Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Deterrent Action against tax evaders – Copies of relied upon documents must be provided to the assessee - Opportunity of hearing means an effective opportunity – CBEC Member's order set aside - High Court

THE notification itself stipulates that the noticee has to be given an opportunity of being heard and that his representation must be considered before the recommendation is made to the Director General. Opportunity of hearing means an effective opportunity of hearing and in this case it means that the petitioner ought to have been supplied with the documents so that he could have made an effective representation against the contemplated action.

CENVAT Credit – capital goods used for setting up of co-generation plant received prior to operationalization of sugar mill – credit cannot be denied - CESTAT

ASSESSEE cannot be denied credit holding that non-dutiable electricity was final product at the time of receipt of capital goods – Sugar mill not being operational on date of receipt of capital goods does not disentitle credit – On erection of entire facility, dutiable excisable goods were final products manufactured using electricity produced by co-generation plant – Impugned order not consistent with law, liable to be set aside

Income Tax

Assessee is tax resident of USA - sets up R&D Centre to develop agri-genetic research - claims exemption u/s 10(1) - Creation and sale of hybrid parent seeds not agricultural activity - expression 'agriculture', has got to be understood as connoting integrated activity of basic operations upon land: ITAT

CREATION and sale of hybrid parent seeds not agricultural activity. The expression "agriculture", has got to be understood as connoting the integrated activity of basic operations upon the land.

From the nature of activity carried out by the assessee, it is clear that the breeder seeds developed or produced by the assessee are sown to obtain large quantities of parent seeds, which are being supplied to joint venture Company for a price. The assessee undertakes the production of parent seed through multiplication of breeder seed, which are developed by the assessee after a long drawn process of combining two or more traits of different seeds into one seed.

Service Tax

Import of services – No tax prior to 18.04.2006 – High Court

YET another High Court has put a stop to Revenue's cavalcade to tax a service without the authority of LAW.

The revenue is before the High Court with the following substantive questions of:

(i) Whether the service tax was leviable on the recipient of service irrespective of Section 66-A of the Finance Act?

(ii) Whether non-supply of information to the department regarding overseas commission with the intention to evade service tax does not amount to suppression of facts and invite invocation of extended period of limitation?

Till the time Section 66A was enacted only the person who rendered the service was liable to pay tax and not the recipient of the service. Accordingly, the revenue did not have any authority to levy service tax on the assessee.

See our columns Tomorrow for the judgements