Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Rate of tax applicable is one prevailing at time of providing service, not receipt of payment. TRU instructions quashed: HC

THE taxable event, in so far as service tax is concerned, is the rendition of the service. That being the position, the taxable events in the present writ petition had admittedly occurred prior to 01.03.2008. At that point of time, the rate of service tax applicable in respect of the services in question was 2% and not 4%, which came into effect only on or after 01.03.2008. Therefore, the rate of tax applicable on the date on which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received.

Income Tax

Income tax - Whether principle of burden of proof as embedded in Section 106 of Evidence Act, can be extended to Section 271(1)(C) of I-T Act when assessee fails to explain source on income surrendered to buy peace - YES: HC

A survey u/s 133A was conducted at the business premises of the assessee in the course of which some documents pertaining to the assessee were found and were impounded. These documents consisted of blank transfer deeds for shares duly signed, affidavits, share application forms, copies of bank accounts, income tax returns and assessment orders of certain other companies. The documents appeared to have belonged to certain entities who had applied for shares in the assessee company, and the AO wanted the assessee to prove the nature and source of the monies received as share capital, the creditworthiness of the applicants and the genuineness of the transactions. In reply to this, the assessee stated that share application money from different entities aggregating to a sum of Rs.239lacs was received, however, it could provide explanation only for a sum of Rs 182.51 lakhs, and the balance amount of Rs 56.49 lakhs was not explained. The assessee further stated that with a view to avoid litigation and buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the Income Tax Department a sum of Rs.56.49 lakhs is being surrendered as income from other sources. Thereafter, the offer of Rs 56.49 lakhs was scaled down to Rs 40.74 lakhs as a revised offer by the assessee. The said amount was added to the total income for taxation.

Central Excise

Sections 11A& 33 of CEA, 1944 - Administrative directions of the CBEC allocating different monetary limits for adjudication of cases by Central Excise officers cannot cut down jurisdiction vested in them by statute and may be followed by them at best as matter of propriety - Setting aside by Commissioner(A) of order of AC, C.Ex, though on an appeal filed by Revenue, adjudicating case involving C.E duty in excess of Rs.5 lakhs is unsustainable and bad in law - order of adjudicating authority restored: CESTAT

AC, C.Ex.,Powai Division, Mumbai-II passed an order against the respondent confirming Central Excise duty demand of Rs.6,61,550/- u/s 11A(1) of the CEA, 1944 and also imposed interest u/s 11AB and an equivalent penalty u/s 11AC. Although no portion of the demand raised in the SCN was dropped or for that matter no penal provision proposed was missed out, the CCE, Mumbai-II did not like the AC, C.Ex. transgressing the monetary limits contained in the Board Circular 865/3/2008-CX dated 19.02.2008 inasmuch as in terms of the said Circular the AC, C.Ex could have decided cases involving a duty demand of up to Rs.5 lakhs ONLY. So, the CCE, Mumbai-II set in motion the review process and resultantly an appeal came to be filed before the Commissioner(Appeals) by the Revenue. The Commissioner(A) accepted the plea of the Revenue and set aside the order passed by the AC, C.Ex., Powai Division. This should have ended the matter but the Revenue had another grievance - that the lower appellate authority did not give any liberty to the competent authority to decide the matter on merits. And once again, the CCE, Mumbai-II is before the appellate authority, the only difference being that he is before the CESTAT. The respondent assessee chose to ignore the rumblings and remained absent in the proceedings before the Tribunal.

See our Columns Tomorrow for the judgements