Jurisprudentiol – Friday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Service Tax

Mere extraction of entire provisions of Section 65(19) of the Finance Act does not fulfill requirement of a Show Cause Notice - Such infirmity is incurable - Show Cause Notice quashed: CESTAT

IT is very easy to issue Show Cause Notice in service tax cases. All you have to do is reproduce the provisions of the definition of a particular service and raise a demand on the income asking the assessee to show cause as to why the service tax should not be demanded with interest and penalties, preferably under extended period, when the normal period is over.But in this case, the Tribunal was not kind enough to take such notice into cognizance and quashed the same.

Income Tax

Whether advertisement expenses, which were considered by Revenue as revenue expenditure, were rightly disallowed merely because in books of account it was considered as deferred revenue expenditure - NO, rules HC

THE issues before the Bench are - Whether the advertisement expenses, which were considered by the Revenue as revenue expenditure, were rightly disallowed merely because in the books of account the same were considered by the assessee as deferred revenue expenditure; Whether the provision made by the assessee for warranty for after-sales services is to be considered as contingent liability and not allowable as expenditure and Whether when at the relevant time as per law assessee has deducted tax at source but paid the same in subsequent year, no disallowance can be made as out of two conditions as mentioned in section 40(a)(i) ‘the tax has not been paid' or ‘deducted' one condition ‘not deducted' do not exist. And the verdict goes against the Revenue.

Central Excise

Notfn. 11/97-CE amending Notfn. 67/95-CE to provide for exemption to intermediate products utilized in manufacture of goods supplied under exemption to UN or International Organization in terms of Notfn. 108/95-CE is to be considered clarificatory in nature as it corrects an anomaly - Appeal allowed: CESTAT

NOTIFICATION No. 108/95-CE dated 28.8.95 exempted all goods falling under the Schedule to the CETA, 1985 when supplied for the official use of United Nations or International Organisation or for the projects funded by United Nations or an International Organization and approved by the Govt. of India.

Rule 57C of the CER, 1944 prevailing during February 1997 provided for disallowance of Modvat credit when final product was exempted from duty. However, exception was made in respect of supplies made in terms of Notification No. 108/95-CE dated 28.8.95.

See our Columns Tomorrow for the judgements