Jurisprudentiol - Monday's cases

By Vijay Kumar

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

CENVAT - duty paying documents lost in transit - Powers of adjudication are given to quasi judicial authorities to sub-serve justice and not to deny them -rejection of request is case of pure and simple harassment to assessee

THE appellant received a consignment of duty-paid inputs from M/s. Rashtriya Ispat Nigam Ltd., Pune. During the course of transportation, all the documents including the duty paying documents were lost in transit by the driver of the truck and the driver lodged a complaint with the Sonai Police Station, Ahmednagar .The appellant vide letter dated 19/12/2007 along with copies of FIR, affidavit and Xerox copies of the invoices, informed these facts to the department and requested for permission to take credit which was never given.

The wait became unbearable and so the appellant took CENVAT credit of the duty involved of Rs.57,792/-. This probably made the Assistant Commissioner wake up from slumber and spring into action. He rejected the assessee's request and denied the credit and, thereafter, issued a SCN dated 20/10/2009 demanding reversal of CENVAT credit along with interest thereon and also for imposition of equivalent amount of penalty under Rule 15 read with Section 11AC.

Income Tax

Whether when commission earned by assessee is in nature of salary as per Sec 192, assessee is required to pay advance tax as per Sec 208 when employer fails to deduct tax at source - NO: ITAT

ASSESSEE, an individual, derives income from salary, house property and other sources. It was carrying on the activity of diagnostic services through his proprietary concern Vijaya Diagnostic Services till the end of FY 2004-05. It had entered into an agreement with Vijaya Diognostic Centre Pvt. Ltd. As per which the business of the proprietary concern was taken over by the company. It had filed its ROI declaring total income of Rs.81,42,230/-. Subsequently a search operation was conducted, during which it was found that huge amounts were debited as ‘commission paid' and at the end of the years some amount was shown as outstanding. When the AO sought clarification, it was explained that the commission was paid to the assessee calculated at the rate of 2% of the total sales made by the company. It was also contended that the amount was not accrued during the year as the royalty payable to the assessee could be ascertained only when the company's accounts were audited. When the AO found that no commission income was admitted by the assessee, he added the same as undisclosed income of the assessee for the assessment year. On appeal, CIT(A) had sustained the addition and observed that the company was all along treating the amount to be paid or payable to the appellant as commission only. In fact, the administrative head of the company had also confirmed that the amount paid to the appellant was commission @2% on the total receipts.

Service Tax

Appellant was providing services as DSA on commission basis to ICICI Bank - since they were misguided by their Consultant that Bank is liable to pay ST, they failed to pay service tax and file ST-3 returns although they obtained registration - this is fit case for condoning lapse and not imposing any penalty - Appeal allowed to said extent: CESTAT

THE appellant was providing services as Direct Sales Agents (DSA) on commission basis since October, 2004 to General Insurance Companies and ICICI Bank.They had obtained Service Tax registration under the category of "BAS" in September, 2005 but did not pay Service Tax or file returns. A case was booked and it was revealed that the appellant had earned commission of Rs.8,52,839/- during the period from October, 2004 to March, 2008 on which they have not discharged their service tax liability of Rs.98,459/-. The above fact was admitted by Shri Mayur Vikrambhai Daftary, proprietor of the assessee in his statement dated 11/02/2008.

See our Columns Monday for the judgements