Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Goods manufactured on job work basis for suppliers of raw materials who are not related – Revenue alleging that valuation should be by adopting the principle contained in rule 8 of Valuation Rules, 2000 and not on cost construction basis - Board Circular dated 19.02.2002 refers to rule 6 and not rule 8 - Matter remanded: CESTAT

THE appellants are engaged in the manufacture of excisable goods falling under Chapter No.73 and 84 of the CETA, 1985. They are also engaged in undertaking job-work of M/s.ONGC . For the job-work activity, materials were supplied by ONGC and the appellants cleared their goods so manufactured on job-work basis by paying the duty on the excisable value arrived at by taking into account the material cost + job charges + 10% notional profit on the material cost. The period involved is from 29/12/2000 to 02/05/2001.

Income Tax

Whether when assessee suomoto rectifies error before indulgence of AO during reassessment proceedings, penalty is leviable - NO, says ITAT

THE issue before the Tribunal is - Whether when assessee suo-moto rectifies his mistake before the indulgence of the AO during the reassessment proceedings, penalty is leviable. The Tribunal says NO.

Service Tax

Service Tax - Works Contract Service - Benefit of composition scheme not available for on-going contracts where service tax was paid under existing three heads of taxable services prior to 01.06.2007 - Benefit of abatement under Notification No. 1/2006-ST available - Pre-deposit of Rs. 2.66 crores ordered and stay granted - CESTAT

PRIOR to 01.06.2007, the appellant paid service tax under the head “Commercial or Industrial Construction Service” under Section 65(105) (zzq) of the Finance Act 1994. After the introduction of levy of Service Tax on “Works Contract” with effect from 01.06.2007, assessee informed the department on 18.06.2007, that they were opting for payment of service tax under works contract service under the compositions scheme. Accordingly, assessee chose to pay service tax on the taxable value of works contract at the compounded rate of 2% in terms of Rule 3 (3) of Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007. The assessee continued paying service tax at the compounded rate of 4% after April 2008.

See our columns Tomorrow for the judgements