Jurisprudentiol – Wednesday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Income Tax

Sec 57 - Legal expenses incurred by assessee, a lessee of Mumbai Port Trust, in defending proposed enhancement of rent before HC and SC are allowable business expenditure: ITAT

THE issue before the Tribunal is - Whether, expenses incurred by the assessee, who is a lessee, in defending proposed enhancement of rent with a view to avoid future recurring outflow of funds, are revenue expenses or capital. And the answer is REVENUE.

Service Tax

SCN mandatory before demand - Letter directing payment is an appealable order – High Court

THE assessee sought a clarification whether service tax was liable. The Department informed that it was not. Later wisdom dawned on the Department that the clarification was wrong and it reversed its decision and asked the assessee to pay the tax immediately as the previous communication was ab intitio void . The assessee was not impressed and rushed to the Tribunal which quashed the second letter. Department is in further appeal before the High Court. The officer must be cursing himself for having given a clarification that there was no tax liability.

Central Excise

On one hand, Commissioner says that activity engaged is not manufacture u/s 2(f) of the CEA, 1944 and hence CENVAT credit is not available - On other hand, CCE proposes recovery of amount paid u/s 11D – self contradiction is writ large - Prima facie case - Stay granted: CESTAT

ONE always wonders whether the adjudicating authority who errs on the side of Revenue and confirms demands of crores of rupees ever bothers to keep track of the survivability of his order at the hands of the appellate authorities. If they are, it is good for everyone.But this Stay order, in particular, should be taken note of by all concerned, the adjudicating authority included!

See our columns Tomorrow for the judgements