Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Export of services - Refund - Relevant Date for limitation is date of receipt of payment not date of export - CESTAT

THE appellant is a 100% EOU registered under STPI for export of computer software and ITES. Their basic area of work is providing product designs, modeling and analysis in car engineering etc.

The issues involved in the appeals are:

i. Whether relevant date specified under Section 11B of Central Excise Act 1944 is relevant for refunds under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification 5/2006-C.E. (N.T.) dated 14.03.2006?

ii. Eligibility of services as input services for grant of refund.

iii. Whether CENVAT credit availed on the input services before payments for the services received.

Income Tax

Whether extending financial assistance or scholarship, to students for educational purpose would fall within connotation of 'education' - YES: ITAT

THE assessee is a Section 25 company. As per the MOA, principle object of the assessee were the study of the theory of banking, to institute scheme of examination, to promote information on banking etc. DIT(E) received a proposal from the ADIT(E) for cancellation of registration granted to the assessee u/s. 12A. ADIT in its proposal stated that assessee was carrying on activities in the nature of trading, commerce or business, that gross receipts of the assessee were in excess of Rs. 10 lakhs, that provisions to proviso to section 2(15) were applicable in the case of the assessee from AY 2009-10. Vide, his letter, DIT(E) issued a show cause notice to the assessee asking it as to why the registration granted to it should not be withdrawn by invoking the provisions of section 12AA (3). It was stated in the show cause notice that the activities as carried out by the assessee were in nature of trade, commerce or business during the AY 2009-10, that the details of the income in the income and expenditure account showed that assessee had earned income of Rs. more than 10 lakhs, that proviso to section 2(15) were applicable in its case, that the objects were in nature of advancement of any other object of general public utility. Assessee had made submissions before the DIT(E).

The issues before the Bench are - Whether without bringing something positive on record to distinguish the facts of earlier year and current year, it can be argued that the assessee has changed its nature of charitable activities and whether extending financial assistance or scholarship, to students for their educational purpose would fall within the connotation of "education". And the verdict goes in favour of the assessee.

Central Excise

Clandestine clearances - Demand cannot be confirmed based on evidence of diary - Settled law that clandestine manufacture and clearance cannot be inferred unless allegations are also corroborated and established on evidences: CESTAT

THE dispute relates to demand of duty on alleged clandestine processing and clearance of man-made fabrics.

The appellant M/s Mahesh Silk Mills is engaged in the processing of man-made fabrics belonging to various cloth merchants/ traders on job work basis attracting Additional Duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The factory premises of the appellant M/s Mahesh Silk Mills and seven shop premises of cloth merchants/ traders were searched by the officers of the Directorate General of Central Excise Intelligence, Zonal Unit, Mumbai. During the course of search the officers seized one diary from the factory premise of Mahesh Silk Mills containing fabric details like Name, Date, No., Meterage, Name of Fabric etc. allegedly showing quantities of grey fabrics received from 47 cloth merchants / traders and corresponding processed fabrics sent back by M/s Mahesh Silk Mills after processing to the said merchants/ traders. Consequently, a demand of Rs 30,18,378/- was confirmed with penalties. The appellant is before the Tribunal against the demand.

See our Columns Monday for the judgements