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By Vijay Kumar

Income Tax

Board Circular issued prior to amendment of Income Tax Act and SC ruling not binding : ITAT Special Bench

IT is now an axiomatic law that Board circulars are binding on the Department, even if they are wrong or against decisions of the Supreme Court. But our Boards do not have the habit of tracking down the multitude of circulars they issue and considering whether they are relevant after the Law has been amended and the Apex Court had already ruled on the issue. In the Dhiren Chemicals case, the Supreme Court had held that if there was a Board Circular which was not in tune with the views of the Supreme Court, the Board Circular would prevail. The whole idea is that the Department should not be seen arguing that the Board was wrong - even if it is wrong, the Departmental officers should be bound by it.

So when the Law is amended or when the Revenue gets a favourable order from the Supreme Court, they should verify whether there is a contradictory circular and track it down and withdraw it. But the Board can't be expected to do this kind of hard work. So more litigation, as this case would show.

Central Excise

Wheeling out a part of electricity generated in factory of appellants to their own another factory cannot deprive them of credit of duty on naphtha used as fuel in their factory : Tribunal my majority

THE electrifying issue involved is as to the availability of modvat credit in respect of inputs used as fuel which generate electricity and part of which is captively consumed in the manufacture of final product and part of it is wheeled out to the appellant's sister concern.

Sales Tax

Sales tax vigilance officer does not cease to be sales tax officer just because he is in vigilance and works under IG, Police - Assessment made for releasing seized goods is a proper assessment : SC

THIS is an appeal by the State against the orders of the Orissa High Court and the respondent is a wholesale dealer in biscuits of different brands under the provisions of the Orissa Sales Tax Act, 1947 and Central Sales Tax Act, 1956. On 14th October, 1999, goods were being unloaded from vehicle No. WB-24-A-0112 when the Investigating Officer of Vigilance Wing, Balasore Division, found certain irregularity and, accordingly, the Sales Tax Officer (Vigilance), raised a sum of Rs. 32,592/- as tax and Rs. 54,320/- as penalty under Section 16-D of the Orissa Sales Tax Act, 1947.

The main contention of the respondent is that the Sales Tax Officer (Vigilance) is not competent to make assessment under Section 16-D of the Act inasmuch as he is an officer under the control of Inspector General of Police (Vigilance) and has no power to make assessment.

Customs:

Superintendent's letter cannot be termed as an order of Commissioner : CESTAT

THE issue was remanded twice by CESTAT to the Commissioner (Appeals). The Commissioner (Appeals) upheld all the Orders-in-Original. The appellants imported various Electronic items and warehoused the same by executing the necessary bonds. They executed 3 bonds viz. (i) 60/96 dt. 18.01.1996; (ii) 98/96 dt. 02.02.1996 and (iii) 162/96 dt. 22.02.1996. In terms of the bonds, the initial warehousing periods are 17.01.1997; 01.02.1997 and 21.021997 respectively. In other words, the initial warehousing period is for one year. The appellants are expected to clear the goods on payment of duty. However, due to various reasons, if they are not in a position to clear the goods, they could apply for extension of the warehousing period to the Commissioner, who is the competent authority under the Customs Act, 1962. They should also give the reasons for the request for extension.

See our columns Tomorrow for the judgements