Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Non-payment of refund - Interest and Cost imposed on Commissioner and other officers - Refund not given because communication to party returned with 'addressee left'. - Interest and Cost set aside: HC

THE grievance of the Department seems to be genuine, as later, if someone brings the original challan and claims this money, the Department would be in difficulty as there is no time limit fixed for refund. Accordingly, respondent/writ petitioner directed to produce the documents pertaining to the identity of the person with correct proof of address and also bank account number along with indemnity bond with an undertaking to the Department so that genuine apprehension expressed by the Department could be satisfied to a large extent. In that view of the matter, there cannot be award of 6% interest on the amount to be refunded so also the exemplary cost awarded in the Review Petition deserves to be set aside.

Income Tax

Whether when assessee, an industrial development arm of State Govt, advances loans to a JV, which is declared sick by BIFR, applying commercial and business exigency tests, it can be said that assessee satisfies twin conditions for claiming deduction of bad debt - YES: SC

THE assessee is State Industrial Development Corporation Limited, Trivandrum. It had advanced loans/credit facilities to M/s. Vanchinad Leathers Limited, a joint sector Company promoted by the appellant for processing hides and skins. M/s. Vanchinad Leathers Limited was set up sometime in the year 1974. Though M/s. Vanchinad Leathers Limited started commercial production in the year 1977, it closed in the year 1980 due to poor performance. It was re-opened in September, 1982, and again closed down in January, 1983. The Company had huge liabilities by end of December, 1986, running into Rs.362.80 lakhs as against its assets worth Rs.106.80 lakhs. In February, 1988, M/s. Vanchinad Leathers Limited moved a Reference Application for declaration that it was a sick Company under BIFR. On inquiry, a declaration was made by BIFR vide Order dated February 22, 1988, that M/s. Vanchinad Leathers Limited, was a sick Company. The High Court disallowed the deduction for bad debt.

Central Excise

Breakage of cenvated glass bottles during manufacture of aerated beverages - No cause for reversal of Cenvat Credit - since benefit given to assessee by Board's instruction dated 17.09.1975 has been withdrawn by Board Circular dated 09.07.2010 it cannot be held to be retrospective - Appeal allowed: CESTAT

REVENUE while confirming the demand relied on the Boards circular dated 9.7.2010. In the present case, the period of demand is November 2009 to June 2010 i.e. prior to the issue of the circular. During the period in dispute, there was a Board circular dated 17.9.1975 which clarifies that the breakage of bottles in the manufacture of aerated beverages upto 0.5% is condonable and manufacturer is not liable to reverse the credit. This circular is withdrawn vide Circular dated 9.7.2010. The Circular dated 9.7.2010 is to be treated as prospective in nature and it cannot be held to be retrospective as the benefit given to the assessee has been withdrawn which cannot be held to be retrospective....

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