Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

CENVAT Credit of Service Tax paid on outward transport - Delivery of goods at buyer's premises - Credit is not admissible of freight charges as they are not integral part of price of goods: HC

THE Assessee manufactures cement and clinker and it supplied the goods to different entities on FOR basis during the relevant period. According to the Assessee, it continued to be owner of the goods till delivery and the sale of the goods took place at the destination.

The amount paid for the GTA-service was not included in the price of the goods; and it was not integral part of the price of the goods. It was separately paid but the Assessee claimed Cenvat credit on the service tax paid.

The demand of CENVAT Credit was upheld by the Tribunal. Hence the assessee is in appeal before the High Court. The period of dispute is January 2005 to October, 2007.

Income Tax

Whether penalty is warranted even in case where tax is paid to buy peace with Revenue - NO: HC

THE assessee is an individual who had established a small private school. A search was conducted and it was noticed that sums of Rs.46,530/- and 48,380/- for the two years were not accounted for. Thus, the amounts were added to his income and separate orders of assessment were passed. On appeal, the CIT(A) granted him relief.

On appeal, the Tribunal upheld the order of assessment. Accordingly, the assessee paid the dues of tax, on the amounts added to his income. Subsequently, the ITO initiated proceedings under Section 271(1)(c). The assessee submitted that he had admitted to the figures as they were only the result of calculations and also he had already been subjected to tax on such amount. However, rejecting such submission, the ITO passed an order levying penalty of Rs.20,000/- each for the two assessment years. On appeal, the CIT(A) deleted the penalty levied. The Department filed an appeal before the Tribunal, which upheld the order of the ITO and directed the Assessing Officer to levy minimum penalty.

The issues before the Bench are - Whether penalty is warranted even in a case where tax is paid to buy peace with the Revenue and Whether when the assessee runs a small school and maintains no books, detection of some additional income during the Survey must necessarily lead to imposition of penalty after the Tribunal confirms the additions. And the verdict goes against the Revenue.

Service Tax

Services provided by M/s Bechtel Overseas Corporation Ltd. San Francisco, CA of overall management and administration for Sahara's Aamby Valley project is correctly classifiable under category of Consulting Engineer Service & not under Real Estate Agent Service - Services by provider located outside India to recipient in India is leviable to ST only from 18.4.2006 - Revenue appeal dismissed: CESTAT

THIS is a Revenue appeal against an order passed by the CCE(A) setting aside demand of Rs.28,12,221/- against the respondent.

The respondent M/s. Bechtel Overseas Corporation Ltd. San Francisco CA, provided overall management and administration for M/s. Sahara India Commercial Corporation Ltd. (Sahara)'s entire project at Aamby Valley under an Agreement for Program Management Services.

The Department alleged that the service provided by M/s. Bechtel falls under the category of Real Estate Agent Service and, therefore, a ST demand of Rs.28,12,221/- was raised for the period 25.01.2001 to 08.02.2002.

See our Columns Tomorrow for the judgements