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By Vijay Kumar

Customs

Compounding is to be allowed only in cases of doubtful benefit to the Revenue and to prevent needlessly proliferating litigation and holding up of collections – Supreme Court

Revenue has won a big case in the Supreme Court against its own Chief Commissioner who allowed compounding.

The compounding mechanism in Section 137(3) is to be allowed only in cases of doubtful benefit to the Revenue and to prevent needlessly proliferating litigation and holding up of collections. Compounding cannot be allowed if there are apparent contradictions, inconsistencies or incompleteness in the case of the applicant before the Compounding Authority. It is the duty of the Compounding Authority to ascertain such contradictions before compounding is ordered. In the present case, different versions given by Anil in his statement under Section 108, in his first bail Application and in his Application for compounding itself disqualifies Anil from claiming the benefit of compounding under Section 137(3) of the 1962 Act.

Income Tax

After joining reassessment proceedings, assessee's claim that notice was not served cannot be accepted - No Income Tax or wealth tax on a house used for business can be levied, nor notional rent to be charged to tax : ITAT

The requirement of the law for initiation of re-assessment proceedings are that if the Assessing Officer has reason to belief that any income chargeable to tax has escaped assessment for any year, he may subject to provision of section 148 to 153 assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which come to his notice subsequently in the course of the proceedings under this section. Considering the facts of the case in the light of the judicial decisions, it is clear that there was no basis whatsoever for initiating reassessment proceedings in these assessment years under appeals.

Central Excise

Only Reliance – wins big case - Fuel used in generating electricity used for residential purposes and supplied to Gujarat Electricity Board – assessee asked for clarification; judicial opinion was in assessee's favour – no suppression – no penalty : CESTAT

THE appellant, the one and only Reliance, is engaged in the manufacture of various petroleum products and has set up a captive co-generation power plant for the production of steam and electricity. Fuel is one of the main inputs to be used in the said power plant. With effect from July ' 99, appellants started producing fuel themselves, which was being used by them captively in the above power plant. They were availing the benefit of Notification No.67 /95-CE, dt . 16.3.95, in as much as the fuel was being used captively. In as much as, a part of the fuel so used was for the manufacture of electricity, which in turn was used for residential purposes and supplied to Gujarat Electricity Board,, the benefit of said notification was allegedly not available. .

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