Jurisprudentiol-Thrusday's cases

By Vijay Kumar

Service Tax

If the reason for waiving penalty u/s 78 in terms of the provisions of Section 80 is that there was confusion about the scope of leviability on service receivers under reverse charge mechanism, then, it is the same confusion because of which the appellants had not declared the fact of receiving service by way of import – Demand time barred: CESTAT

THE Commissioner noted that the issue of charging service tax on reverse charge basis under Section 66A was under litigation in various courts. He relied on case laws which have held that if the service tax has not been paid due to pendency of matter in judicial forums, the said aspect may be considered as reasonable cause for non payment for invoking the provisions of Section 80. Accordingly, he waived penalties under Section 76, 77 & 78 of the Finance Act. ...If the reason for waiving penalty under Section 78 in terms of the provisions of Section 80 are that there was confusion about the scope of leviability on service receivers under reverse charge mechanism, then, it is the same confusion because of which the appellants had not declared the fact of receiving service by way of import. In fact, the appellants case is even stronger because it has not even been established convincingly by the Commissioner that the service receive is entirely covered under the category of Intellectual Property Right Services.

Income Tax

Whether finding that there was no distribution of assets leads to conclusion that there was no transfer of assets at all - NO: High Court

THE assessee, a partnership firm, was undertaking the activity of analyzing chemical compounds and pollutants. The firm is a part of group of establishments, by name Bhagavati Ana Labs Limited. A search was conducted in the parent organization and a show cause notice was issued to the assessee u/s 158BD. Thereafter, the AO took the view that the assessee under-disclosed the sales consideration of its assets to another company, and therefore, it was liable to pay the capital gains tax. The assessee argued that the consideration for the assets was paid in the form of shares to the respective partners, however, the AO took the view that the obligation to pay capital gains tax arose on account of the transfer of capital by way of distribution of capital assets, on the dissolution of the firm. That view was upheld by the CIT(A). The Tribunal, however, held that the sale took place, before the dissolution of the firm and it is not a case of distribution of assets, contemplated u/s 45 (4) of the Act. However, the Tribunal held that even if the transaction does not fall under Section 45(4) of the Act, it would get attracted by Section 45(1) of the Act.

The issue before the Bench is - Whether finding that there was no distribution of assets leads to conclusion that there was no transfer of assets at all. NO is the answer.

FERA

Whether finding that there was no distribution of assets leads to conclusion that there was no transfer of assets at all - NO: High Court

THE retraction of the confessional statement containing admission of wrong-doings by the appellant came after more than ten years, at the stage of personal hearing only, and not before that. Had the appellant been subjected to threat, coercion or pressure – as alleged by him rather belatedly, he would have retracted his confessional statement soon after making the same, once the alleged threat, coercion or pressure ceased to influence the action of the appellant. It is not his case that the said factors continued to influence him for 10 long years. Moreover, the appellant failed to disclose as to how he was pressurized, coerced, or tortured, and by whom, when he made the earlier confessional statement. The confessional statement was also duly corroborated by the aforesaid independent evidence viz. the list of persons to whom the monies had to be distributed, received by fax from Ubaidullah of Dubai.

Thus, the plea of the appellant, founded upon his so-called highly belatedly retraction of his confessional statement, has to be rejected.

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