Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Issue management related service provided by merchant bankers are classifiable under ‘Banking and other financial service' of FA, 1994 & not as ‘Underwriting services' - applicant has not made a prima facie case in their favour - Axis Bank directed to make a pre-deposit of Rs.50 lakhs: CESTAT

THE applicant had availed the services of Non-Resident service providers, who did not have offices in India and they had paid certain fees/charges to such non-resident service providers for facilitating issue of Global Depository Shares (GDS).

Revenue took a view that the service rendered by such non-resident Joint Bank runners and Joint Lead Managers to the applicant appeared to be a taxable service classifiable under the category of Banking and Other Financial Services as Merchant Banking Services and is liable to service tax w.e.f. 16th July 2001.

Income Tax

UP Chief Minister takes Rs 44.67 lakh loan from Samajwadi Party in cash; CIT(A) & ITAT rule penalty u/s 271D not imposable for violation of Sec 269SS

THE assessee is Akhilesh Kumar Yadav, the present Chief Minister of UP. He acquired a property worth Rs. 44,67,208/- along with his wife, Smt. Dimpal Yadav. This amount was deposited in cash by the Samajwadi Party as a cash loan. It was noted by the AO that the assessee had taken cash loan from Samajwadi Party in contravention of the provisions of section 269SS of the IT Act and as such, liable for penalty u/s. 271D of the IT Act. Accordingly, it was held that the assessee had no reasonable cause to accept the deposits/loans in cash. It was, therefore, held that the assessee had violated the provisions of section 269SS and accordingly, penalty was levied u/s. 271D of the IT Act. The CIT(A) held that the assessee had "reasonable cause" for his failure to comply with the provisions of section 269SS of the IT Act and accordingly, deleted the penalty and allowed the appeal of the assessee. On appeal by the Department, the ITAT held that the assessee has been able to prove that there was a "reasonable cause" for failure to comply with the provisions of law and confirmed the order of the CIT(A).

Central Excise

Refund of deemed credit available under notfn. 54/2001-CE(N.T) - There is no requirement of fixing RSP on readymade garments exported - RMG are also not notified u/s 4A of the CEA, 1944 - in such a situation, there is no question of applying contents of notfn. 20/2001-CE(NT) to reject a part of refund claim - Appeals allowed: CESTAT

THERE is no requirement of fixing the RSP on the goods for export. Further, as the readymade garment has not been notified under Section 4A of the Central Excise Act, there is no requirement for fixing the RSP on the readymade garments which were exported therefore, provisions of Notification No.20/2001-CE are not applicable. The impugned order, rejecting a part of the refund claim by taking into consideration the provisions of Notification No. 20/2001-CE, is not sustainable. Hence, the same is set aside and the appeals are allowed.

See our columns Tomorrow for the judgements