interior work.

Customs

Fraudulent Import – misdeclaration - petitioner cannot be allowed to take advantage of the wrong committed by it by filing writ in the High Court – Exercise of power of seizure of any goods in the absence of a quick decision, without any responsibility is prima facie not permissible - Directions to Customs in 2006 to take steps for quick clearance of goods – Court satisfied with Report from Customs – High Court

WHETHER an importer, who is alleged to be guilty of misdeclaration of description of goods and under-valuing the invoices, can invoke extraordinary jurisdiction of the High Court by filing a writ petition with a prayer that the authorities be directed to reimburse the cost of detention and demurrage charges during the pendency of proceedings before the appropriate authority, which has issued a show-cause-notice for imposing duty, penalty and confiscation of goods, especially when goods have been provisionally released, is a question which has been raised in the present writ petition.

Service Tax

Production of goods containing alcohol and discharging State Excise duty – CESTAT while granting Stay ordering for pre-deposit – later, in another case of same appellant setting aside order of lower authority by holding activity not liable to Service Tax under head BAS – Appellant files Modification applications – CESTAT dismisses the same as infructuous and also sets aside demand.

IT was decided that if the CBU undertakes complete process of manufacture of alcoholic beverage under the ‘contract bottling arrangement' then such activity would not fall under the taxable service, namely the BAS. However, in case the activity undertaken by the CBU falls short of the definition of manufacture (such as activity of ‘packing' or ‘labelling' alone) then such activity would fall within its ambit and would be charged to service tax.

See our columns Tomorrow for the judgements