Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Compounding of Offence - Considering that no minimum sentence or penalty was attracted for offence that petitioner was charged with, denial of compounding meant that he would have to face a long trial which ultimately would, in all probability, culminate in small fine - Order of CC rejecting application is erroneous: HC

THE petitioner has prayed for quashing the order of the Chief Commissioner (Customs) where under his application for compounding made under Section 137 of the Customs Act was rejected.

The facts are that the petitioner arrived from Hong Kong and was caught by the Customs authorities while smuggling ten thousand pieces of microchips (micro SD cards) valued at Rs.15,80,000/-. While initially he stated that the goods were given to him at Hong Kong by one Rakesh Jain for delivering the same to a person in Jaipur, later he admitted that the articles were procured by him only and that he bought them from the market to sell them in India. Apparently, he also made certain contradictory statements in the bail application presented on his behalf before the Metropolitan Magistrate.

Income Tax

Whether once AO has passed block assessment order, fresh notice u/s 148 can be issued to reopen assessment on basis of certain materials found post-search - YES: HC

ASSESSEE'S returns were accepted and intimation u/s 143(1) was issued. A search and seizure operation was conducted u/s 132(1). Based on this search and seizure, block assessment order was made u/s 158BC. After passing block assessment, AO issued notice u/s 148 giving the reason that certain income chargeable to tax had escaped assessment for the year 1999-2000 and which has come to his notice subsequently. Similar notices were issued for AY 2000-01 and 2001-02.

The reasons stated that subsequent to the search and seizure operation, post search enquiries were made and it was found that the gift transaction shown in the return of income were not regular transactions but purely arranged transactions.

The issue before the Bench is - Whether once AO has passed block assessment order, a fresh notice u/s 148 can be issued to reopen assessment on the basis of certain materials found post-search. And the answer is YES.

Service Tax

Limitation - Section 73 prior to 10.09.2004 - for invoking longer limitation period existence of fraud wilful mis-statement, suppression of facts etc, was not necessary Demand upheld - Penalty set aside - CESTAT

IT is only w.e.f. 10.09.04 that the section 73 was substituted by a new section 73 whose language was identical to the language of section 11A(1) of the Central Excise Act, 1944 in which the invoking of extended limitation period of five years from the relevant date is linked with the existence of fraud, wilful mis-statement, suppression of facts and deliberate contravention of rules on part of the assessee. In terms of section 73 as it stood during the period of dispute, for invoking longer limitation period existence of fraud wilful mis-statement, suppression of facts and deliberate contravention of the provisions of Finance Act. 1994 or of the rule made there under with intent to evade tax was not necessary and what was required was reason to believe on the part of the Assistant./Deputy Commissioner that on account of omission or failure on the part of the assessee to file return under section 70 for any prescribed period or to disclose wholly or truly all the material facts required for verification of assessment under section 71, some value of the taxable service has escaped assessment or has been under-assessed or service tax has not been paid or has been short-paid or any sum has erroneously been refunded. In this case during the period of dispute the appellant were not filing any return and had not even taken any registration and hence in terms of the section 73(1)(a) as it stood during that period, longer limitation has been correctly invoked.

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