Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Classification - There is no fixed test for classification of a taxable commodity. This is probably reason why 'common parlance test' or 'commercial usage test' are most common: SC

WHETHER a particular article will fall within a particular Tariff heading or not has to be decided on the basis of the tangible material or evidence to determine how such an article is understood in 'common parlance' or in 'commercial world' or in 'trade circle' or in its popular sense meaning. It is they who are concerned with it and it is the sense in which they understand it that constitutes the definitive index of the legislative intention, when the statute was enacted. However, there cannot be a static parameter for the correct classification of a commodity. The combined factor that requires to be taken note of for the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the use to which the product is put. However, the miniscule quantity of the prophylactic ingredient is not a relevant factor.

Income Tax

Whether for purpose of imposing penalty u/s 158BFA(2), necessary condition prescribed under Sec 271(1)(c) to prove concealment of income or furnishing of inaccurate particulars of income is not required to fulfilled - YES, rules Gujarat HC

SEARCH and seizure operation u/s 132 was carried out. AO, while carrying out the assessment proceedings made various additions over and above the income disclosed by the assessee. CIT(A) restricted the additions. Tribunal granted further relief. Assessee did not carry the matter any further and Tribunal's order thus became final. AO issued notice for imposing penalty u/s 158BFA(2). No reply was received from the assessee and AO imposed penalty u/s 158BFA(2). CIT (A) confirmed the order of the AO. Tribunal retained a small portion of the penalty imposed. Revenue raised the question of law that whether the penalty u/s 158BFA(2) was mandatory or discretionary in character and if it was held to be discretionary, did the Tribunal exercise its discretion on legally sound principles so as to delete the penalty.

Service Tax

Service Tax paid by job-worker although entitled to exemption notfn. 8/2005-ST - since Revenue has accepted tax paid and no action has been initiated against job worker, prima facie case in favour: CESTAT

PRIMA facie, that the Revenue has accepted the duty paid by the job worker and no proceedings were initiated against the job worker, therefore, the applicants have a strong case in respect of the duty demanded of Rs. 3,95,771/-.

See our columns Tomorrow for the judgements