Jurisprudentiol - Friday's cases

By Vijay Kumar

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

CX - Refund - Tribunal has observed that petitioners are allowed interest at rate prescribed under law after three months from date of filing of refund application - as interest @ 12% has been provided by Supreme Court, there is no reason that petitioner may not get interest @ 12% - No direction in regard is necessary to be issued: HC

IN the matter of claim for payment of interest @12%, the High Court observed -

"7.So far as rate of interest @ 12% is concerned, the Tribunal, in its order dated 5.7.2004, has observed that the petitioners are allowed interest at the rate prescribed under the law after three months from the date of filing of the refund application.The interest @ 12% has been provided by Hon'ble Supreme Court, there is no reason that the petitioner may not get interest @ 12%.No direction in regard is necessary to be issued."

VAT

VAT - Fiscal incentives by Gujarat government in form of loan to Tata Motors Limited at 0.1% simple interest per annum - such amount is not refund of tax - similar incentives are found in other states too - policy decision is not against public interest - no merit in PIL: HC

TATA Motors had bought land in Singur in Hoogly district, West Bengal to produce its low-cost car, purportedly the One lakh rupee Nano.But the project actually never took off due to protest from farmers who claimed that they had been underpaid or forced from their land.

Exasperated by the mounting resistance, Tata pulled out of West Bengal.No sooner had this exit been announced, it is said that Narendra Modi, the Gujarat Chief Minister sent a SMS to Ratan Tata, Company's President and which read “Welcome to Gujarat”.Within a few days, the Gujarat government transferred land to the company and thus the Sanand Nano story was born.

In his interview to a leading news channel a few days back, the BJP's Prime Ministerial candidate, Shri Narendra Modi in reply to the issue of toffee model raised by the Congress said, -

Only a week ago, the Gujarat High Court gave a 100 per cent judgment on the Tata Nano car project, in favour of the government policy.But it was not news for you. Nobody reported it.

We will report it tomorrow.

Income Tax

Whether if assessee fails to ensure presence of its vendors during assessment proceedings, it warrants rejection of books of accounts - NO: Delhi HC

THE assessee is engaged in designing, manufacturing, marketing and trading telecommunication equipments, public address system and flood matters.The assessee declared an income of Rs.1,08,85,191/-; it was initially processed under Section 143(1) of the Act. During the year under consideration, a search operation was conducted by the Central Excise Department in the manufacturing unit of the assessee.It was alleged that the assessee had claimed CENVAT credit for inputs, and that it was using bogus purchases bills from non-existent parties.The Central Excise Department identified 19 such fictitious vendors.On the strength of these allegations, the Income Tax Department also took up the assessee's case for scrutiny and issued notice under Section 133(6) of the Act to 16 parties.The AO finally rejected the books of accounts and determined the net profit at 10% to the total sale of business at Rs.16,40,91,000/- in addition to other income declaration by the assessee. A further addition was made to the tune of Rs.18,34,490/- under Section 40(a) (ia) of the Act for non-deduction of tax at source.

The issues before the Bench are - Whether if the assessee fails to ensure the presence of its vendors during the assessment proceedings, it warrants rejection of books of accounts and Whether assessee's books can be rejected merely on the basis of the suspicion that the vendors withdrew cash which may have found its way back to the assessee.And the verdict goes against the Revenue.

Service Tax

Payment of bills made at discounted value by appellant to service provider - No evidence has been brought on record by Revenue to indicate that reduced service tax has been paid - credit of full tax shown on duty paying document is admissible - Appeal allowed: CESTAT

THE issue involved in these proceedings is that appellant has taken CENVAT credit of the Service Tax paid by the service provider but Revenue has taken the objection that payment of such bills was made at discounted value.

Against the order of the Commissioner(A), the appellant is before the CESTAT.

It is submitted that Service Tax has not been paid to the service provider proportionate to the reduced bill amount and, therefore, the appellant is entitled to avail entire service tax paid on the invoices as admissible CENVAT credit. Reliance is also placed on the CBEC Circular No.877/15/2008-CX dated 17.11.2008 and Circular No.122/3/2010-ST dated 30.4.2011.

See our Columns Tomorrow for the judgements