Jurisprudentiol-Wednesday's cases

By Vijay Kumar

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

Clandestine Removal - pan masala and gutkha - What is required to be proved by the department is preponderance of probability - Matter remanded with pre-deposit: CESTAT

THERE is no conclusion or evidence to show that quantum of production declared by the appellant was less than what was possible with support of evidence; no evidence has been gathered to show that there was excess use of machines or additional shifts of work done by the appellants during the relevant period; no consignment have been seized or intercepted while clearing without payment of duty; There is need for more detailed consideration of the available evidence and there is a need to show that with the available evidence, case has been made out. The matter is remanded to the Commissioner with a direction to consider each and every point that may be submitted by the appellants, record his observations and consider details of evidence gathered and why submissions of the appellants are not acceptable.

Income Tax

Whether when Revenue has issued restraint order against goods seized u/s 132(1), HC is right in directing official to make inventory of goods and then quash search proceedings on basis of Report submitted by official - NO: Supreme Court

THE assessee is engaged in the manufacture of C.I. pipes, fittings and manholes and had obtained the licence under the Central Excise Act. The assessee had been filing income-tax returns regularly. On 16.2.2000 the Income Tax Department conducted a search & seizure operation on the residential and business premises of the assessee. The assessee filed a writ against the action of the Revenue and contended that there was no information in possession of the officer which could have persuaded any reasonable person to form an opinion about the existence of undisclosed assets of the assessee. It was further urged that the warrant of authorization was issued mechanically, arbitrarily and there was total non-application of mind and moreover there was no formation of opinion about the existence of undisclosed assets as contemplated under Section 132(1) of the Act. On this foundation, the search and seizure were sought to be quashed.

The issue before the Bench is - Whether when the Revenue has issued restraint order against goods seized u/s 132(1), the High Court is right in directing a particular Revenue official to make inventory of goods and then quash the search proceedings on the basis of the report submitted by the official. NO is the answer.

Service Tax

CENVAT - Rule 2(l) of CCR, 2004 - Services namely, Brokerage for sale/purchase of shares & securities for Trading, Custodian charges, Event management are in nature of input services having nexus to the business activity of Banking - Pre-deposit waived & stay granted: CESTAT

AGAINST the order passed by the CCE, Thane-I denying CENVAT credit taken of the service tax paid on various services, of Rs.4,88,93,874/-, along with every other pecuniary provision that can go along with it, the Bank is before the CESTAT with an application for Stay.

The applicant is a banking company engaged in providing banking and financial services to their clients. To provide these services the applicants are required to maintain CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio) as per guidelines prescribed by RBI. For this, the applicant is paying brokerage and sale of investment and also paying custodian charges to M/s. Stock Holding Corporation of India Ltd. On these charges the service provider is paying service tax and the appellant has taken CENVAT credit of the tax paid on such services. They have also availed CENVAT Credit on event management charges paid by them to custodian for celebration of annual day function etc., they have also taken the CENVAT Credit on the consortium charges paid to the lead bank i.e. SBI and also availed CENVAT Credit on maintenance charges for residential flat of Managing Director.

See our Columns Tomorrow for the judgements