Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Export goods rejected by overseas buyer - goods re-imported & Credit availed of CVD paid thereon - credit denied and equivalent penalty imposed - as per rule 16 of CER, 2002, any goods on which duty has been paid at time of removal when brought back to factory would be eligible to CENVAT credit - prima facie appellant has not made case for total waiver - pre-deposit ordered of 50% of CENVAT involved: CESTAT

DURING the period October 2011 to November 2011, the appellant availed CENVAT credit of Rs.68.45 lakhs of the CVD paid against re-importation of their goods viz. cotton fabrics and made-up articles exported earlier. The goods had to be re-imported because the overseas buyer rejected the consignment citing defects.

The Revenue authorities denied this credit by concluding that since the goods exported were not duty paid and hence, when it was returned to the factory, after rejection, it cannot be admissible to CENVAT credit under Rule 16 of the CER, 2002.

Against this order of the CCE, Kolhapur, confirming the demand and imposing equivalent penalty, the appellant is before the CESTAT.

Income Tax

Whether when assessee is public limited company, recovery of tax dues cannot be initiated against Directors and no proceedings u/s 179 can be initiated - YES: HC

THE assessee was a director of one M/s. Sirs Engineering Private Limited. For the AY 2000-2001, AO passed order of assessment on 28.3.2003, raising tax demand of Rs.40,99,967/. With penalty, it came to Rs.41,09,967/. Five more separate orders of assessment dated 27.2.2004 were passed in case of the same company for the AY 1996-1997 to 1999-2000 and 2001-2002 raising different tax demands. On 22.3.2004, ITO issued a notice to the petitioner indicating that a tax demand of the said company of Rs.41,11,967/ for the AY 2000-2001 was still outstanding. Assessee was the director of the company during the relevant period and was asked to show cause why he should not be held personally liable for such recovery u/s 179.

The issues before the Bench are - Whether when the assessee is a public limited company, recovery of tax dues cannot be initiated against Directors and no proceedings u/s 179 can be initiated and Whether it is necessary for the Revenue to establish that such recovery cannot be made against the company and then alone it can reach the directors who were responsible for conduct of the business during the previous year in relation to which liability existed. And the answers go against the Revenue.

Service Tax

Merely because appellant collected only 75% of salary paid to employees, it does not take appellant out of purview of service tax liability - law does not envisage that appellant should be engaged in supplying manpower to various clients - Even if activity undertaken in one-time transaction, conforming to legal definition of supply of manpower, service tax liability would accrue: CESTAT

THE appellant SSKL leased out their plant and machinery to M/s. Bajaj Organics Ltd., Mumbai. In addition to leasing out the plant and machinery, the agreement dated 04/08/2002 also provided that the lessee, namely, Bajaj Organics Ltd., shall endeavour to engage maximum possible technical and other staff from amongst the present staff on the roll of SSKL and salary of each such staff engaged by mutual consent, shall be fixed up between SSKL and Bajaj Organics and the same shall be reimbursed to SSKL on a monthly basis. Staff of SSKL would work under the administrative guidelines of Bajaj and if any disobedience occurs, the same staff would be returned to SSKL. The department was of the view that the appellant M/s. SSKL has supplied manpower to M/s. Bajaj Organics and, therefore, demanded Service Tax.

See our Columns Tomorrow for the judgements