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By Vijay Kumar

NDPS

Conviction under NDPS Act – presence of a gazetted officer is required for searching a person, not a house – Supreme Court

In the first place, there is no question in this case, of any such right of the accused. The right of the search being taken only in presence of a Magistrate or a gazetted officer is restricted where the search is to be taken of a 'person' of the accused. In this case the search was of a house and, therefore, all that the investigating officer had to follow was the conditions under Section 42 of the Act read with Section 100 Code of Criminal Procedure, 1973. Therefore, the argument that the accused had any right in respect of the aforementioned search and that right has been breached is wholly incorrect.

Customs

Prosecution launched before application in Settlement Commission – no immunity from prosecution – petitioner could have still opted for compounding: Delhi High Court

There is no doubt that the provision for settlements introduced in statutes like the one in Customs Act regarding filing of applications by evaders of customs duty etc. before the Settlement Commission for settlement of the disputes regarding the amount of evaded duty are meant for ensuring that proceedings before the criminal courts are avoided and the Government is also not put to financial loss. However, as noticed already and which position was not disputed even by the learned senior counsel for the petitioners, the remedy of seeking immunity from prosecution from the Settlement Commission is available only before the initiation of prosecution proceedings by the Customs Department.

Income Tax

Relief for Eicher Ltd; ITAT holds change of opinion cannot form the basis permitting Assessing Officer or his successor to reopen assessment

THE assessee company is engaged in the business of manufacture and sale of tractors, engines, motor cycles, gears their spares and components. It was noticed by the AO that the appellant company to expand its product range has incurred expenses on inspection and testing, component development expenses of various nature and professional consultancy expenses totalling to Rs. 1,56,62,632/-. The AO held that expenditure to be of capital in nature.

The present case is a case of reassessment. The original assessment u/s 143(3) was completed vide order dated 28.3.2002 u/s 143(3) of the Act. The said assessment was reopened by issue of notice dated 18.3.2004 u/s 148 of the I.T. Act and reassessment is completed vide the impugned assessment order dated 28.2.2005 passed u/s 148/143(3) of the Act wherein disallowance of above-mentioned amount of Rs. 1 ,56,62,632 /- was made.

Service Tax

Input Services - Canteen or Catering services provided to employees may be obligatory as per Factories Act but it cannot automatically lead to conclusion that the same relates to business activity – Credit not available : Tribunal

CONSISTENCY requires you to be as ignorant today as you were a year ago. – Bernard Berenson , Notebook, 1892.

A few days ago, a set of appeals filed by the Revenue [ CCE , Nashik ] came up before the Tribunal challenging the propriety of the order of the Commissioner (A) in extending the benefit of Cenvat Credit in respect of Service tax paid on Catering Services provided in the company canteens.

However, this time around, the same Single Member Bench that had pronounced its decision in the case of Manikgarh Cement (supra) took a diagonally opposite view unpalatable to the bon vivant by adopting the following rationale –

“The catering/canteen services are neither used in or in relation to the manufacture or clearance of final products nor can it be said to be an activity relating to business. The illustration of activities relating to business viz. accounting, auditing, financing etc. are all connected with the business of manufacture. Catering service cannot be treated as an activity relating to business and even if it is obligatory on the part of the assessees/respondents as per the requirements of the Factories Act, 1948, to provide a canteen, this does not automatically lead to the conclusion that a catering service relates to business activity. It is in the nature of welfare activity and not an activity relating to business.”

See our columns Tomorrow for the judgements