Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Appeal against an order of the CESTAT - to High Court or Supreme Court? Question relates to rate of tax - no appeal to High Court: HC

THE primary issue and question is whether Section 65(105) (r) was applicable in respect of the said activities and in case it was not applicable, no service tax was payable. The rate of tax would be "Nil". As held above, Section 83 of the F. Act read Section 35G of the CE Act is not applicable and, therefore, the present appeal is not maintainable before the High Court.

The question raised is whether the assessee was liable to pay service tax under Section 65(105) (zzb) of the F. Act. Case of the assessee is that they were not liable as the activities undertaken were non-taxable. The dispute would fall in the category of "rate of tax". Hence, the present appeals would not be maintainable before the High Court under Section 83 of the F. Act read with Section 35G of the CE Act.

Income Tax

Whether when assessee-trust that runs a school for children of non-residents, excludes poor children from its ambit, can still claim to be charitable - NO: HC

THE assessee is a registered Trust under the name and style "Dawn Educational and Charitable Trust". It operates a school named 'Dawn International School'. An application was filed seeking registration u/s 12A so as to get income tax exemption on the ground that they were imparting education and therefore it was a trust meant for charitable purpose. Revenue made an enquiry to satisfy itself whether the activity done was factually in the direction of object of the trust. The CIT, who had the authority to grant registration u/s 12AA, was of the opinion the assessee intended to run a posh international school in the name of charitable activity, therefore, assessee was not entitled for such registration. Reasons for rejection of application were, though the trust says main object of it being to run educational institutions and establish institutions of training and rehabilitation for mentally retarded persons, physically handicapped persons etc., enquiries revealed that activity of the trust was only to bring under its ambit the already existing Dawn International School run by the Managing Trustee.

The issues before the Bench are - Whether when the assessee-trust that runs a school for children of non-residents, excludes poor children from its ambit, can still claim to be charitable; Whether there is any live link between the nomenclature of the body and its main activities and whether the Revenue is right in making inquiries before rejecting the application filed under Sec 12A. And the answers go against the assessee.

Central Excise

Reduction of demand by CESTAT consequent upon ROM application is on account of it allowing rectification application and not on account of review of order - Revenue appeal dismissed: HC

WE reported the CESTAT order more than eight years ago.

In this case, a ROM application was filed by the appellant on the ground that the Tribunal while passing the order dated 01.09.2004 did not consider the plea of limitation inasmuch as since there was no misdeclaration, the extended period of limitation could not have been invoked.

Reduction of demand by the impugned order dated 20 December 2005 is on account of it allowing the rectification application and not on account of review of an order. It is pertinent to note that the revenue was represented before the Tribunal at the hearing of the rectification application and have not contended that the demand is not time barred.

See our Columns Monday for the judgements