Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Application for COD - CESTAT at loss to understand mindset of Revenue authorities - the only reason given for delay of six years in filing appeal is ‘oversight' - applications & appeals dismissed: CESTAT

THE Commissioner of Customs, Kandla had passed an order-in-original on 31.03.2008 and dropped the proceedings initiated vide SCN dated 12.10.1999 issued by DRI against three noticees.

Revenue filed the appeal against one of the respondent M/s. National Impex Corporation before the Tribunal but appeals against the other two co-noticees was apparently missed out.

So, after six years the Revenue is before the CESTAT with two more appeals and applications for condonation of the delay.

The Revenue presumably works under the adage - better late than never.

Apprehensive that the COD applications would be rejected, the Revenue representative submitted that the two appeals have to be considered as supplementary appeals.

Income Tax

Whether if service provider fails to collect service tax from its clients but once pointed out by Audit, deposits same with interest from own account, such expenses can be claimed as eligible deduction u/s 37(1) - YES: HC

THE assessee company had not collected service tax on mechanical erection and installation of plant and machinery, structure work, piping work and works contract works for a period of time. During the audit, the assessing authorities raised certain objections and asked the assessee to furnish the reasons on why he failed to do so. The assessee failed to furnish any answers to the objection, as a result the assessee deposited service tax as specified by the authorities, with interest. When the return was filed, the assessee claimed deduction on the service tax and interest paid, as expenditure incurred for business. During the assessment, the AO concluded that the amount paid as service tax and the interest thereon, cannot be claimed for deduction as it was the outcome of infringing a provision of law.

The issue before the Bench is - Whether if a service provider fails to collect service tax from its clients but once pointed out by Audit, deposits the same with interest from own account, such expenses can be claimed as eligible deduction u/s 37(1). And the verdict goes in favour of the assessee.

Service Tax

As for same period, proceedings had already commenced against respondent through a SCN in July, 2005, there was no need to issue another SCN in July, 2007 - Revenue appeal dismissed: CESTAT

THIS is a Revenue appeal.

Your belief that the department has all the time in the world to indulge in issuing frolicsome SCNs and filing frivolous appeals would be strengthened upon going through the facts of this case. It is another thing that the departmental officers get paid for what they do but it is the assessee who has to hire Consultants and Advocates to attend to these!

A SCN 24.07.2005 was issued to the respondent for the period April 2002 to October 2003 on the premise that the respondent had collected service tax but not deposited with the department in due time and, therefore, they are liable to pay interest.

The adjudicating authority confirmed the demand of interest and also imposed penalty.

Another SCN came to be issue on 03.10.2007 for the same period i.e. April 2002 to October 2003 demanding service tax along with interest and penalty .

See our Columns Monday for the judgements