Jurisprudentiol – Monday's cases

By Vijay Kumar

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

CENVAT - Credit taken not utilized and reversed - Penalty not imposable, but interest liability exists in view of Apex Court decision in Ind-Swift Laboratories: HC

THE Adjudicating Authority imposed penalty and demanded interest on the ineligible credit of Rs. 51,833/- taken by the assessee. Before the Tribunal, the assessee contested only the penalty and interest on the ground that credit was taken but not utilised. The Tribunal agreed and set aside the penalty and interest.

The provision of Rule 14 read with Section 11 AB is clear and does not leave to any ambiguity in its understanding, more so, in the context of the decision of the Hon'ble Supreme Court in Ind-Swift Industries. Held: in the context of the decision in Ind-Swift Industries, irrespective of the utilization of the credit and going by the provisions, interest on the wrong credit is called for, as per Rule 14 read with Section 11AB and in the circumstances on the aspect of leviable interest, the order of the Tribunal set aside and Revenue appeal allowed.

Income Tax

Whether when assessee has earned capital gains on transfer of land to developer, not filing income tax return merely because relevant documents were missing, and also fact that no appeal was filed after AO made additions, warrant penalty - YES: ITAT

A survey u/s 133A was conducted in the case of ‘B' Pvt Ltd in which assessee was the managing director. It was noticed in survey that assessee had not filed his return of income. AO initiated penalty proceedings. In response to the said proceedings, assessee contended that the reason for not filing the income tax returns was that the information pertaining to the details of purchase of property given for development and will deed in which his mother gifted property to him was misplaced by his staff. Thus, due to lack of information return could not be filed within due date. In the absence of the same, it was not possible to compute capital gain and pay tax on it. In survey proceedings, revenue officials assured that if tax was paid, no penalty would be levied. The revenue officials advised to pay tax and file return despite the documents being lost.

The issue before the Bench is - Whether when the assessee has earned capital gains on transfer of land to developer, not filing income tax return merely because relevant documents were missing, and also the fact that no appeal was filed after the AO made additions, warrant penalty. And the answer goes against the assessee.

Service Tax

In appeal memorandum, Revenue seeks classification under BAS - since in SCN classification under BAS has not been raised at all, appeal has no merits, hence dismissed: CESTAT

THE respondent assessee is engaged in providing e-commerce transaction services through website which facilitates sale and purchase of goods over internet and they were charging a commission from sellers for successful e-commerce transactions. In addition, they were also charging a “listing fee” towards “banner advertising” on the web site wherein the advertisements were flashed on the web site without any creative work involved.

Because of the e-commerce transaction services offered, the Revenue viewed that the activity would be exigible to service tax under the category of ‘online data access and/or retrieval service' as defined in Section 65(105)(zh) of the Finance Act, 1994 and accordingly, a show-cause notice dated 27/01/2005 was issued to the appellant demanding service tax of Rs.80,85,217/- for the period July 2001 to August 2004.

See our Columns Monday for the judgements