Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

No need to reverse CENVAT credit taken on inputs and input services used in or in relation to rendering of output services to a unit in SEZ or to a developer of SEZ for their authorized operations: CESTAT

THE appellants are registered with the department under the category of "Consulting Engineers Service". During the course of audit of the records of the appellant, it was observed that the appellant was providing both taxable and exempted service and was not maintaining separate accounts for the CENVAT credit availed. Accordingly, the department was of the view that the appellant was liable to pay an amount equivalent to 8% (6% with effect from July 2009) of the value of the exempted service in respect of such services provided during April 2008 to September 2009. Accordingly, a demand notice of Rs.1.69crores found its way to the office of the consulting engineer and the adjudicating authority did the rest.

Income Tax

High Court reverses ITAT Special Bench decision; rules provisions of Sec 40(a)(ia) cover not only sums, which are payable as on 31st March of a particular year but also which are payable at any time during year.

IN our opinion, the Tribunal committed an error in applying the principle of conscious omission in the present case. Firstly, as already observed, we have serious doubt whether such principle can be applied by comparing the draft presented in Parliament and ultimate legislation which may be passed. Secondly, the statutory provision is amply clear. In the result, we are of the opinion that Section 40(a) (ia) would cover not only to the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirements of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT , does not lay down correct law.

Central Excise

Rebate under Rule 18 when the original and duplicate ARE1s are lost - The procedure under Notification cannot be raised to the level of a mandatory requirement: High Court

THE rebate claims of the Petitions filed under Rule 18 of the Central Excise Rules, 2002 were rejected by the rebate sanctioning authority on the ground that they had failed to submit the original and duplicate copies of the ARE-1 forms. The revisional authority has also held that the submission of the original and duplicate of the ARE-1 forms duly endorsed by the customs authorities establishes the export of duty paid goods and is an essential requirement and upheld the rejection of rebate.

See our Columns Tuesday for the judgements