From our Legal Corner - Thursday's cases
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By Vijay Kumar

Income Tax

If a non-resident is assessed independently, its representative assessee cannot be taxed u/s 163 for same income : ITAT

TAXING a non-resident has always been challenging, and wherever possible the law has provided adequate safeguard for the Revenue. That is how Sec 163 came into being. The issue here is : If a non-resident is assessed independently, can its agent in India be also assessed as representative assessee for the same income u/s 163? This was the issue that came before the Mumbai bench of ITAT which decided the question in the negative in favour of assessee by holding that this can't be done as the primary reason for enactment of Sec.163 was to protect the interest of revenue where it is difficult to make assessment and recover tax from a non resident assessee by assessing its agent in India as representative assessee but once the actual assessee is independently assessed then protective assessment in the hands of agent u/s 163 is unjustified.

Service Tax

Cellular Telephone Service - Credit on cell site towers or parts of towers and pre-fabricated shelters prima facie available : Tribunal

CELLULAR companies raised a toast on 9^th September 2005 when the Tribunal pronounced its order - " Cell site/BTS site/BSC site are not excisable - the activity of installing and commissioning a cell site cannot be an activity of manufacture as no marketable goods arise even in those cases where the cell site is relocated by dismantling and reassembling of individual components ".

Central Excise

Shortage noticed in Audit - Cenvat Credit to be reversed - burden is on assessee to prove eligibility of credit - Demand and interest confirmed, penalty quashed : Bombay HC

DURING the course of Audit of Records of the respondent by Internal Audit Officers of Central Excise, it was observed that in the Cost Audit Report for the year 2002-2003, for the physical verification of inventory, there was shortage of raw material worth Rs. 33,42,161/-. The amount involved CENVAT Credit of Rs. 5,34,746/-.

Show-cause notice dated 15-12-2004 was issued directing the assessee to show cause as to why demand of Rs. 5,34,746/- may not be confirmed, why interest under section 11AB of the Central Excise Act, 1944 may not be recovered and why penalty under section 11AC of the Central Excise Act, 1944 may not be imposed.

Revenue's case that unjust enrichment is applicable is without basis, as Central Govt would not have issued exemption notification, under Sec 11C for products in question : Tribunal

TAPES/STRIPS (S.H 3920.32) were being captively consumed by the assessee during the manufacture of ropes falling under S.H 5607.90, which apparently were cleared on payment of duty. Revenue contended that these intermediate products are chargeable to Central Excise duty.

A demand of duty on the said intermediate products was raised for the period 22.5.88 to 22.11.88. The assessee deposited an amount of Rs.12,00,000/- in PLA vide Entry no. 493 dt. 25.9.89 'Under Protest' as they knew that the matter was already under the active consideration of the Central Government.

The matter was amicably resolved as the Central Government issued a notification 38/90-CE(N.T) dated 9.10.1990 in terms of Section 11C of the CEA'44 directing that the duties of Central Excise were not required to be paid on the tapes/strips used in the manufacture of ropes for the period 1.03.1987 to 31.05.1989.

See our columns for the judgements on Thursday