Jurisprudentiol– Tuesday's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

Demands under Section 11D – Tribunal thrashes once again revenue's belief that demands under Section 11D have no time limit – holds limitation under Section 11A is applicable

THERE is a popular belief in the field formations that the demands under Section 11D can be made for unlimited period. The reason for such belief is that Section 11 D does not contain any relevant date for issue of show cause notice.

Income Tax

India-UK DTAA - assessee makes payment to non-resident for providing training to technical personnel - such payment is fee for technical services, and can be taxed in source jurisdiction - Since fee has arisen in India it is taxable u/s 13(7) of DTAA : ITAT

WITH globalisation coming home to forward-looking Indian corporates, it is nowadays common to see Indian personnel being sent abroad for technical and managerial training. In this case, SAIL sends its engineers and managers to UK-based Corus Consulting for imparting training and exposure to various modules on iron and steel-making. A payment is to be remitted to the non-resident. Is TDS deductible on such payments? And the Tribunal's verdict is that yes, such a payment made for imparting technical training does qualify as fee for technical services as per Explanation 2 to Sec 9(1)(vii) and can also be taxed in the source jurisdiction under Sec 13(2) of the DTAA. Since the fee arises in India in terms of Article 13(7) of the DTAA, it is very much liable to tax.

Service Tax

Activity of powder coating on material supplied by customers and collection of job charges – Abatement of value of goods and materials sold to customer available – Matter remanded to grant benefit of Notification 8/2005-ST: CESTAT

THE appellant is engaged in the activity of powder coating on the materials supplied by their customers and after powder coating the materials are returned back to the customer. The Revenue proceeded to tax them under the category of ‘Business Auxiliary Service' on the ground that the appellant is engaged in the activity of production of goods on behalf of their clients.

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See our columns Tuesday for the judgements