Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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Appellate authority misunderstood purport of order of adjudication and created havoc by modifying it - Imposition of penalty beyond scope of show cause notice is not permissible in law – Appeal allowed : CESTAT

THE appellants cleared a consignment of electrical goods to be delivered to the UP State Power Corporation Ltd on payment of duty. Unfortunately, en-route the truck met with an accident; the goods were damaged and had to be brought back to the factory. The damaged goods were repaired by the appellant by making use of additional inputs and the repaired goods were re-despatched to the consumer. While clearing the goods, duty was paid only on the cost of repairs. Later, the appellants realized their mistake and paid the differential amount of duty along with interest.

Income Tax

Income tax - TDS - Assessee is cellular service provider - appoints prepaid marketing associates for distribution of SIM Cards - provides SIM cards on discounted price - SIM card is merely a linking device and it is not a 'sale' - Legal relationship between assessee and distributors is not that of 'principal and principal' - liable to TDS u/s 194H: Delhi High Court

AO finds from the conditions of the agreement that the distributors were required to display the SIM Cards and Recharge Coupons in such a manner that they appeared to be owned by the assessee and the PMAs were not allowed to sell competitors' products, to file monthly sales return and the assessee had the right to terminate the agreement. AO concludes that it is a case of 'principal and Agent' relationship and the commission was offered in the form of 'discount' on prepaid SIM Cards and the assessee was liable to TDS u/s 194H. CIT(A) agrees with the AO but the assessee succeeds before the Tribunal .

Customs

Fine and penalty reduced by appellate authority – since higher amounts paid after adjudication, refund claims filed – Claim not hit by unjust enrichment as fine and penalty are not duty or tax that can passed on to customers : CESTAT

AFTER extracting portions from the said decision where it was held that the principles of unjust enrichment are not applicable to fine or penalty as the same are basically imposed for a wrong done and are unlike duty, tax, cess, fees which could be passed on to a consumer, the CESTAT directed the original authority to effect cash refund of the amounts to the appellant as early as possible, at any rate within a period of 30 days from the date of receipt of a certified copy of the order.

See our columns Tomorrow for the judgements