Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

If an exporter is found to have committed acts of duty evasion exemption from furnishing of bank guarantee could be revoked - In such circumstances, it cannot be said that Circular No. 58/2004-Cus dated 21.10.2004 is arbitrary and illegal: HC

THE petitioner was engaged in the manufacture of woven bags meant for export to foreign countries. The petitioner is one of the biggest exporters and is recognized as a star export house by the DGFT. It was submitted that in terms of Para 3.10.4 of the FTP certain privileges were conferred on status holders like the petitioner. It was contended that by the impugned Circular, the benefits and privileges conferred under FTP were curtailed or withdrawn.

Income Tax

Whether when assessee discloses income in two stages after search is conducted, even then it can claim penalty not imposable as incomes were offered voluntarily - NO, rules ITAT

A search u/s 132(1) was carried out on 25.11.2005 and the instances of suppression of sales were detected. During the search proceedings, statement of one of the Directors was recorded in which he admitted that 75% of sale proceeds were received with cash memo and by omitting certain cash sales average 25% of sale proceedings in cash every day were not recorded in the books of the assessee, which manufactures and sells sweets and bakery products. On this basis, assessee had disclosed additional sales varying from Rs 1,05,00,000/- and Rs.1,50,00,000/- and additional profit varying from Rs 7,00,000/- to Rs 7,50,000/- respectively for above AYs respectively. This additional profit was included in the returns filed in response to notice u/s 153A of the Act and taxed accordingly. In response to show cause notice proposing levy of penalty u/s 271(1)(c), it was claimed by assessee before the A.O. that he had filed the revised returns of income showing additional income in pursuance to notice u/s 153A, which was finally assessed on the same figure of income returned. In the circumstances there would be no question of any concealment in the return of income filed and therefore, penalty u/s 271(1)(c) was not attracted.

Service Tax

Service recipient made liable to pay service tax under category of C&F agency services and Goods Transport operator - as rule 2(1)(d) of Service Tax Rules, 1994 has been held as ultra vires, demands are not sustainable: CESTAT

THE issue is that during the impugned period whether the service tax can be demanded from the service recipient through show-cause notice issued in this case. The issue has been dealt with by this Tribunal in the case of L.H. Sugar Factories Ltd. (supra) wherein it has been held that "the above would show that even the amended Section 73 takes in only the case of assessees who are liable to file return under Section 70. Admittedly, the liability to file return is cast on the appellants only under Section 71A. The class of persons who come under Section 71A is not brought under the net of Section 73. The above being the position show-cause notices issued to the appellants invoking Section 73 are not maintainable.

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