Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Mandatory Penalty - No discretion to reduce penalty if conditions of S.11AC are fulfilled: High Court

IT was clarified by the Supreme Court that the pre-conditions stipulated under Section 11AC of the Act, namely, non-payment or short payment of duty was the result of fraud, collusion or any willful mis-statement, suppression of the facts, or contravention of any provisions of this Act or the Rules made there under with the intent to evade payment of duty, had also to be satisfied. The court thus held that once these conditions are satisfied, the penalty as prescribed under Section 11AC of the Act had to be imposed and in that event there was no discretion with the authority to impose lesser penalty than what is prescribed in the aforesaid provision.

Income Tax

Sec 32(1)(ii) - Whether expenditure incurred for acquisition of technical knowhow for improvement of products is revenue or capital expenditure? - Revenue expenditure, rules Delhi High Court.

THE issue before the High Court is - Whether expenditure incurred by the assessee for acquisition of technical know-how for improvement of products was revenue expenditure or capital expenditure, eligible for depreciation u/s 32. High Court says it is revenue expenditure.

Service Tax

Service Tax – Penalty under Section 78 equivalent to the amount of service tax was the minimum: High Court

This appeal before the High Court was to consider following question of law:-

“Whether the penalty imposed equivalent to Service Tax short paid by the party under Section 78 of the Finance Act, 1994 is the maximum statutory limit or the minimum mandatory limit?”

See our columns Tomorrow for the judgements