Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Tribunal had shown sufficient indulgence to appellant by granting time to deposit part of tax demanded and had also granted an extension of time for compliance - Tribunal had, therefore, rightly dismissed appeal for non-compliance: HC

THE appellant had filed an appeal before the Tribunal challenging the order passed by the CCE & ST, Trichy wherein a service tax demand of Rs.3,02,46,974/- was confirmed apart from imposition of penalty and interest.

By an order dated 23.1.2013, the Tribunal, taking note of the fact that the appellant already deposited a sum of Rs.77,32,903/-, directed the appellant to pre-deposit a further sum of Rs.1.20 Crores within a period of six weeks and report compliance for obtaining stay from recovery of the adjudged dues.

The appellant deposited only Rs.20 Lakhs and filed an application seeking extension of time. The Tribunal allowed this application and directed the appellant to deposit the balance amount of Rs.1 Crore within a period of eight weeks. In the said order, the Tribunal observed that if the appellant does not deposit the amount within the stipulated period, the appeal will be dismissed.

The appellant deposited a further amount of Rs.25 lakhs.

Noting that the appellant had failed to comply with its order, the Tribunal dismissed the appeal

Income Tax

Whether in case of sale and lease-back deal where sales tax was paid, depreciation can be disallowed merely because Central Excise papers treat machinery as 'not for sale' - NO: HC

THE assessee, a finance company, had entered into a Sale and Lease back agreement with the manufacturer of a machinery, to acquire ownership of machinery for consideration and thereafter lease the said machinery to the same company. The machinery was manufactured by that company and sold to the assessee and on the transaction, sales tax was levied and collected from the assessee and paid out to the Government. On the leased out machinery, assessee had received rental income and it was disclosed in the return as business income of the assessee.

THE issues before the Bench are - Whether in a case of sale and lease-back deal where sales tax was paid, depreciation can be disallowed merely because the Central Excise papers treat the machinery as 'not for sale' and Whether the rental income earned from leasing of such assets is to be treated as business income. And the verdict goes in favour of the assessee.

Central Excise

Re-quantification of demand - When the first and last page of SCN indicates that notice was issued on 09/07/1998 it is very strange and also not understandable as to how Revenue has come to the conclusion that SCN has been issued on 19/06/1998 - ground to file appeal is totally frivolous - appeal dismissed: CESTAT

THIS is the 2nd round of litigation.

In the earlier round, the Tribunal had remanded the matter back to the adjudicating authority with a direction to re-quantify the duty for a period of six months after allowing the benefit of MODVAT credit, for which purpose the appellants would produce the relevant documentary evidence.

The ground taken by the Revenue to file the appeal is totally frivolous and on this ground itself the demand is not sustainable.

See our Columns tomorrow for the judgements