Jurisprudentiol–Tomorrow's cases

By Vijay Kumar

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

CENVAT Credit cannot be denied on the ground that activities undertaken by the supplier of inputs did not amount to manufacture – Revenue appeal dismissed: High Court

THE substantial question of law before the Court raised by the Revenue was, “Whether CENVAT credit is admissible on the inputs where activities undertaken by the supplier of inputs did not amount to manufacture in view of facts mentioned in appeal”

Income Tax

International Taxation - if a contract is composite in spite of the apparent demarcation into separate parts, the mere fact that for off-shore supply the title passed outside India alone will not decide taxability - "business connection" includes close, real, intimate relationship and commonness of interest between the non-resident and the Indian person: Madras HC

THE word "business connection" is too wide to admit any precise definition. From the various judgments of the Supreme Court the Court found that, it includes close, real, intimate relationship and commonness of interest between the non-resident and the Indian person and where there is control of management or finances or substantial holding of equity shares or sharing of profits by the non-resident of the Indian person, the requirement of principle (iii), i.e., the existence of close, real and intimate relationship and commonness between the non-resident and Indian person, is fulfilled. Therefore, it is not just where the title passed, but also whether there was a crucial and intimate relation, whether there was an element of continuity between the business of the non-resident and the activity within the taxable territories, such transaction not being stray or isolated.

Service Tax

Service Tax paid on Group Mediclaim Policy and Workmen's Accident policy is available as credit as they form part of manufacturing cost as per CAS-4, para 5.2: Tribunal

FOR an amount of Rs.4,813 /- the Revenue is in appeal before the Tribunal and that too with an application for Condonation of Delay.

Revenue is not pleased with the Commissioner(Appeals)'s generosity in extending the benefit of CENVAT Credit of this amount of service tax paid on Group Mediclaim Policy and Workmen's Accident Policy taken by the manufacturer for its workers.

There was not much to be debated before the Tribunal for the Larger Bench had in the case of CCE, Mumbai-V vs. GTC Industries [2008-TIOL-1634-CESTAT-Mum] laid down the principle that any expenses which form part of the manufacturing cost as per format prescribed in CAS-4 statement shall be allowable as credit.

See our columns Tomorrow for the judgements