From our Legal Corner – Monday’s cases

By Vijay Kumar

Central Excise

First impact of SC decision in Jayanti Food Processing case - pesticides cleared in pack of 50 ml to Mahyco seeds for being supplied free to farmers along with BT Cotton seeds to be assessed u/s 4 and not Sec 4A of Excise : Tribunal

SEVEN months ago, we reported a similar decision concerning the present company [2007-TIOL-324-CESTAT-MUM] where the Tribunal had held that merely because Pesticides were notified in terms of Section 4A, that itself would not mean that all clearances of pesticides should be assessed on the basis of MRP. The case was that the company was manufacturing and clearing the product TATA MIDA 17.8SL in 50 ml bottles on payment of duty and the assessable value was arrived on the basis of contract rates as per the purchase order without declaring the MRP price on the bottles of 50 ml, the reason being that these 50 ml bottles were meant for free distribution by M/s Mahyco Seeds Limited to farmers along with seeds, which is their own product sold by them to farmers. This was objected by the department who wanted the goods to be assessed on MRP basis and the matter had reached the Tribunal where the assessee was granted relief.

Service Tax

Revision order passed by Commissioner after two years - Tribunal cannot review its own order : CESTAT

HERE is a strange situation. As per section 84 of the Finance Act, 1994, the Commissioner can review any order passed by any subordinate and pass a revision order. This revision order is appealable to the CESTAT. But there is a condition that the Commissioner cannot pass a revision order after two years of the original order.

Income Tax

Relief for Siemens; A fresh interpretation of laws, based on same set of facts, without anything more, by succeeding AO does not constitute adequate 'reason to believe' for reopening assessment u/s 147 : Bombay HC

IN the Income Tax Department, there is one Section which is invoked thoughtlessly and, sometimes, mindlessly is the Section 147 - reopening of completed assessment order. The insertion of 'Reason to believe' was believed to be one statutory move which was expected to cut down the reckless use of the re-assessment provisions. But it has not! In the latest case decided by the Bombay High Court, the issue was : Can a different interpretation of the provisions of law by a succeeding AO be regarded as adequate 'reason to believe' or a mere change in the opinion? And the High Court has emphatically said that if an interpretation is attempted based on the same set of facts which were made available to the predecessor AO to complete the assessment and the accounting system followed by the assessee is the same, such interpretation will amount to mere change of opinion.

See our columns Monday for the judgements