Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

CENVAT Credit - Interest on irregular credit - Karnataka HC Judgement per incuriam - SC Judgement in Ind-Swift applicable: CESTAT

THE issue before CESTAT was the demand of interest on CENVAT Credit taken but not utilised and reversed before issue of Show Cause Notice.

The Supreme Court in UOI Vs. Ind-Swift Laboratories Ltd - 2011-TIOL-21-SC-CX had held that interest is payable from the date of taking credit and not utilisation. The Karnataka High Court had in Commissioner, LTU Bangalore Vs. Bill Forge Pvt. Ltd. Bangalore - 2011-TIOL-799-HC-KAR-CX distinguished the Apex Court judgement and held that interest being compensatory cannot be demanded when the credit was not utilised. The assessee relied on this judgement while the Department relied on the Supreme Court judgement and argued that the Karnataka High Court judgement was per incuriam and the Tribunal need not follow it. The Tribunal found great force in the argument of the Department.

Income Tax

Whether assessee-EoU is entitled to Sec 10B benefits on receipts from training activities when it has not received any foreign exchange in this respect - NO: Madras HC

THE issues before the Bench are - Whether the benefit available u/s 10B is an exemption or a deduction; Whether the benefit u/s 10B can be allowed only in case an assessee is indulged in activities as pre-determined under the statute; Whether u/s 10B, which is a clear exemption provision, unless the assessee is in a position to show any ambiguity in the provisions of the Act, there can be any liberal interpretation given to the provisions of the Act, for the purpose of granting relief to the assessee and Whether an assessee is entitled for exemption u/s 10B with respect to receipts from training activity, when no foreign inward remittance has taken place. And the verdict goes against the assessee.

Service Tax

IT enabled services i.e. software consultancy service exported during impugned period was classifiable as an ‘exempted service' under Rule 2(e) of CCR, 2004 and even if an exempted service is exported the benefit of CENVAT Credit and Rules thereof shall be allowed to exporter of exempted service - Appeal allowed: CESTAT

THE department was of the view that the services exported by the appellant were software development and software consultancy services falling under the taxable service category of ‘Consulting Engineer' and during the impugned period they had not obtained service tax registration in respect of the said service. It was also noted that the appellant had not maintained any separate accounts for the inventory of ‘input services' meant for use in providing taxable output service and quantity of input service which is intended for use in the exempted services as required under Rule 6 of the CCR, 2004.

See our Columns tomorrow for the judgements