Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

When main assessee pays duty with interest and 25% penalty within thirty days of SCN, no penalty proceedings against other notices: CESTAT

THE point of dispute is as to when the Show Cause Notice issued to the manufacturer/assessee for demand of duty along with interest and imposition of penalty, also show causes other persons (co-noticees) like Directors or employees of the manufacturer/assessee company or other persons like Transporters or Customers who have dealt with the goods in respect of which either the duty liability had not been discharged or has been discharged only partly, for imposition of penalty under Rule 26 of the Central Excise Rules, whether the Show Cause Notice would also stand concluded in respect of the co-noticees as to the matter stated therein, when the manufacturer/assessee has paid the duty along with interest and 25% of duty on penalty within 30 days of the receipt of the Show Cause Notice.

Income Tax

Capital gains - Whether when assessee transfers agricultural land to an AOP, such transfer is valid only if there is an agreement between the assessee and AOP - YES: HC

THE assessee's case was selected for scrutiny on the basis of information received that the assessee had sold an immovable property for Rs 39 lakh. The assessee contended that he had an agricultural land which land and land situated in the vicinity were declared as industrial estate. Assessee contended that he and other land owners having agricultural land within that declared industrial estate formed an AOP, transferred the agricultural land to AOP, whereupon AOP applied for conversion of land use and the same having been granted, the industrial land was ultimately sold by AOP. It was contended that transfer by him of a piece of agricultural land to AOP does not attract any capital gain. Steps taken to sell the industrial land will attract capital gains in the hands of the AOP. This contention was not accepted by the Assessing Officer, inasmuch as, there was no evidence to suggest transfer of any agricultural land by the appellant to AOP.

Service Tax

Appellant collecting development and maintenance fees from flat buyers to discharge payments towards outward expenses including municipal local taxes, property taxes, water charges, electric charges, revenue assessment and other mandatory charges under s.5 of Maharashtra Ownership Flats (Regulation) Act, 1963 - prima facie such activity undertaken in capacity of an executor is not liable to ST under category of ‘Management, maintenance or repair services' - Stay granted: CESTAT

THE appellants are engaged in the construction of residential flats. During the sale of the flats before handing over the possession of such flats, the appellant collected the development and maintenance fees from the flat buyers as the promoter is liable to discharge payments towards outgoing expenses including any municipal local taxes, property tax, water charges, electric charges, revenue assessment or interest or any mandatory charges under the provisions of Section 5 of Maharashtra Ownership flats (Regulation) Act, 1963. On completion of construction while handing over the possession, the developer returns the balance amount, if any, after debiting the expenses.

The department was of the view that the activity undertaken by the appellant comes under the category of ‘Management, maintenance and repair services'.

See our Columns Thursday for the judgements