Jurisprudentiol–Tomorrow's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Service Tax

Ahmedabad Management Association is not liable to pay Service Tax on commercial coaching, club or convention services: CESTAT

WHETHER the training programmes conducted by AMA can be called as commercial training or coaching. The answer is no in view of the following:

i. AMA is not a commercial concern.

ii. The purpose of the training is not commercial.

iii. The objective of the AMA in conducting the programme is not commercial and whatever extra income is earned, it is flowed back into the association and is used for public purpose.

iv. The programmes conducted by the AMA can be considered as continuing education programmes and not as commercial training or coaching.

v. No specific skills which prepare candidates for a particular job or an examination are imparted.

vi. The diploma programmes/courses conducted by AM/ amount to education or continuing education and no commercial training or coaching.

Income Tax

Indo-USA DTAA - Indian subsidiary hires services of seconded employee of parent company - payment made towards reimbursement of salary cannot be treated as fee for technical services and no TDS is deductible u/s 195: ITAT

THE assessee in this case is a 100% subsidiary of its US-based parent company. It enters into a secondment agreement with the parent company for deputing a technically qualified employee for its own software development work in India and agrees to reimburse the cost. Now the issue is - can this payment made as reimbursement of salary paid to the seconded employee by the parent company be treated as fee for technical services as per Explanation 2 below Sec 9(1)(vii) and also under Article 12(4) of the DTAA ? Is any TDS u/s 195 is to be deducted while remitting the amount?

Central Excise

100% EOUs - Whether imported goods warehoused in premises of 100% EOU are to be held to have been removed from warehouse when same are issued for manufacture within the 100% EOU ? - Matter goes to Larger Bench

THE unit had imported the HSD by availing the benefit of Notification 52/2003 Cus dated 31.3.2003. However, the department denied the exemption in respect of Additional duty of Customs on the ground that the Notification No.52 /2003- cus dated 31.3.2003, exempted only basic customs duty and additional customs duty imposed under Section 3 of the Customs Tariff Act and not the additional customs duty imposed under Section 128 of the Finance Act, 2003 and confirmed demand of additional duty of customs. The Commissioner (Appeals) allowed the benefit of exemption, but the revenue was in appeal before the Tribunal. The EOU was also in appeal for the subsequent period as their appeal was dismissed by the Commissioner (Appeals) for non-compliance of pre-deposit.

The appellants, without going into the complexities as to whether the exemption under Notification 52/2003 Cus can also be extended to the Additional Duty of customs levied under the Finance Act, 2003 or not, (Please see DDT990 for a detailed analysis of this issue) raised an interesting argument before the Tribunal. It was argued that the entire operations of the EOU are carried out in a warehouse as the goods were not removed from the warehouse the question of payment of duty does not arise.

See our columns tomorrow for the judgements