Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Valuation - When applicant is paying duty in terms of rule 10A of Valuation Rules, 2000, it cannot be said that value of scrap retained by them is an additional consideration - Strong prima facie case in favour - pre-deposit waived and Stay granted: CESTAT

ONE of the favourite pastimes of the audit parties is raising valuation issues, which more often than not do not survive. But the Range formations, even though they may not agree, not that they do not show their displeasure during the Audit meeting, are strictly bound by departmental diktats and are forced to issue the demand notices, always invoking the extended period. Never is a moment spared to discuss threadbare the details of the objections and whether they would finally stand the test of law. What happens in totality is a long list of SCNs and the resulting orders-in-original and orders-in-appeal all queued up at the CESTAT door awaiting their turn.

In the meantime, the threatening recovery notices and attachments start seeing the light of the day.

As per Rule 10A of the Valuation Rules, 2000 w.e.f 01.04.2007, the valuation now adopted by a job worker is the sale price at which the principal manufacturer sells to an un-related buyer and the price is the sole consideration for sale. Can there be any more value than this on which a job-worker should pay duty? Surely No, but in the present case the Revenue thinks otherwise.

Income Tax

Whether facts when share transfer of listed company is concluded within merely four days, and company directly corresponds with shareholder, offers sufficient grounds to question genuineness of such transaction - YES: ITAT

THE issues before the Bench are - Whether it leads to prima facie evidence against the assessee, when he has failed to provide satisfactory explanation of the source of a particular income; Whether the facts when share transfer of a listed company is concluded within merely four days, and the company directly corresponds with the shareholder, offers sufficient grounds to question the genuineness of such transaction; Whether the mere fact that shares purchased have been sent for dematerialization by the assessee, proves the genuineness of the same, even though they were transacted offline and not on the floors of a stock exchange and Whether the rule of estoppel under the Evidence Act can be invoked, when the assessee has retracted at the time of filing return, from his earlier stand taken during the search and seizure proceedings. And the verdict goes against the assessee.

Service Tax

Appellants are manufacturer of country liquor under brand name "Pahili Dhar", registered in their name and are having agreement with M/s. Talreja Trade (HUF) for marketing this liquor - it cannot be said that appellant are job workers for Talreja Trade as they are the selling agents - they are not liable to pay service tax under "Business Auxiliary Service" - Appeal allowed with consequential relief: CESTAT

THE revenue is of the view that the raw material is being supplied by M/s. Talreja Trade (HUF) to the appellant and the appellants are job workers for Talreja Trade. Therefore, the appellants are liable to pay service tax under the category of "Business Auxiliary Service".

See our Columns Tomorrow for the judgements