Jurisprudentiol - Tuesday's Cases

By Vijay Kumar

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

Advance Ruling: processing of various grades of stainless steel scrap ('metal scrap') to produce ‘blended metal scrap' amounts to manufacture: AAR

APPLICANT proposes to process various grades of stainless steel scrap (‘metal scrap') to produce ‘blended metal scrap'. Blended metal scrap is required by the stainless steel manufacturers as a raw material for its manufacturing activity i.e. for manufacture of stainless steel products. Applicant will source different grades of metal scrap from its vendors located within India as well as outside India. The metal scrap so procured by Applicant is classified under Chapter 720421 of the Central Excise Tariff Act, 1985 (in short Tariff Act). The different grades of metal scrap will then be processed in order to produce blended metal scrap of the grade required by its customers. The blended scrap so produced by Applicant is also classified under Chapter 720421 of the Tariff Act.

The core issue is whether the activity proposed to be undertaken is manufacture or production.

Income Tax

Whether penalty is imposable if assessee makes false claim of Sec 80IA benefits on sub-contracted work and also furnishes a CA Certificate in this regard - YES: Delhi HC

THE assessee is a joint venture company by the name of M/s. HCILARSSPLTRIVENI and M/s. HCILKALINDEEARSSPAL. The assessees had claimed deduction under section 80IA for executing certain work for M/s. Rail Vikas Nigam Ltd and M/s. Rites Ltd. The AO disallowed the deduction as the assessee had not done any actual work but had only subcontracted the work. The AO levied penalty under section 271(1) (c) for concealment of facts. The CIT(A), upheld the penalty levied by the AO. On appeal, the ITAT deleted the penalty. THE issues before the Bench are - Whether no penalty u/s 271(1)(c) is warranted even if assessee makes false claim of Sec 80IA benefits on sub-contracted work and also furnishes a CA Certificate in this regard; Whether the onus of establishing that the explanation was bonafide and the facts and material relating to computation of his income disclosed, is on the assessee, so that penalty is not attracted and Whether penalty for concealment can be imposed and is justified when interpretation or claim of the assessee is rejected. And the verdict favours the Revenue.

Service Tax

In view of ad-hoc exemption order exempting Security Agency Service rendered by CISF, there is no tax liability on appellant - therefore, delay of 826 days in filing appeal condoned and appeal allowed: CESTAT

VIDE an Order-in-Original dated 25/09/2009, the CCE, Nashik confirmed a Service Tax demand of Rs.3,33,47,243/- against the Central Industrial Security Force, (CISF), India Security Press, Nasik for the ‘Security Agency Service' provided during the period May 2006 to November 2008.

The appellant is before the CESTAT with an appeal & stay application. The appellant has also filed an application for Condonation of Delay in filing the appeal - the delay being 826 days and the reason stated is that the appellant being a Government department had to seek prior approval from the higher authorities and the matter was also under consideration by the Ministry of Home Affairs.

See our Columns Tuesday for the judgements