Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Supreme Court decisions in Dharamendra Textile as well as in Rajasthan Spinning & Weaving Mills do not lay down that for every short payment of duty, penalty is automatic: High Court

LAW laid down in Dharmendra Textile as well as in Rajasthan Spinning & Weaving Mills is that mandatory penalty under Section 11AC of the Act was not applicable to every case of non-payment or short-payment of duty. Thus, even though the authorities may have no discretion once conditions stipulated under Section 11AC of the Act exist, in absence of fulfilment of such conditions, penalty could not be levied. In this view of the matter and the finding of the Tribunal that there was no allegation of suppression of facts with intent to evade the payment of duty, the penalty under Section 11AC of the Act was not warranted. No substantial question of law arises.

Income Tax

Cultivation of potatoes - assessee provides seeds to farmers for better crops and buys back entire produce - Can such activity be treated as works contract and farmers as jobworkers? - No, provisions of Sec 194C do not apply - Sec 40(a)(ia) cannot be invoked: ITAT

IT is settled law that the jobwork is akin to manufacturing. Jobworkers also pay Central Excise duty like any other manufacturers. But can this term be stretched to an extent that a potato cultivator can be treated as a joworker, and such an activity can be brought under the provisions of Sec 194C by treating it as works contract? Are provisions of Sec 40(a)(ia) applicable to payments made by the assessee to farmers to grow better potatoes crops? Is cultivation of potatoes a natural phenomena and cannot be managed by any science and hence, mere guidelines for growing better potato crop cannot be termed as direction for obtaining desired products? And the final verdict has gone in favour of the assessee.

Service Tax

Refund of Service Tax – Notfn. 41/2007-ST – bill raised by service provider indicated that service tax was paid by another service provider – when fact remains that assessee had borne service tax, refund cannot be denied: CESTAT

THE respondents filed a refund claim of service tax claiming the benefit of exemption Notification no. 41/2007-ST dated 6.10.2007. The respondents claimed the refund on the strength of bill raised by the service provider indicating service tax amount claimed by the service provider from the respondent whereas the service tax was actually paid by some other party.

Averring that this document indicated that the service provider who had issued the bill had not paid the service tax, the department was of the opinion that the document submitted was not a valid one to claim refund of service tax .

See our columns Tomorrow for the judgements