Jurisprudentiol – Monday's cases

By Vijay Kumar

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

At stage of Show Cause Notice, the department should have open mind - Madras High Court sets aside Show Cause Notice issued with pre-determined conclusions

THE petitioner has filed a writ petition challenging the show cause notice issued under Regulation 20(1) of the Customs Brokers Licensing Regulations, 2013.

The main ground on which the impugned notice is challenged is that the contents of the show cause notice disclose a pre-conceived and closed mind. Upto paragraph 7, the show cause notice contains the narration of the facts relating to investigation conducted, the evidence recorded in the course of enquiry, etc.,

But, thereafter, in paragraph 9, the first respondent has recorded a series of findings. These findings, are very categorical in nature, without leaving any scope for the petitioner to explain. Even the first respondent has asserted that a clear prima facie case has been made out against the petitioner and that if the petitioner is allowed to continue to operate, it would be detrimental to the interest of revenue.

Income Tax

Whether when assessee has been showing certain expenditure towards 'work-in-progress' for two years but not in year of filing return because its contract was terminated, such expenditure written off in books is to be allowed - YES: High Court

THE assessee company was awarded a contract by Madhya Pradesh Electricity Board for rehabilitation job for the Amarkantak Thermal Power Station near Jabalpur in MP. An amount of Rs.9,29,20,000/- was paid as advance. The assessee gave a bank guarantee for the said amount. The assessee commenced the work and incurred expenditure on the project. The total amount of expenditure incurred on the project was Rs..6,64,01,149/-. Assessee contended that MPEB arbitrarily terminated the contract and invoked the bank guarantee. The said contract was terminated by letter dated 8.10.2002. The assessee invoked the arbitration clause and put forth a claim. The amount of Rs.6,64,01,149/- included money spent on raw materials like tubes and pressure parts, consumables, freight and carriage and also bank charges, professional charges etc., in addition to the expenses on personnel, transport and communication and administrative expenses.

The issue before the Bench is -Whether when the assessee has been showing certain expenditure towards 'work-in-progress' for two years but not in the year of filing return because its contract was terminated and bank guarantee encashed, the expenditure written off in books is to be allowed. And the answer is YES.

Service Tax

Commercial training or Coaching service - Retrospective amendment by FA, 2010 - All institutes, whether charitable or not come within the scope of taxable service if courses are not recognized by law and a consideration is charged for the services rendered: CESTAT

AGAINST the appellant, a Service Tax demand of Rs.6.59 crores was confirmed by CCE, Pune-III by classifying the services rendered by them during the period 01/07/2003 to 31/03/2006 under ‘commercial training or coaching services'.

Before the CESTAT the appellant inter alia submitted that pursuant to the investigation and recording of statements of the President of the appellant society they applied for service tax registration with effect from 05.05.2006 and deposited an amount of Rs.8,76,42,162/- towards their tax liability upto December, 2006 which included an amount of Rs.5,27,37,740/- towards the tax liability for the period 01/07/2003 to 31/03/2006, under protest.

See our Columns Monday for the judgements