Jurisprudentiol – Monday's cases

By Vijay Kumar

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

If you don't pay, no duty at all, but if you pay, you have to pay interest also! Assessee paid duty voluntarily even before Show Cause Notice- Commissioner holds no intent to evade duty and so drops penalty, but demands interest - Duty itself not payable; no interest payable: HC

ACCEPTING the stand of the Department that even in such a case once the payment of duty is made, interest liability would follow would bring about an incongruent situation. The recovery of the unpaid or short paid duty would become time barred. If the manufacturer does not pay it voluntarily, it would not be possible for the Department to recover the same. But if he does it voluntarily despite completion of period of limitation, he would, further be saddled with the liability to pay statutory interest. Surely, this was not the intention of the Legislature while sub-Section (2B) was introduced in Section 11A of the Act.

Income Tax

Whether expression 'core activities' of tonnage tax company appearing in section 115VI includes profit accrued as a result of sale of old ships - NO, rules ITAT

ASSESSEE is a shipping Company - filed its ROI declaring positive income including tonnage income - During the course of assessment proceedings the AO observed that the assessee included the profits from the sale of ships in the tonnage income and hence could not offer the same for MAT purposes - The AO was of the view that the income from the sale of ship was not attributable to the shipping activities and hence the same was not available for tonnage benefit and the same was includable in book profits - CIT(A) affirmed the view of the AO - In appeal before the ITAT where the AR of the assessee argued that sale of old ships was an activity covered by the expression shipping operations.

Service Tax

Input Service Distributor - No bar exists in rule 7 of CCR, 2004 from taking CENVAT Credit in respect of invoices prior to date of registration - Prima facie strong case in favour - Pre-deposit waived - CESTAT

THE issue involved in the case is that applicant had distributed CENVAT credit in respect of input services prior to registration as “Input Service Distributor”. On being pointed out, the assessee reversed the credit availed by them and thereafter “Input Service Distributor” registration was granted to them on 02.01.2007. After the registration was given, head office of the applicant passed on an amount of Rs. 1,94,501/- to their manufacturing unit at Nashik.

See our columns Monday for the judgements

Happy Vishu, Rongali Bihu, Nutan Varsha, Vaiskhadi, Bahag Bihu, Puthandu Pirappu, Naba Barsha and Vaisakhi.