Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Deterrent Action - Rule 12 AA of CCR and Rule 12CC of CER and Notification No. 32/2006-CENT not valid before 08.05.2010: HC

FINANCE Act, 2010 introduced an amendment to Section 37 of the Central Excise Act authorizing to make Rules to provide for withdrawal of facilities or imposition of restrictions in case of evasion of duty or misuse of Cenvat Credit. Central Government has made the Rules 12CC of the CE Rules, 2002 and Rule 12AA of the CC Rules, 2004 in the year 2006 without any authority of law which power was vested in the Central Government in the year 2010 by inserting clause (xiiia) in sub-section 2 of Section 37 and therefore, the two Rules are ultra vires the Central Excise Act, 1944. Consequently, Notification No.32/2006-CE (NT) dated 30.12.2006 issued in pursuance of Rule 12CC of the CE Rules, 2002 and Rule 12AA of the CC Rules, 2004 is not sustainable in law.

Income Tax

Whether disallowance is warranted for deduction of tax @ 1% on subcontract where subcontract is entered into to fulfill conditions of main contract - NO, rules ITAT

THE questions before the Tribunal are - Whether when the assessee earns dividend income, disallowance of administrative expenditure incurred, directly or indirectly, can be made even without rule 8 provided AO is able to link the same to earning of the income - Whether disallowance u/s 40(a)(ia) is warranted for deduction of tax @ 1% on subcontract where the sub-contract is entered into to fulfill the conditions of the main contract and the same is not independent to the main contract ------

Service Tax

Repairs and maintenance Service of Wind mills used for producing Electricity situated away from the factory are also Input Services – there is no mandate in law that Services should be used in the factory unlike inputs - no reason for denial of Cenvat Credit: CESTAT

BRIEFLY stated facts of the case are that the assessee is engaged in the manufacture of excisable goods viz. motor vehicle parts falling under Chapter 87 of CETA, 1985 at their factory at Waluj, Aurangabad. The assessee availed CENVAT credit of Service Tax paid on repairs and maintenance service of their wind mills situated at Supa and Satara.

See our columns Tomorrow for the judgements