Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Inputs stored outside factory without obtaining prior permission as mandated in Circular 01/05/1996 - instead of recording positive finding that Inputs were used in manufacture and credit was availed after receipt of inputs in factory, Commr (A) while allowing credit made a passing observation for which there is no reference to any material - CESTAT order upheld: High Court

THE appellant is engaged in the manufacture of excisable goods falling under Chapter 48 of the CETA 1985. The issue inter alia concerns denial of CENVAT credit of Rs.30,05,054/- in respect of inputs, which were stored outside factory premises without obtaining prior permission of the Commissioner, Central Excise in terms of CBEC Circular dated 1.5.1996.

The High Court dismissed the appeal by the assessee.

Income Tax

Whether in case of refund of excess amount, provisions of Sec 132(4)(b) have any application to decide interest liability for pre-assessment period - YES: Supreme Court

THE Revenue conducted a Search & Seizure on the premises of the assessee, an HUF, and seized cash of Rs. 2,35,000/-. On 31.5.1990, an order under Section 132(5) of the Income Tax Act, 1961 came to be passed. The Assessing Officer calculated the tax liability and the cash seized in the search from the assessee's house was appropriated.

The issues before the Bench are - Whether in case of refund of excess amount the provisions of Sec 132(4)(b) have any application to decide the interest liability for the pre-assessment period and Whether provisions of Sec 132(4)(b) deal with pre-assessment period and provisions of Ss 240 and 244A deal with post-assessment period. And the verdict goes in favour of the assessee.

Service Tax

ST - Builders/Developers are not liable to pay Service Tax under the category 'Maintenance or Repair services' on the 'One-time maintenance charges' collected from flat buyers: CESTAT

THE appellants are builders/developers of residential flats and various commercial complexes. They sell the residential flats to various customers over a period of time. After sale of all the flats, a Co-operative Housing Society is formed by the owners of the flats; thereafter the title of land etc. is passed on to the Flat Owners Co-operative Housing Society. The appellants are recovering a one-time maintenance deposit from each of the customers to whom they have sold the flats. The said amount is kept in a separate bank account as fixed deposit. From the interest earned on the said deposit, the appellants are expected to pay for various charges such as common electricity bill, water charges, security charges etc. After the flat owners co-operative housing society is formed, whatever balance is left in the said bank account the same is handed over to the Flat Owners Co-operative Housing Society.

The CCE, Pune-III was of the view that the appellants are required to pay Service Tax on the deposits made by various purchasers of the flats on the ground that the appellants are providing “Maintenance and Repair” service.

See our Columns tomorrow for the judgements