Jurispruden tiol – Monday’s casesLegal Corner Icon — the image was hosted by the publisher and was not captured.

By Vijay Kumar

Central Excise

Welding Electrodes – Cenvat Credit available, trumpets Tribunal

WHY there is so much of dispute on some insignificant welding rods, when you are ready to give credit to almost any input? And the dispute continues unabated for more than twenty years! Instead of having a perpetual dispute, why can’t the government clarify the position in the Rules?

Welding electrodes used for repair; eligible:

Welding Electrodes used in repair and maintenance of machineries in the cement factory, - the cement factory consisting of complex machineries cannot run smoothly if the various defects are not rectified immediately. There are large number of pipes and tubes through which the various ingredients pass through. If some parts of the pipes or even machinery are broken, welding is very necessary. How can anybody reason that such welding is not in relation to the manufacture of final products?”

Judicial Discipline:

It was clearly held that Supreme Court’s decision is binding on the Tribunal and is to be preferred to the contrary decision of Tribunal’s Larger Bench decision.

Income Tax

Jurisdiction - If an order is set aside by CIT(A) for fresh examination, AO is not at liberty to find a new source of additions - cannot go beyond grounds it originally made additions on and same were set aside: Gujarat HC

WHAT is the jurisdiction of an Assessing Officer (AO) if an order is totally set aside by the CIT(A) and remanded for fresh assessment? The normal assumption and widespread understanding in the Department and also among most professionals is that the AO is at liberty to examine the facts furnished in the return by the assessee and if it comes across something new which might have escaped the eagle's eyes of the AO, he is free to make additions. This is what was understood not only by the CIT(A) and also the ITAT in this case but the Gujarat High Court took a different view that the AO cannot exceed its jurisdiction except for the grounds on which it made the additions and the same were challenged and finally set aside by the CIT(A) for fresh examination by the AO. Had the CIT(A) originally not set aside the order, the AO would not have expanded the scope of his jurisdiction. And thus, the High Court allowed the appeal of the assessee.

Service Tax

ST Credit – Prima facie, credit allowable on Xerox Machine maintenance services, Air Travel Agent Service, Tourist taxi service & Photography services: Tribunal

Minuscule amounts of credit were taken pertaining to service tax paid on the following services - Xerox machine maintenance, Air Travel Agents, Tourist taxi & Photography.

Revenue was of the opinion that there was no question of extending any credit on these services as there was no connection of these services with the manufacturing activities.

The cenvat credit of Rs.22,078/- was accordingly denied & a penalty of Rs.5000/- was imposed by the lower authority, which order was upheld by the Commissioner (Appeals).

See our columns Monday for the judgements