Description: egal Corner Icon — the image was hosted by the publisher and was not captured.Jurisprudentiol - Friday's Cases

By Vijay Kumar

Central Excise

Valuation - buyer agreed to provide interest free advance to assessee to help him set up factory with an undertaking that assessee would supply at least 90% of their production to buyer - such ‘compensation’ is not includible in AV as SCN did not bring out categorically allegation that arrangement was to influence sale price: CESTAT by Majority

THE appellant was manufacturing re-treading and supplying 97% to 98% of their production to M/s Black Stone Rubber Industries Pvt. Ltd ("the buyer"). During 1996-97, the buyer paid an amount of Rs.6,84,780/- as "compensation" to the appellants in addition to the declared price of the goods. During 1997-98 the buyer paid Rs.6,50,500/- in similar manner.

The case of Revenue is that these amounts should have formed part of the assessable value of goods sold by the appellant to the buyer.

Accordingly, a SCN demanding excise duty of Rs.2,20,835/- was issued and confirmed by the adjudicating authority and also upheld by the Commissioner. However, the Commr(A) set aside the penalty of Rs.25,000/- on the appellant manufacturer and reduced the penalty on the partner to Rs.10,000/-

Aggrieved by this order, the appellant is before the CESTAT.

Income Tax

Reassessment u/s 147 - Whether Revenue is on sound legal footing if it denies to share2G Spectrum Investigation Report on ground of confidentiality - YES: Delhi HC

THE assessee is a company, incorporated under the Companies Act, 1956. It filed its return of income on 6.10.2010, declaring nil income for AY 2009-2010, which was processed u/s 143(1), without any notice u/s 143(2). Subsequently, assessee was served with a notice dated 5.7.2011 u/s 148 for reassessment of the AY 2009-2010. Assessee requested a copy of the reasons that led to opening of the reassessment proceedings. No such reasons were provided; however a questionnaire was sent, to which the assessee duly responded. Thereafter, reasons to believe that income had escaped assessment were provided to the petitioner.

The issues before the Bench are - Whether the issuance of a notice and the communication and furnishing of reasons thereof, go hand-in-hand; Whether two notices or proceedings can remain pending against the same assessee in respect of the same AY at the same time; Whether non disclosure of the internal date on which the reasons were prepared by the Revenue can vitiate the reassessment proceedings; Whether the mere fact that a letter conveying the decision taken in the order sheet was entered before the reasons recorded for the fresh notice, this mode prejudices the assessee or violates any procedural mandate u/s 147 and Whether the Revenue has power to keep the 2G Spectrum Report from the assessee on the ground of confidentiality. And the verdict goes in favour of Revenue.

Service Tax

If the appellant had indeed rendered a multiplicity of services, charges would have varied every month which also is pointer towards fact that appellant rendered only one type of service - From statements of the employees of appellant firm, service rendered was only security services and nothing else -: CESTAT

IN the present case, against the appellant, a service tax demand of nearly sixty lakhs along with penalties was confirmed on the ground that they did not pay Tax on the Security Agency services rendered.

Before the CESTAT while seeking Stay in the matter, the applicant submitted -

Over and above rendering security agency services, they were also rendering other services, such as management advice, group auditing, guidance on business planning, financial planning, and business guidance etc.

However, the adjudicating authority had treated that all the services rendered by the applicants as a single service, namely that of a security agency.

Service tax payable on the security agency service rendered by them would be approximately Rs.14 lakhs.

They are not a commercial concern as they are operating on a no profit no loss basis, and based on CBEC Circular no. 86/4/2006-ST dated 1.11.2006 service tax cannot be levied.