Jurisprudentiol-Monday's cases
Legal Corner Icon — the image was hosted by the publisher and was not captured.Service Tax
O-in-O clearly states that appellant had availed CENVAT credit on Input services - Works Contract Composition Scheme only requires that provider of service must not have taken CENVAT Credit on inputs - no reason to deny option exercised by appellant - Appeal allowed: CESTAT
REVENUE has raised an objection that CENVAT credit of Rs.2,69,580/ was availed on input services and this is not permissible for availing abatement under Notification 1/06. In this matter there are several judgements of the Tribunal such as Khyati Tours & Travels (supra), B.G. Shirke Technology (supra) and Ramkrishna Travels (supra) which have relied upon the Supreme Court judgment in the case of Chandrapur Magnet Wires all holding that once the credit has been reversed the benefit of Notification would be available. It would also a travesty of justice if service tax of Rs.85 lakhs approx. is demanded only because a small amount of credit was first taken and thereafter reversed. In view of the above, the demand of service tax is not sustainable.
Income Tax
Whether redemption fine paid to Customs authority is compensatory in nature and thus, allowable as legitimate business expenditure - YES: ITAT
THE assessee is engaged in the business of import and sale of goods. The assessee entered into an agreement with Export House for import of certain goods. The assessee entered into agreement with the Export House and imported a consignment of "Almonds in Shell". After the order of the Supreme Court that dry fruits could not be imported against the additional licences issued to Export Houses. The Collector of Customs, Madras confiscated the goods. The assessee made a payment of Rs. 75 lacs to Customs Authorities for releasing the goods and claimed the same as business expenditure. While making assessment of the assessee, the A.O. disallowed the payment of Rs. 75 lacs u/s 69-C on the plea that the source of expenditure was not explained.
The issue before the Bench is - Whether redemption fine paid to the Customs is compensatory in nature and thus, allowable as legitimate business expenditure. YES is the answer.
Central Excise
Because petitioner paid interest of barely Rs.12,000/- through CENVAT Credit instead of paying it in cash, all subsequent clearances were stigmatized by invoking rule 8(3A) of CER, 2002 - since this sub-rule has been struck down, all orders based on same cannot survive - Petition allowed: HC
ON one occasion, it appears that the petitioners paid the duty beyond the due date but within 30 days and were, therefore, required to pay interest of Rs.11,400/- on delayed payment of excise duty.
The petitioners paid such interest, however, by utilizing the CENVAT Credit.
The department held a belief that until such interest for delayed payment of dues was paid in cash all subsequent clearances by utilizing CENVAT Credit would be irregular.
Until Monday with more DDT
Have a nice weekend.
Mail your comments to vijaywrite@tiol.in