Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Personnel supplied are expected to work as security guard and ensure security of articles and equipment in the building and offices - service provided by assessee is that of security agency and not Manpower supply - Wages cannot be called reimbursable expenses as these are not incidental but main element in providing service - Appeal rejected: CESTAT

THE assessee is a proprietary concern providing security guards to M/s.BSNL for security of their immovable and movable properties. As per the terms of agreement between BSNL and the assessee, BSNL was to pay the salary of the guards + 10% as the service charges to the appellants. The entire amount was billed by the assessee and was paid by BSNL to the assessee. From the said amount, the assessee was paying the salary to the security guards and retaining 10% service charges as their profit. Assessee was paying service tax on the service charges alone.

Income Tax

Whether share application form is unimpeachable document, and same can be considered for cross-verification of transaction of share transfer -NO: HC

THE assessee, a company, had filed return on 31.10.2001 declaring total income of Rs. 1,42,508/-. Its assessment was completed u/s 143(3) at income of Rs. 8,90,160/-. On giving appeal effect, the revised income stood assessed at Rs.8,64,414/-. As per the Investigation Wing, Assessee was identified as one of the beneficiaries who had received bogus entries. Notice u/s 148 was issued, in response to which, assessee filed a letter stating that return originally filed may be treated as return in response to the notice u/s 148. Notice u/s 143(2) & 142(1) was issued and assessee was required to furnish information in respect of persons who had been allotted shares between the period 31.03.2001 and 31.03.2007.

The issue before the High Court is - Whether share application form is unimpeachable document, and the same can be considered for cross-verification of the transaction of share transfer. And the verdict goes against the assessee.

Central Excise

Rule 8(3A) of CER - It is a well settled principle of law that no provision of law should be read in such manner so as to make it ineffective or otiose - since appellant has defaulted in payment of duty for period more than 30 days, appellant is not entitled to utilize CENVAT Credit for payment of duty liability - Pre-deposit ordered of Rs.7.37 Crores: CESTAT

DURING the period from April 2011 to March 2012 the appellant consistently defaulted in payment of Central Excise duty. The amount of defaulted duty during this period amounted to Rs.1,44,83,942/-. Therefore, a SCN was issued to the appellant on 16/05/2012 invoking the provisions of Rule 8(3A) of the CER, 2002 wherein it was proposed to deny the benefit of CENVAT Credit for payment of duty inasmuch as the default persisted more than 30 days.

Accordingly, a demand of duty of Rs.8,88,02,216/- was confirmed against the appellant for the period June 2011 to March 2012 which was appropriated from the payments made subsequently by the appellant. CENVAT Credit of Rs.7,36,74,043/ was sought to be denied during the impugned period and the adjudicating authority confirmed this duty demand. However, he allowed the appellant to take credit of the same in case this amount of Rs.7,36,64,043/- is paid in cash. In addition, interest is demanded and a penalty of Rs.35 lakhs was imposed under Rule 25 of CER, 2002.

See our Columns tomorrow for the judgements