Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

It is not in dispute that valid grounds existed for invoking proviso to section 11A(1) of CEA, 1944 – payment of entire duty before issuance of Show-cause notice cannot exonerate assessee from payment of equal penalty and interest under the CEA, 1944: CESTAT

THE Commissioner (A) while sustaining the demand of duty found that the entire amount of duty which was confirmed against the respondent by the adjudicating authority under the proviso to section 11A(1) of the Central Excise Act had been paid before issuance of the relevant show-cause notice and, therefore, he held that the provisions of section 11AC (Penalty) and section 11AB (interest) were not invokable in the case.

Income Tax

Sec 10A - assessee has two units - one is STPI and other is into trading - loss of non-STPI unit cannot be set off against profit of STPI unit; Sec 10A deduction to be granted while computing profits of business itselft and not from gross total income; loss of trading unit can be set off against other incomes: ITAT Special Bench

IT is almost three decades when Sec 10A had made its debut in the Income Tax Act in 1981. But the disputes continue to spring up new dimensions and the Tribunal has to set up Special Benches to sort them out. In the latest decision the ITAT has held that the Sec 10A benefits are not exemption but deduction and such deduction is to be allowed while computing profits and gains of the business itself and not from the gross total income. It has also ruled that the business loss of a non-STPI unit cannot be set off against the profit of a STPI unit which alone is eligible for deduction as a undertaking. However, Revenue needs to allow such set off against other incomes of the assessee.

Customs

Settlement Commission – application would be maintainable only if it discloses duty liability, which had not been disclosed to proper officer. Appellant cannot be permitted to dissect Settlement Commission's order with a view to accept what is favourable to them and reject what is not. Costs awarded to Government – Supreme Court

AN application under Section 127B of the Act would be maintainable only if it discloses duty liability, which had not been disclosed to the proper officer. Obviously, a disclosure contemplated by the said Section is in the nature of voluntary disclosure of the concealed additional customs duty. Having opted to get their customs duty liability settled by the Settlement Commission, under Chapter XIVA of the Act, the appellant cannot be permitted to dissect the Settlement Commission's order with a view to accept what is favourable to them and reject what is not. As observed by Krishna Iyer, J. the recommendation of Wanchoo Committee was a compromise measure of a statutory settlement machinery, where a big evader could make a disclosure, disgorge what the Commission fixes and thus buy quittance for himself and accelerate recovery of taxes in arrears by the State, although less than what may be fixed after long protracted litigation and recovery proceedings. Applicant cannot be permitted to resile from his pleadings in the application at any stage of proceedings before the Settlement Commission or set up a new case before the higher Fora.

See our columns Tomorrow for the judgements