Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Short payment of Duty is Default - Penal provisions like consignment wise payment and non-use of CENVAT Credit apply - CESTAT

SUPPOSE you are required to pay a duty of Rs. 1,00,001 and by mistake you pay only Rs. 1,00,000 and after six months the Audit party finds out that you have not discharged the full duty during that month. What are the consequences? You were an offender in the sense that during the last four months or so, you were not entitled to utilize any CENVAT Credit and you were required to pay the duty consignment wise. So you will be asked to reverse the entire CENVAT Credit utilized and pay the amount in cash - you will also be penalized for non-payment of duty, irregular Availment of CENVAT Credit and evading duty. The penalty maybe a few Crores - all for that one rupee short paid!

Income Tax

Sec 37 - Whether when assessee consistently writes off software in two years, AO is justified in treating expenses on software and web-hosting as capital expenditure and also disallowing depreciation in absence of tangible assets - NO, it is revenue expenditure: ITAT

THE issue before the Tribunal is - Whether when assessee consistently writes off software within two years, AO is justified in treating expenses on software and web-hosting as capital expenditure, and also disallowing depreciation in the absence of tangible assets. NO, it is revenue expenditure, rules the ITAT.

Service Tax/CENVAT CREDIT

Non-maintenance of separate accounts of input services - Reversal of pro-rata CENVAT Credit availed - issue settled in favour of respondent assessee by retrospective amendment made in rule 6 of CCR, 2004 by Finance Act, 2010 – Revenue appeal rejected: CESTAT

THE short issue involved in this case is reversal of CENVAT credit on input where the assessee manufacture both dutiable and exempted product without maintaining separate account. In this case, the respondents were having separate account for their inputs but they failed to maintain separate account of input services and they reversed proportionately after availing the CENVAT credit of input service after removal of goods. In the Budget 2010 an amendment has come in the Finance Act, 2010 with regard to Rule 6 of CENVAT Credit Rules, 2004, read with Schedule VIII.

See our columns Tomorrow for the Judgements