Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

If on basis of an agreement between State authority and concessionaire for construction of roads, contractor is authorised to collect toll charges from the users of roads for services rendered and entire activity is done on Build-Own/Operate-Transfer basis, there is no service tax liability - Demand of Rs.30 Crores set aside: CESTAT

THE appellant is an ideal road builder and engaged in construction of highways i.e widening of the existing two-lane carriageway from KM 0/115 to KM 23/509 of Thane-Bhiwandi bye-pass road. The Public Works Department (PWD) of Government of Maharashtra awarded the contract for this purpose. To compensate the appellant for undertaking the work they were authorised to collect tolls from the users of the road at various places. The appellant collected tolls from the users. Let aside the fact that the departmental officers had commuted by this road and waved their identity card for not paying toll on more than one occasion, when it came to Service Tax, they were not the one to waive the demand notice.

The department was of the view that the appellant was required to discharge service tax liability on this activity under the category of "Business Auxiliary Service" and accordingly a show-cause notice dated 21/10/2011 was issued demanding a service tax of Rs.30,30,07,734/- on the total toll collection of Rs.264,06,80,930/- during the period 2006-07 to 2010-11.

Income Tax

Whether for claiming Sec 54F benefits, it is essential for assessee to invest in residential house in his own name and not his wife - NO: HC

ASSESSEE is a retired individual from IOCL. He had earned income by ways of salary, house property and other sources. He had inherited 50% share in a residential house from his father in 1968. The other half share was inherited by his brother. In the year 2008, both the brothers jointly sold the property which gave rise to proportionate capital gains in the assessee's hands. The assessee had claimed deduction u/s 54F on the ground that the sale proceeds were invested in the acquisition of a vacant plot for Rs. 31,25,100/- and the purchase of a residential house for Rs. 34,35,700/- in the name of his wife. During assessment, the AO observed that u/s 54F, the investment in the residential house should be made in the assessee's name. AO had reduced the deduction and computed the capital gains accordingly.

On appeal, CIT(A) accepted the assessee's contention. On further appeal by the Revenue, Tribunal agreed with the decision of the CIT(A) and in doing so followed the judgment of the Madras and AP HCs and also another judgment of the Karnataka High Court. The Tribunal also observed that Section 54F being a beneficial provision enacted for encouraging investment in residential houses should be liberally interpreted.

Central Excise

Since case is made without minimum diligence required and in casual manner, sending such matter for de-novo consideration will be another round of harassment for the appellants and most likely another round for wasting time of Tribunal also in further litigation in second round - Order set aside and appeal allowed: CESTAT

WE are not able to understand the meaning of the sentence "All these facts have also been admitted in the show cause notice." appearing in the said paragraph. If the adjudicator has understood the allegations in the SCN as admission by the appellant then the adjudication order is not worth examining at all. In the normal course when there are inaccuracies in adjudication, the Tribunal sends the case back for a de-novo consideration. But we are of the view that in this case the Revenue's case is without any substance and made by its own mistakes of numerous types and without an effort to understand the issues involved. Since we consider that this is a case made without the minimum diligence required, sending such matter for de-novo consideration will be another round of harassment for the appellants and most likely another round for wasting the time of the Tribunal also in a further litigation in second round.

See our Columns Tomorrow for the judgements