Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Construction Service - Revenue cannot be allowed to receive service tax twice in respect of same construction activities, once from contractor and second time from person who has collected the same: CESTAT

REVENUE's contention is that the appellant, who has collected the amount, was required to deposit the same himself with the Revenue. There is no justification for the above stand of the department. Admittedly, the appellant is the owner of the flats, who is selling the same to its customers. The value of said flat is being recovered by the appellant from the buyer and all the taxes payable to the Government are to be collected by him from their buyers along with the cost of the flats. Whether such Service tax collected by them from the buyers is deposited directly with the department by themselves or is deposited with the Revenue by the contractor being the job worker for the appellant is immaterial as long as Service tax so collected is deposited. The Revenue cannot be allowed to receive service tax twice in respect of same construction activities, once from the contractor and the second time from the person who has collected the same.

Income Tax

Whether when serious irregularities are pointed out in Special Audit Report and fact that assessee was also given opportunities to inspect records seized during Search but it did not avail it, penalty is inescapable consequence in such case - YES: Delhi HC

THE assessee, a contractor, undertaking projects of Indian Railways on turnkey basis, filed its return of income declaring a total income of Rs.88,91,700/-. On the basis of the materials gathered in the course of a search carried out in the assessee's premises as well as in the premises of the directors and trusted persons, the assessing officer referred the matter to a special audit in terms of Section 142(2A) of the Act. The special audit reported that there were large number of transactions for which no supporting vouchers were available, that several discrepancies in cash and journal vouchers and changes in the dates of the vouchers were noticed, that there were discrepancies in the adjustments of cash books with cash vouchers, that there were payments made to the Railway staff which were not allowable as deduction under the Act, that several payments were made without obtaining any signature of the recipients, that the assessee did not maintain any stock register and did not disclose any work-in-progress in the balance sheet, that several items of capital expenditure were passed off as revenue expenditure and so on.

The issue before the Bench is - Whether when serious irregularities are pointed out in Special Audit Report and the fact that the assessee was also given opportunities to inspect records seized during Search but it did not avail it, penalty is inescapable consequence in such a case. And the verdict goes in favour of Revenue.

Kerala General Sales Tax Act

Sale by brand name holder or trade mark holder to be first sale for purpose of Section 5(2): SC

IF the following three conditions are satisfied, the sale by the brand name holder or the trademark holder shall be the first sale for the purpose of the Act.

(i) Sale of manufactured goods other than tea;

(ii) Sale of the said goods is under a trade mark/brand name and;

(iii) The sale is by the brand name holder or the trade mark holder within the State.

See our Columns Tomorrow for the judgements