Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Deterrent Action- Mere fact of payment of duty with interest does not absolve or cleanse petitioner of the violations - These measures are aimed at preventing duty evasion - CBEC Member's order upheld: High Court

It must be noted that such restrictions are necessary to bring the erring assessee on the correct rails, so that there is a compulsion on statutory compliance at least in the future. Such restrictions are imposed keeping in mind the need to protect the interest of the Revenue as well as to have a check on the breach of law consciously committed by an assessee, leading to evasion of duty, that restrictions imposed as to the payment of duty and availing of CENVAT credit would bring an erring assessee to comply with the provisions in accordance with law. On the substantiated fact, that the petitioner had knowingly committed this violation, imposing the restrictions on the payment of duty and availing of CENVAT credit and that too for a limited period by the respondents cannot be viewed as an arbitrary exercise.

Income Tax

AOP - Association set up for treatment of industrial effluent - Taxability of surplus generated from members - since surplus fund falls within purview of doctrine of mutuality, it is exempt from taxation: Bombay HC

THE assessee in the present case is an association of persons. It collects funds from its members for the purpose of treating industrial effluents. And the issue before the High Court is the taxability of surplus generated by the assessee from its members after meeting regular expenses - Whether the ITAT was justified in holding that surplus generated by the association of persons where there is complete identity of contributors and participators, is exempt from taxation on the principle of mutuality. The second issue is - Whether interest earned on surplus funds placed with bank by a mutual concern is exempt from taxation. And the answers to both the questions are YES.

Service Tax

Definition of C&F Agent includes Consignment agent: High Court

All the authorities have proceeded on the premises that the assessee is a consignment agent and relying upon Sub-section 25 of Section 65 of the Finance Act 1994, the original authority has passed the order holding that the assessee is liable to pay the service tax. When the assessee is a consignment agent, as the definition of C & F agent includes consignment agents as held in the case of Mahavir Generics , the High Court answered all the questions in favour of the revenue and against the assessee.

See our columns Tomorrow for the judgements