Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Commissioner has no jurisdiction to reallocate the CENVAT credit distributed by an ISD - assessee is not entitled to take credit on services mentioned in rule 6(5) of CCR, 2004 which is attributable to trading activity as during the material period it was neither taxable nor an exempted service: CESTAT

THE assessee has manufacturing units located in Maharashtra, Uttaranchal and in Himachal Pradesh.The Head Office is located at Andheri (W), Mumbai.The manufacturing units located at Uttaranchal and Himachal Pradesh did not pay Central Excise duty. The appellant is also engaged in the activity of trading of goods at their Head Office. The other units are manufacturing dutiable as well as exempted goods. The Head Office at Andheri (West) distributed the CENVAT Credit of input services to the units located in Maharashtra at Nerul, Pawane and Patalganga. While doing so the Head Office has distributed credit in proportion of turnover i.e. credit attributable to units exclusively engaged in exempted goods and credit attributable to trading was not distributed. However, CENVAT Credit on input services covered under Rule 6(5) of CCR, 2004 was distributed in full so long as it did not pertain to units exclusively engaged in manufacture of exempted goods or trading.

Income Tax

Whether sale of immovable property through medium of MoU falls within meaning of transfer as per Sec 2(47) - YES: High Court

THE assessee acquired an immoveable property through a Memorandum Of Understanding (MOU), with the delivery being given to the assessee. This was an agricultural land. Thereafter, the assessee sold his immovable property and declared the income. He claimed that the profit earned by him in the process cannot be treated as taxable income, since it was in respect of an agricultural land. The AO accepted the claim of the assessee and passed an order of assessment. However, the Commissioner invoked section 263. According to him, the AO did not take the contents of the MOU into account and erroneously failed to bring the income earned by the assessee under the purview of the tax. On appeal, the Tribunal set aside the order of the Commissioner.

The issue before the Bench is - Whether the sale of immoveable property through the medium of Memorandum of Understanding would fall within the meaning of transfer given in section 2(47) of the Income Tax Act. And the answer is YES.

Service Tax

Appeals - Pre-deposit of Rs. 20 Crore ordered by Tribunal on Agency of the State, waived: High Court

THE appellant assessee is the City and Town Development Authority on which the CESTAT had ordered a pre-deposit of Rs. 20 Crores. Tribunal has found that it has made out a strong prima facie case. The Tribunal has also found that the issue is arguable; The appellant being an organization or agency of the State, the dues of the Revenue are secured.

Held : prima facie case in favour of the Appellant Assessee. In these circumstances, the Tribunal should not have insisted even otherwise on securing a Revenue in the sum of Rs.20 Crores as directed. This was a fit case when the precondition of the deposit of the duty liability could have been waived and in its entirety. Further, the recovery of taxes should have been stayed unconditionally pending disposal of the Appeal.

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