Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

A show cause notice under section 11A(1) of CEA, 1944 should result from successful conclusion of investigations rather than from a mere report of an auditor – Arithmetically blunderous demand – CESTAT

THE lower authorities chose to repeat the mistake of the auditor in application of Rule 9(5) of the Cenvat Credit Rules, 2004 . Apparently, it was presumed that the burden of proof regarding the admissibility of CENVAT credit to the extent of Rs.3,22,525/- lay on the assessee. The indisputable fact is that, in this case, the assessee consistently denied having taken any such credit. The department, in the absence of CENVAT account, did not make out a fool-proof case of such credit having actually been taken by the assessee either.

Income Tax

Cooperative bank - deduction for interest on tax refund - Although interest income falls under head 'income from other sources' but for business of banking it falls under much wider term 'gains' in 'profits and gains of business' as legislature has used phrase 'attributable to' as against narrower term 'derived from' in Sec 80P - deduction allowable: ITAT Special Bench

INTEREST on income tax refund is a common phenomenon. What is equally common and settled legal proposition is that such interest is an income, exigible to tax. But the larger question is whether such income would fall under the head 'income from other sources' or under the head, depending on the character of source of such income. For instance, if the source of fund deposited with the Revenue is 'capital gains', would the interest on income tax refund fall under the head 'capital gains'? If the fund deposited with the Revenue is 'Income from House Property', will the interest income by way of income tax refund fall under the same head?

Service Tax

Rent a cab service, outdoor catering service, air travel booking, telephone/mobile services and steamer agent qualify as "input service" – Refund of un-utilised Cenvat credit admissible – CESTAT

THE present stand of the Revenue is unacceptable. It is well settled that the Revenue cannot blow hot and cold at the same time. The law does not permit blowing bugle at both ends. It is clear that the burden of service tax must be borne by the ultimate consumer and not by any intermediary i.e. manufacturer or service provider. In order to avoid the cascading effect, the benefit of cenvat credit on all input Stage goods and services must be allowed. Consequently, refund should be allowed in case of export of goods.

Customs

Prosecution – A person not concerned with exports cannot be prosecuted for export offence; No punishment for false declaration when no document was signed by petitioner- complaint also time barred – High Court

IN the present case there is nothing to show that the petitioner made any false declaration or prepared false documents and, therefore, he is not liable to be prosecuted under Section 132 of the Customs Act. In this case, moreover the complaint is barred by limitation inasmuch as per the provision of Section 132 which existed at the relevant time the punishment which could have been imposed for violating Section 132 could have extended for a period of six months or with fine or with both and limitation in such a case as provided under Section 468 of the Cr.P.C. was only 1 year. In the present case, the complaint was filed by the respondent on 31.08.1998 whereas the incident in this case pertains to the year 1997 and, therefore, the complaint was admittedly barred by limitation. This has also been accepted by the learned counsel for the respondent during the course of arguments.

See our columns Tomorrow for the judgements