Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Good news for EOUs - CESTAT rules that education cess is not payable 'for third time' on DTA clearances.

THE dispute is with regard to the quantum of education cess payable by the EOUs when the goods are cleared in DTA. The revenue is of the view that the EOUs have to pay education cess of 2% on the total duty computed in terms of proviso to Section 3(1) of the Central Excise Act read with Notification 23/2003 CE. This is popularly known as THIDRD TIME CESS. This third time cess was initially upheld by the CESTAT also in (2008-TIOL-985-CESTAT-AHM). However, on appeal against the said order, the Bombay High Court has remanded the matter to the Tribunal and the Tribunal has not approached the question from the perspective of treating the goods as imported goods for the purpose of levying excise duty in (2008-TIOL-516-HC-MUM-CX) Since the issue is likely to affect a number of EOUs , the HC also directed the tribunal to consider issuing general notice making it known that any person representing EOU can address the tribunal on this question so that a well-considered decision on the subject can be taken.

Central Excise

Intent to evade payment of duty has to be deciphered from conduct of assessee – No clean conduct found on part of appellant – Penalty upheld and ROM dismissed: CESTAT

THE amount involved is a pittance. The assessee filed an appeal against the order of the Commissioner(A) imposing an equivalent penalty, all of which is less than Rupees Fifty thousand (even if you include the duty amount) and when called for hearing before the CESTAT, they gave a written submission with a request that the case be decided on merits.

Income Tax

I-T - non-resident buys shares of partnership firm and converts it into subsidiary company - transfer u/s 2(47) - capital gains - there is violation of clause (d) of proviso to Sec 47(xiii) by premature transfer of shares but there is no tax liability as there is no profit or gain in the conversion: Advance Ruling

THE Applicant is a tax resident of Luxembourg. It buys shares of an Indian partnership firm and makes it a wholly owned subsidiary. The partnership firm is converted into a private limited company - whether the conversion of the firm into a registered company will be treated as transfer u/s 2(47). Whether it would give rise to capital gains liable to tax. Whether it is eligible for exemption as per the provision in clause (d) of proviso to Sec 47(xiii).

See our columns Tomorrow for the judgements