Jurisprudentiol – Monday's cases
Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise
Inputs supplied to SEZ Units without payment of duty - No provision under CENVAT Rules to export inputs without payment of duty after taking credit - Demand of duty confirmed: CESTAT.
REVENUE contended that the meaning of the word "export" is not defined in Central Excise Act or Rules. It is defined in Customs Act, 1962. This meaning has been applied for the purpose of implementing Central Excise Act and Rules all along. There is a separate definition for this word under SEZ Act, 2005. As per this definition, supply of goods from Domestic Tariff Area to units in SEZ is also to be treated as exports. This is a deeming fiction which can apply only to the provisions in SEZ Act. Whether this deeming fiction will have effect in the context of goods supplied to SEZ units was examined by the Gujarat High Court in the case of Essar Steel Limited Vs. UOI - (). In this case, the issue was whether export duty needs to be paid on iron ore supplied from DTA unit to a unit in SEZ since such duty was payable on iron ore exported out of India. The High Court held that the deeming fiction in SEZ Act cannot be applied for the purpose of Customs Act and held that export duty is not payable unless there is export out of India that is to say the definition in Customs Act, 1962, was adopted. Therefore, as per Rule 3 (5) of CCR, the respondents were bound to reverse the credit taken.
Income Tax
Whether proviso to Sec 2(15) will hit assessee-trust for mere selling of some products for profit and assessee cannot avail exemption u/s 11 - NO: ITAT
THE assessee is a trust. Its objects were to breed the cattle and endeavour to improve the quality of the cows and oxen in view of the need of good oxen as India is prominent agricultural country and the cow milk as food is both conducive to and requisite for good health and longevity of human life, and likewise, other objects.
The Revenue authorities denied the exemption u/s 11 by holding that the object of the assessee trust was 'any other object of general public utility' and accordingly covered by proviso to Section 2(15) of the Act since the activities of the assessee trust were commercial in nature.
The issue before the bench is - Whether proviso to Sec 2(15) will hit assessee-trust for mere selling of some products for profit and assessee cannot avail exemption u/s 11. And the verdict favours the assessee.
Service Tax
Section 78 provides for penalty on ‘person liable to pay tax' and since person liable to pay tax is appellant firm, imposition of penalty on MD is not sustainable in law - Appeal disposed of: CESTAT
ACTING on intelligence, the officers of DGCEI, Vadodara initiated investigation regarding the Service Tax payments made by the appellant in respect of security services provided by the firm. In his statement the Managing Director categorically admitted that the appellant firm had deliberately not declared the correct value of security services.
Until Monday with more DDT
Have a Nice weekend.
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