Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Attachment of Bank account - This appears to be one of modes of recovery of dues - Petitioner allowed to represent before Authority - Recovery stayed till passing of speaking order: HC

THE Petitioner challenges the notice of the Commissioner of Service Tax to the bank to recover an amount of Rs.28,56,464/- allegedly payable by the bank to the petitioner.

The issue for decision by the High Court is whether Section 87 of the Finance Act, 1994 empowers the revenue authority to issue impugned notice intending to recover the amount.

Income Tax

Whether, based on subsequent decision of Supreme Court which was not available at time of decision given by Tribunal, rectification application u/s 254(2) is maintainable - YES: HC

THE assessee is an individual. In the AY 1990-91, the Tribunal while allowing the appeal of the Revenue, had observed it was clear that whatsoever may be the mode of dissolution or closure of the business of the firm, the profits had to be ascertained only by taking the closing stock at market value. The accounts had to be worked out on that basis upto the date of dissolution or prior to it. The situation that the firm came to an end by way of liquidation or partners dissolved the firm for distributing the assets of the firm, or dissolved and closed the firm with a view to form a company or otherwise, were not relevant because the accounts of the outgoing entity, i.e., the firm, were to be prepared properly, may be the business remained the same and stock was also taken over by the new entity i.e., the company. For tax purposes, the profit and loss of the outgoing entity, i.e., the firm had to be properly and separately worked out and was not to be mixed up with the new entity, i.e., the company.

THE issues before the bench are - Whether, based on a subsequent decision of the Supreme Court which was not available at the time of decision given by the Tribunal, a rectification application u/s 254(2) is maintainable and Whether in the event of closure of a firm, stock of the said firm would be carry forward to the newly formed company, at cost only. And the verdict goes against the Revenue.

Central Excise

Appellant producing CA certificate showing inclusion of elements which department alleges was not included in AV - CCE has unnecessarily proceeded to adjudicate matter without verifying facts and expecting that this is Tribunal's job - CC directed to issue instructions so that frivolous litigation is avoided: CESTAT

DIFFERENTIAL duty of Rs.1.22 crores has been confirmed on the ground that the appellant has not included the cost of transportation and transit insurance charges and automobile cess in respect of ‘chassis fitted with engines' manufactured and supplied by M/s. Tata Motors, Jamshedpur for body building to the appellant. The body built vehicles were supplied to the depots of Tata Motors for sale and duty liability on the goods were discharged on the cost arrived on the basis of Ujagar Print's formula.

The Bench caustically observed -

Instead of doing the necessary verification, the adjudicating authority has unnecessarily proceeded to adjudicate the matter without verifying the facts and expecting that it is Tribunal's job to verify these facts and not that of the adjudicating authority. We strongly condemn this approach of the adjudicating authority.

See our Columns Tomorrow for the judgements