Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Appellant receiving base oil for storage purpose and taking credit - without using the same, later clearing it to importer upon reversal of credit - Credit not available ab initio as goods were not intended for use in or in relation to manufacture of excisable goods - reversal of CENVAT amounts to discharge of duty hence recovery would amount to double demand - interest payable, penalty not imposable as no mensrea - RF set aside as goods not available for confiscation: CESTAT

THE appellant is a manufacturer of lubricating oils and is availing CENVAT credit on various inputs and capital goods. They availed CENVAT credit amounting to Rs.1,61,04,675/- of the CVD paid on imported base oil during July, 2003 to September, 2004. The goods were imported by M/s Valvoline Cummins Ltd. and the entire goods were transferred to the appellant for storage purposes. The B/E was also endorsed in favour of the appellant. The base oil on which credit was taken was returned by the appellant to M/s. VCL and M/s. Ultraplus Lube Pvt. Ltd. and the appellant paid excise duty equivalent to the credit taken on such base oil returned.

The department was of the view that taking of credit by the appellant was not permitted under law inasmuch as the goods were not intended for use in the manufacture of excisable goods and, therefore, credit was not admissible under CCR, ab initio.

Income Tax

Whether when assessee pays excess tax, interest on refund is to be calculated from date of payment of tax till date of grant of refund - YES: AP High Court

THE issues before the Bench are - Whether when the assesse pays excess tax, the refund and the interest thereof arise automatically and no claim is to be filed; Whether interest is to be calculated from the date of an order passed u/s 244 and Whether the assessee is entitled to interest on refund from the date of payment of excess tax till the date of grant of refund. And the answers go against the Revenue.

Service Tax

Renting of vacant land by way of lease or licence for construction of a building or a temporary structure for use at a later stage in furtherance of business or commerce is a taxable service only from 1.7.2010 and not earlier to this date - Matter remanded: CESTAT

THE assessee inter-alia contended that leasing of vacant land was not comprehended within the ambit of the taxable "renting of immovable property" service prior to 1.7.2010, since only by the Finance Act, 2010 and with effect from 1.7.2010 was clause (v) incorporated in Explanation (1) to clause (zzzz) of Section 65(105); that prior to 1.7.2010 renting of a vacant land was outside the purview of the taxable service; that since the assessee as a statutory Development Authority, created by the provisions of the U.P. Industrial Area Development Act, 1976 had entered into long term leases with third parties whereunder vacant lands were leased to such third parties inter alia for business or commercial purposes on long term leases (of 99 years duration), such leases are substantially in the nature of transfer of ownership and consideration received on such transfers would not amount to consideration received for providing the taxable service enumerated in Section 65(105)(zzzz).

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