Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Inherent contradiction – By upholding demand of duty, Commissioner(A) has given his stamp of approval to invocation of extended period of limitation – in such an eventuality, mandatory penalty and interest payable – revenue appeal allowed- CESTAT

THE entire demand of duty was for a period beyond the normal period of limitation. But upholding such demand of duty, the learned Commissioner(Appeals) was giving his stamp of approval to the invocation of the extended period of limitation. Therefore, it was not open to him to hold that the proviso to section 11A(1) was not applicable.

Income Tax

STPI unit – Deduction under Sec 80HHE and Sec 10A eligible for two different periods of same Asst Year - ITAT

THE principle of apportionment of income or expenditure is well entrenched in the taxation laws. The assessee computed profits for the two periods on a reasonable basis by taking receipt on actuals and expenditure on a proportionate basis. The Assessing Officer has not found any fault with the allocation of profit in the two periods. It is settled that in law, the profits of a business accrue on the last date of the previous year. However, that does not mean that allocation of profits of the year in two different periods is an impossibility because of the aforesaid principle of law. Such an apportionment was necessary as the assessee became entitled to deduction under two different provisions for the two periods. The principle of accrual of profit does not come in the way of allocation of profit in the two periods. What can be done at best is to ensure that the allocation is made on a proper basis so as to avoid excessive claim of deduction under one or the other provision.

Service Tax

Construction of a building in Sri Lanka – tax paid by misunderstanding of law – Amount paid is not tax and refund not governed by limitation under Section 11B of Central Excise Act – Madras High Court

IT is clear that if what was paid cannot be taken to be duty of excise, the bar of limitation under section 11B(1) cannot be applied. This is on account of the fact that the bar of limitation prescribed under Section 11B(1) applies only to "any person claiming refund of any duty of excise and interest". Therefore, the claim of the petitioner for refund can be entertained by this Court, since there is no dispute about the fact that no service tax was payable by the petitioner and as a corollary, what was paid by them was not service tax.

And we came across a similar case from another High Court

Service Tax – Amount paid due to misunderstanding of law, when no tax was payable – limitation under Section 11B of Central Excise Act not applicable – Karnataka High Court

SECTION 11B provides for making a claim to refund duty. Admittedly, the sums deposited by the petitioner are held to be a deposit and not as a duty, therefore, there was no necessity for the petitioner to have made a claim invoking Section 11B of the Act for refund.

See our columns Tomorrow for the judgements