Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Goods supplied under Notification No 108/95 CE - Benefit of exemption is admissible to goods cleared to contractors executing projects financed by UN or international organizations: HC

THE respondents were engaged in the manufacture of Loaders falling under Chapter Heading 84.29 of the 1st Schedule to the CETA 1985. They cleared these goods by availing exemption in terms of Notification No.108/95-CE dated 28.8.95 which inter alia exempts excisable goods supplied to projects financed by UN and International Organizations approved by the Government of India, subject to certain conditions relating to production of certificate from specified authorities.

The benefit of the Notification was denied to the respondents by holding that it only exempted goods supplied to Projects financed by United Nations or International Organizations approved by the Government of India while the appellants had cleared the loaders to contractors of the respective Projects and not to the Project Implementing Authorities and on the ground that the contractors continue to be the owners of the goods and continue to possess them even after the completion of the Project.

Income Tax

Whether once Commissioner while exercising his revisional powers has stated that non-initiation of penalty proceedings by AO does not warrant any interference, hands of AO are tied on invoking penalty on remand - NO: HC

THE issues before the Bench are - Whether once the Commissioner while exercising his revisional powers has stated that non-initiation of penalty proceedings by the AO does not warrant any interference, the hands of the AO is tied on invoking the penalty provisions on remand; Whether such penalty proceedings cannot be initiated, although the assessee was later found to have made bogus claims and concealed income during such fresh assessment; Whether in such a situation, if the provisions of the Act on penalty are attracted, the AO has to go by the dictates of the law or rather by the order of the Commissioner; Whether mere submitting a claim which is incorrect and untenable in law would not give rise to imposition of penalty; Whether if such claim made by the assessee is not bona fide and with mala-fide intention, Explanation 1 to Section 271(1)(c) would come into play and penalty shall be levied and Whether penalty can be imposed in a civil liability, once it is established that the assessee has wilfully provided a wrong explanation to conceal its income. And the verdict goes in favour of the assessee.

Service Tax

Nobody can provide a service to himself - Just because the storage of free sale sugar had to be extended at behest of GOI, neither sugar mill becomes a ‘storage and warehouse keeper' nor GOI becomes a client - no cause for payment of ST as no service provided - Revenue appeal dismissed: CESTAT

THE appellants are manufacturers of sugar. The Directorate of Sugar, Government of India, directed the appellants to keep a buffer stock of sugar in their factory for which they paid buffer stock subsidy.

As is their wont, the revenue took a view that the appellants had rendered a service to Government of India for which they received a consideration and therefore, the subject transaction is liable to the service tax under the category of "storage and warehousing services".

The lower authorities did the needful viz. issuing SCN and confirming them with sweetness.

The Commissioner(A) did not allow this sweetness to last. He allowed the appeals on the ground that the activity cannot be considered as a service as the goods belonged to appellant themselves and the storage was undertaken in respect of appellant's own goods; therefore, no service has been rendered. The lower appellate authority also held that the demands were time barred.

The Revenue was aggrieved with this order which left a bitter taste. So, the CCE, Pune is before the CESTAT.

See our Columns Thursday for the judgements