Jurisprudentiol-Tuesday's cases

By Vijay Kumar

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

Refund - Commissioner (A) has given strange reasons to deny appellant benefit - he is not taking consistent stand in his reasoning - he has not read apex Court decision in India Tobacco Asscn. in proper perspective - Notification 21/2009-ST does not have retrospective effect - Appeal allowed: CESTAT

THE appellant, a Company incorporated in France, with representative office in Mumbai entered into two contracts with ONGC for seismic surveys for Oil and Natural Gas in blocks/sites awarded by Government of India in the Eastern and Krishna Godavari basin Areas Offshore India.

The appellants were asked to pay Service Tax of Rs.7.44 crores which they paid under TR-6 Challans marked "Under protest" for the period 1.4.2006 to 18.4.2006.

This amount was claimed as refund but the same was denied by the adjudicating authority.

Income Tax

Whether in absence of certainty about rate of surcharge because of uncertainty about date with reference to which rate is to be applied, it can be said that surcharge as per existing provision of Sec 113 was leviable on block assessment qua undisclosed income - NO: SC

THE assessee was engaged in real estate business and its assessment was completed under block assessment proceedings. As per the proviso inserted to Section 113 of the Income Tax Act vide Finance Act, 2002 the tax chargeable under the said Section shall be increased by a surcharge, if any, levied by any Central Act and applicable in the assessment year relevant to the previous year in which the search is initiated under Section 132 or the requisition is made under Section 132-A of IT Act. However, there was no clarity as to the date with reference to which the rate of surcharge was to be levied. The dispute was regarding the issue whether this levy of surcharge brought through Finance Act, 2002 was prospective or retrospective in operation.

The issue before the Bench is - Whether in the absence of certainty about the rate of surcharge because of uncertainty about the date with reference to which the rate is to be applied, it can be said that surcharge as per the existing provision of section 113 was leviable on block assessment qua undisclosed income. And the answer is NO.

Central Excise

Demand of 10% under Rule 6 of CENVAT Credit Rules on Petroleum gases returned to refinery in terms of Notification No 4/2006 CE dated 01.03.2006 and 12/2012 dated 17.03.2012 - Show Cause Notice set aside: HC

AGAINST Show Cause Notice issued by the department, the assessee filed this Writ Petition before the High Court challenging the notice. The assessee is engaged in manufacture of Poly Iso Butylene. The main input for the product is Poly Butylene Feed Stock (PBFS), which is manufactured and supplied to the petitioner by Chennai Petroleum Corporation Ltd. After extraction of Poly Iso Butylene, 83% of the feedstock is sent back to the supplier refinery. As per Notification No 157/89 CE, later continued vide Notification No 4/2006 CE and 12/2012 CE, duty leviable as is in excess of the duty on gas consumed in the manufacture of Poly Iso Butylene is exempted. The gas consumed is computed by subtracting the quantity of gas received back by the refinery from the gas supplied.

It is the case of the department that the assessee is manufacturing both dutiable and exempted goods, (goods which are returned to the refinery) in terms of Rule 6 of the CENVAT Credit Rules, they are liable to pay 10% amount as they failed to maintain separate accounts for CENVAT Credit.

On the question of maintainability of a Writ Petition against Show Cause Notice in view of the alternate remedy, the High Court held that where the Show Cause Notice is issued without jurisdiction or where there is an abuse in process of law, the Petition would be maintainable and proceeded to examine the issue on merits.

See our Columns Tomorrow for the judgements