Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Appellant, a Proprietary unit was taken over by Pvt. Ltd. company - due to delay in getting name changed in agreement, appellant unable to deposit ST liability - later, appellant depositing same along with interest - as there is no malafide no justification exists for imposition of penalty: CESTAT

THE appellant, a Proprietary unit was providing services of site formation & Clearance, Excavation & Earthmoving & Demolition services to Ms. Northern Coalfields Ltd. and were discharging their service tax liability.

With effect from 01.04.2008 the said proprietary unit was taken over by Ms. GSCO Infrastructure Pvt. Ltd. Consequently, the old company applied to Ms. Northern Coalfield Ltd. for change in the name of agreement. As the said request was taking time at the end of Ms. Northern Coalfields Ltd., the appellant intimated their jurisdictional Central Excise Officers indicating that though they have surrendered their old service tax registration and has obtained new service tax registration in the name of Ms. GSCO Infrastructure Pvt. Ltd., they are unable to deposit the service tax liability on account of non-payment of the same by Ms. Northern Coalfield in the name of the new company.

Before the CESTAT the appellant submitted that it is not a case of any malafide so as to attract the penal provisions.

Income Tax

Whether provisions of Sec 179 will apply in case where project runs into losses due to earthquake and FIs restructure debt and permit sale of property and creditors being proportionately paid out of such sale proceeds and when payments were made, assessment order was still pending - NO: HC

THE Assessee is a director of a private limited company. For the assessment year 2010-2011, the said company filed its return which was taken in scrutiny. The Assessing Officer framed assessment and computed the long term capital gain after set off of business loss at Rs.4.14 crores (rounded off). The company filed appeal against the order of the assessment. Such appeal was pending before the CIT(Appeals). The said company also prayed for stay against the recovery of tax demand flowing from the order of assessment. CIT(Appeals) refused to grant stay. No further proceedings were carried by the company against such order of CIT(Appeals). As of now thus there was no stay against recovery of the tax.

The issue before the Bench is - Whether provisions of Sec 179 will apply in a case where project runs into losses due to earthquake and FIs restructure debt and permit sale of property and creditors being proportionately paid out of such sale proceeds and when payments were made, assessment order was still pending. And the HC's answer is NO.

Central Excise

Stock taking at Branch Sales offices from where steel products are sold showed that there was excess sale of certain steel products as compared to quantity received from respective steel plant - Merely from this difference it cannot be presumed that goods were cleared clandestinely by PSU steel companies: CESTAT

THE appellant is a PSU & has several steel plants. Steel manufactured by different plants is cleared on payment of duty to various stockyards in the country called Branch Sales Offices (BSOs) from where the steel products are sold.

The dispute in this case is in respect of BSO, Bhilai, District, Durg. The BSO, in question, and all other BSOs have central excise registration as registered dealer and issue cenvatable invoices. In this regard, they maintain an account of receipt and sale of the steel products in RG-23-D register. The stockyards conduct annual stock taking and the quantity of each product received from a particular steel plant and the quantity of that product sold are reconciled.

On the basis of records of such stock taking in respect of BSO, Bhilai, the department found that there was excess sale of certain steel products as compared to the quantity of those products received from the respective steel plant.

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