Legal Corner Icon — the image was hosted by the publisher and was not captured.Jurispruden tiol – Monday's cases

By Vijay Kumar

Income Tax

Sale of diamonds to non existing customers – reopening of assessments – High Court not to interfere: Allahabad HC

The formation of belief by the assessing officer is within the realm of subjective satisfaction and at the stage of issuance of notice the only question is whether there was relevant material upon which a reasonable person could have formed requisite belief or not. Beyond this there is no scope of judicial review in such matters. Remedy under Article 226 of the Constitution of India is discretionary and even if there is some irregularity or illegality, the Court is not bound to exercise discretion at the instance of the petitioner if it is satisfied that it is not otherwise a fit case warranting exercise of discretionary jurisdiction under Article 226 of the Constitution.

Central Excise

Non-filing of Cross Objections proves costly as plea during hearing is not entertained by Tribunal

THE case is associated with the well-known Orissa Extrusions [ 2002-TIOL-240-SC-CX ] decision wherein the Apex Court had held that in the absence of a bar in the notification granting exemption, the credit of duty paid on inputs could be availed. This alleged flaw pointed out by the Apex Court in the matter of construction of an exemption notification vis-à-vis the provisions of rule 57C of the CER , 1944 led the Central government, as one school of thought says, to insertion of an Explanation in rule 3 of the Cenvat Credit Rules.

Service Tax

Revenue has a reason to smile - RPG Enterprises Ltd loses Rs 5 Cr Service Tax case – Tribunal upholds demand by holding that they are Management Consultants

A two-year wait has brought cheer for Revenue. We had reported the Tribunal decision [ 2006-TIOL-385-CESTAT-MUM ] wherein the Bench had opined that the company had not made a prima facie case for total waiver & hence directed them to make a pre-deposit of Rs.2 crores .

The short facts of the “loaded” case need a mention. It was the contention of the Revenue that the company is rendering “management consultancy services” to its group companies & recovering fees hence the same was chargeable to Service Tax. Accordingly a demand of Service Tax of Rs.4.89 crores was made for the period 1998-1999 to 2001-2002. The demand was upheld & equivalent penalty, interest etc. was imposed by the Deputy Commissioner whose order was also upheld by the Commissioner (Appeals).

See our columns Monday for the judgements