Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Penalty proceedings have to be initiated within five years: HC

ANY law or stipulation prescribing a period of limitation to do or not to do a thing after the expiry of period so stipulated has the consequence of creation and destruction of rights and, therefore, must be specifically enacted and prescribed therefor. It is not for the Courts to import any specific period of limitation by implication, where there is really none, though Courts may always hold when any such exercise of power had the effect of disturbing rights of a citizen that it should be exercised within a reasonable period. The period of five years has been held to be reasonable period for initiating penalty proceedings.

Income Tax

Income tax - Whether assessee is eligible for deduction u/s 54EC, even if investment made in relavant AY was not within six months from handing over of possession to developer by virtue of JDA - NO: ITAT

THE issue before the Bench is - Whether assessee is eligible for deduction u/s 54EC, even if investment made in the relavant AY was not within six months from handing over of the possession to the developer by virtue of joint development agreement. And the answer is NO.

Service Tax

Penalty - penalty is ordinarily levied for some contumacious conduct or for deliberate violation of provisions of particular statute: HC

PENALTY is ordinarily levied for some contumacious conduct or for a deliberate violation of the provisions of the particular statute. In the case on hand, the assessee has stated that they were under the impression that the service rendered by them will not be exigible to service tax. On an earlier occasion, the assessee registered and paid service tax on a non taxable service and they did not even seek for refund of the amount. The bona fide confusion in the mind of the assessee as to which service is taxable or non-taxable is apparent and that justifies the plea of failure to pay service tax. This reasoning paripassu applies to non registration of said service rendered by them. Therefore, the demand of penalty under Sections 76 and Section 77 of the Finance Act, 1994 is not tenable.

Section 80 - No penalty if reasonable cause is shown: The provision of Section 80 of the Finance Act, 1994 gives the authority the power to consider not to impose penalty in certain cases, where the assessee shows reasonable cause for his failure to comply with the requirement of the Finance Act, 1994. This provision is analogous to Section 273B of the Income Tax Act, which also states that no penalty shall be imposable on the assessee for any failure referred to in the said provision, if the assessee proves that there is reasonable cause for the failure.

See our Columns Tomorrow for the judgements