From our Legal Corner – tomorrow's cases

By Vijay Kumar

Central Excise

Amendment to Notification is prospective- If the intention was to give retrospective effect, it would have been stated to be so specifically – Supreme Court

Here is an assessee who pleads that amendment to Notification has retrospective effect and Revenue strongly rebutting that.

During period of forfeiture, an assessee can discharge duty liability either out of PLA or by utilising Cenvat credit and failure on his part to do so would not attract interest and penalty - CESTAT Larger Bench

NO doubt, this decision is only of academic interest. But take a look at the reasons this matter came to be referred to the Larger Bench.

It all started in the year 2004 when the lower appellate authority upheld a demand of Rs.8,35,000/- made against the assessee who always had noble intentions. There was a forfeiture order passed against the assessee requiring them to make duty payments on consignment wise basis and that too through Account Current P.L.A. The Noble assessee disobeyed this order and landed in trouble. He was in for a rough time that took him to the Tribunal.

Fragile Rule 6 takes repeated beating - No need to pay 10% amount if credit taken on common inputs used in exempted goods is reversed : Tribunal

IN terms of Rule 6 of the Cenvat credit Rules, if an assessee is engaged in manufacturing both dutiable and exempted goods and is using common inputs, he has option to maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products and exempted goods and take credit only on the inputs used in the dutiable goods. The assessee also has the option of paying 10% amount on the price of the exempted products instead of the hassles of maintaining the separate accounts. What happens if the follows neither? Naturally the revenue demands 10% amount on the sale price of the exempted goods. But unfortunately the 10% amount, being computed on the sale price of the exempted goods, runs into several crores of rupees for taking credit of a few lakhs on the common inputs resulting in "uncommon sense" demands notwithstanding setting aside of such demands by the CESTAT repeatedly.

Income Tax

Penalty for non-deduction of TDS - Assessee acted in a bona fide manner under opinion from counsel - no interference against concurrent findings of lower authorities : Madras HC

THE questions before the High Court were, whether in the facts and circumstances of the case, the Tribunal was right in

1. holding that penalty under section 271C is not leviable on the assessee company?

2. holding that penalty under Section 271C is not leviable when the assessee had advertised in the news paper that the return on the investments made with the company will not attract tax deduction at source, which is against the provisions of the section 194A and thereby induced the depositors to invest?

See our columns tomorrow for the judgements