Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Clandestine Removal – except for a statement from an employee no substantial evidence produced – Tribunal was right in allowing appeal – no question of Law

IT is apparent that the Tribunal has taken into consideration all the relevant facts and evidences, including the evidence which has been ignored by the Commissioner, namely the report of the Technical Engineer. In the light of the aforesaid facts, considering the fact that except for the statement of the authorized signatory there is no other evidence to substantiate the allegation of clandestine removal, it cannot be stated that the Tribunal has committed any legal error so as to warrant interference. In the circumstances, no question of law much less a substantial question of law can be stated to arise out of the impugned order of the Tribunal

Income Tax

Can a JV claim deduction for expenses even if one of JV partners withdraws and contract being executed by other partner - NO, says ITAT

THE issue before the Tribunal is - Whether expenses of a joint venture can be claimed as deduction if the JV is legally alive but one of the partners has withdrawn and the work of the venture is being continued by the other partner.

Service Tax

Service tax can be levied on the service portion involved in the execution of a works contract only after 1/6/2007 and not prior to 1/6/2007 – Apex Court's dismissal of departmental SLP in Daelim case is upon appreciation of merits of the Tribunal's decision and hence is a binding precedent – Revenue appeal rejected: CESTAT by a majority.

THE view taken in Daelim case and consistently followed by co-ordinate Benches in numerous subsequent cases including Diebold Systems is still binding on co-ordinate Benches.

The works contract was executed long before 01/06/2007, during which period such contracts were not exigible to service tax. Works contract came to be taxable only w.e.f. 01/06/2007. The 46th Amendment to the Constitution was made with intent to enable the States to levy sale tax on the sale component of a works contract. It had a direct bearing on entry 54 of State List of the VII Schedule to the Constitution. It has no such bearing either on Entry 97 (residuary entry) or on Entry 92C (service tax) of the Union List. The 46th Constitutional Amendment did not purport to enable the Central Excise authorities to levy any tax on the service component of a works contract.

See our columns tomorrow for the judgements