Jurisprudentiol-Friday's cases

By Vijay Kumar

Sales Tax

Official Liquidator is a dealer liable to pay tax - Supreme Court

OFFICIAL Liquidator is an officer of the Court and that for the purpose of discharging statutory obligations imposed under the Act, 1956, the Official Liquidator merely steps into the shoes of the company in liquidation. By virtue of the notice issued by the Official Liquidator for inviting tenders, dated 26.11.2001, it is amply evident that the liquidator intended to conduct a transfer of the said goods in liquidation. Since the conduct of an auctioned sale involved transfer of goods, it falls within the wide ambit of section 2(viii)(f) of the Act, 1963. Therefore, it can be concluded that the liability to pay sales tax, in the present case, would be on the Official Liquidator in the same manner as the dealer, that is, the Company in liquidation.

The Official Liquidator would be required to pay the tax payable on the sale of the assets of the company in liquidation.

Income Tax

Whether when assessee is engaged in business of race horses and has betting income it cannot set off losses incurred in earning such income - YES: High Court

THE assessee is a breeder and owner of race horses. The assessee had shown betting income and while computing the total income, the assessee had adjusted the losses suffered under the head 'business' against the income earned under other heads, including betting income, and after setting off such losses, and the betting income was brought to tax by the assessee at the flat rate of 40% as prescribed u/s 115BB of the Act. This computation was refused by the AO and held that the total winnings are to be taxed u/s 115BB and losses cannot be set off against such income. Accordingly, the total winnings from betting were brought to tax at the rate of 40% as envisaged u/s 115BB of the Act. The CIT(A) allowed the appeal of the assessee that tax is to be computed on the net betting income receipts. This was further confirmed by the Tribunal and hence this appeal by the Revenue.

The issue is - Whether when the assessee is engaged in the business of race horses, and has betting income it cannot set off losses incurred in earning such income. And the answer is YES.

Central Excise

Rule 16 of CER, 2002 does not require maintenance of any records - Returned goods have to be treated as inputs and the assessee having shown the issuance of the said inputs from their RG-1 are deemed to have manufactured final product - CENVAT reversal cannot be sought: CESTAT

THE respondents are engaged in the manufacture of Aluminum Foils. The said final product cleared by them on payment of duty to their customers is sometimes received by them either under the cover of the invoices issued by their customers or under the cover of the invoices issued by the respondent themselves. In terms of the provisions of Rule 16 of the CER, 2002 the respondent was entering goods in their input receipt register and was availing the CENVAT Credit. There is no dispute about the availment of credit by the Respondents.

However, it is the Revenue observation that after entering the goods in their CENVAT Account, the assessee has simpliciter shown the issuance of the said inputs for further manufacture, without maintaining any records about the same.

See our Columns tomorrow for the judgements