Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Cenvat Credit taken on strength of challans and not Bills of Entry - fact of payment of duty on imported goods and their usage in manufacture of final products cleared on payment of duty not in dispute - pre-deposit waived and stay granted: CESTAT

APPLICANT paid the appropriate duty; the same has been accepted by the customs authorities and imported goods released and thereafter used in the manufacture of final product cleared on payment of duty. These facts are not in dispute. Therefore the pre-deposit of duty, interest and penalty is waived and recovery of the same is stayed during the pendency of the appeal….

Income Tax

Income tax - Whether proviso to Sec 272A(2), which was introduced to scale down quantum of penalty to amount of tax deductible is remedial in nature, and thus it is retrospective in operation - YES: Gujarat HC

THE issue before the Bench is - Whether the proviso to section 272A(2) inserted by the Finance Act, 1998 which was introduced with the intention to obviate the unintended consequences of section 272A by scaling down the quantum of penalty to the amount of tax deductible or collectible at source and is remedial in nature, and the proviso is be treated as retrospective in operation. And the answer goes to favour the assessee.

Service Tax

Availment of Cenvat Credit on common Input services - even during year 2007-08, rule 6(5) of CCR, 2004 entitled an assessee to avail CENVAT credit of whole of service tax paid in respect of specified services - restricting same to 20% is not sustainable in law - Appeal allowed: CESTAT

THE appellant is engaged in Commercial and Industrial Construction Services and availed CENVAT Credit facility. They also undertake non-commercial construction services i.e. construction not used for commerce and industry such as construction of education Institutions.

During the course of audit of the records, it was noticed by the department that the assessee had taken CENVAT Credit in respect of input services amounting to Rs.14,82,515/- during 2007-08 and as per the Rules 6(3)(c) of the CENVAT Credit Rules, the appellant was entitled to avail CENVAT credit only to the extent of 20% of the service tax payable whereas the appellant had availed 100% of the CENVAT credit. After adjusting the 20%, the appellant was required to pay Rs.11,14,303/- being excess of CENVAT credit availed in respect of input services during 2007-08.

See our columns Monday for the judgements