Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

CENVAT - Appellant procuring various items falling under Ch. 85 for setting up of paint shop in factory - Revenue alleging that upon fabrication what comes into existence being fixed to earth is not excisable and hence these items are not CENVATABLE - objection is absurd and not relevant -Order set aside and appeals allowed: CESTAT

THE appellants took CENVAT credit of Rs.6,28,320/- on the basis of 14 invoices under which various items falling under heading 85.48 were supplied for setting of paint shop. It is the contention of the Revenue that the appellant had placed order with the supplier for supply of a paint shop, that the goods after being brought into the factory were used for erection of paint shop which is an immovable property and hence the appellant would not be eligible for capital goods CENVAT credit in respect of these items.

The demand was confirmed along with imposition of equivalent penalty and interest. Even the Executive Director and the Commercial Manager were saddled with penalties.

Income Tax

Whether penalty u/s 272B is to be imposed on deductor even if fault of non-furnishing of PAN details lies with deductees - NO: Allahabad HC

THE assessee is a public sector undertaking. It has been deducting income tax at source as per the provisions of Section 194-C and 194-J of the Act on all the payments made to contractors/professionals during the financial year 2002-03. The tax so deducted was also deposited by it in the government treasury in time. The annual return of TDS as per the provisions of Section 203 of the Act, was also filed in the prescribed 'Form-26-C' and TDS certificates were issued to contractors/professionals. However, penalty at the rate of Rs.10,000/- for each 350 defaults committed by the assessee amounting to Rs. 35 lacs was imposed by the Additional Commissioner of Income Tax Range-I, Agra on the ground that the assessee had not mentioned Permanent Account Number in Form-16-A issued to 350 contractors.

The issues before the Bench are - Whether penalty u/s 272B is discretionary; Whether penalty can be imposed merely because it is lawful to do so; Whether penalty u/s 272B is to be imposed on the deductor even if the fault of non-furnishing of PAN lies with the deductee and Whether when the deductee has furnished PAN details but the deductor has failed to mention the same in Form 16A, it warrants penalty u/s 272B. And the verdict goes against Revenue.

Service Tax

Service Tax is leviable on rendering of services - therefore, it is rate prevalent on date of rendering of service, which is relevant for levy of ST - appeal allowed: CESTAT

A service tax demand of a princely sum of Rs.20,296/- was confirmed against the appellant on the "Commercial Training or Coaching" services rendered by them during the period July, 2004 to October, 2004. The appellant contested that for the period prior to 10.09.2004, the rate of Service Tax leviable was 8% and w.e.f 10.09.2004, the applicable rate was 10%. Therefore, for the services rendered prior to 10.09.2004, they are liable to pay Service Tax only @8% even though they raised bills after 10.09.2004. This contention of the appellant was rejected and the Service Tax demand was confirmed by the lower authorities.

See our Columns tomorrow for the judgements