Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

CENVAT Credit taken wrongly, not utilised, but reversed - no interest, no penalty: CESTAT

THE appellants are engaged in manufacture of sugar and were availing the benefit of Cenvat credit of duty paid on various inputs as also on capital goods. However, while availing the Cenvat credit in respect of capital goods, it seems that they availed the credit in respect of those items which according to the Revenue were not capital goods,. The said fact was pointed out by the audit and the appellant accepted the same and reversed the excess availed credit.

The dispute is whether such excess availed credit which was reversed by the assessee, even before utilization, would attract interest and penalty or not.

Income Tax

Whether money kept in escrow account for a specific purpose can be demanded by Revenue u/s 226 to clear income tax liability - NO: Delhi HC

THE issues before the Bench are - Whether money kept in escrow account is available to the assessee or the Revenue, when it is kept specifically to indemnify the purchaser of shares against any income tax liability arising on the assessee; Whether Revenue can invoke the provisions of section 226 to settle its tax demand against such held back amount, although it is clear from the language of the Share Purchase Agreement that under no circumstances would the money held in escrow be released either to the assessee company or to the Department; Whether a company can stake claim to any part of the consideration as shares in a transaction relating to sale and purchase of shares inter-se the selling shareholders and purchasers; Whether when the assessee company is neither a party to the Share Purchase Agreement or the Escrow Agreement can claim any sum from the parties to the Escrow Agreement; Whether as per section 226 of the Income Tax Act, the AO steps into the shoes of an assessee with respect to recovering sums owed to or held by the garnishee on account of the assessee; Whether section 226(3) neither confers jurisdiction nor provides a machinery for an AO to adjudicate the indebtedness of a third party to the assessee; And the assessee's writ allowed.

Service Tax

Applicants are arranging tour of Ranthambore sanctuary by various types of vehicles and collecting certain amounts per person - since they are engaged in business of planning, scheduling, organizing or arranging tours, therefore, prima facie, they are liable to pay ST under category of "Tour operator service" - Pre-deposit ordered: CESTAT

THE appellant in this case are the Deputy Conservator of Forest & Deputy Field Director, Rajasthan. Against them a Service Tax demand of Rs.1.56 Crores has been confirmed by the CCE, Jaipur and, therefore, they are in the urban forest with a Stay application filed before the CESTAT. The service tax demand is made on the ground that the applicant provided tour operator service and had not paid service tax for the period from 1.4.2004 to 31.3.2010. Two show cause notices were issued for demanding duty and for penalty. The adjudicating authority confirmed the demand along with interest. In respect of first SCN, the CCE, Jaipur allowed the benefit of section 80 of Finance Act, 1994 and had not imposed any penalty. However, the same was not the case in the second SCN and penalty under section 76 & 77 was imposed.

See our Columns Tuesday for the judgements