Jurisprudentiol–Tomorrow's cases

By Vijay Kumar

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

Even if agreement was not an agency agreement and it was a simple contract, amount received on termination of Contract can still be taxed as a revenue receipt : ITAT

THE assessee was deriving income from the business of running of several agencies. During the year under consideration, the assessee had received commission on account of agencies of 90 companies. The assessee was dealing in chemical products of several overseas companies. It had also an agency of Degussa AG (in short, ‘Degussa'), a German company. The agency agreement with Degussa was existing since 1-1-1969 though the formal agreement had been signed on 23-10-1972 applicable from 1-10-1972 which was automatically renewable at the end of the calendar year unless terminated by either party by giving a notice of three months. Though fresh agreements had been entered into from time to time, the terms and conditions basically remained the same. The last agreement had been signed on 10-6-1988 applicable from 1-1-1988. This agreement was being renewed from year to year. Degussa, however, gave a notice dated 21-7-1999 for termination of the agreement and, thereafter, a termination agreement was arrived at between the parties on 23-7-1999 as per which the assessee ceased to act as an agent of Degussa from 31-8-1999. From the said date, Degussa Hull (India), was appointed as an agent of the assessee.

Customs

Pre-Deposit; power of waiver of pre-deposit has to be exercised such that the order of the assessing authority will be tested by appellate forum and it will not cause any serious prejudice to the revenue: Allahabad High Court

SINCE it is always the endeavour of this Court to have the matter decided on merits and where the order of revenue authority is subject matter of appeal but condition of pre-deposit is there in the statute before the appal can be entertained, the power of waiver of pre-deposit has to be exercised by the appellate authority considering over all facts and circumstances with a view that if a party gets opportunity to have matter decided on merit, the order of the assessing authority will be tested by appellate forum and it will not cause any serious prejudice to the revenue. On the contrary, it will get doubly sure about the correctness of the order and this will inspire confidence in the public in assessing that no particular, unjust and undue demand has been made by the revenue authorities.

Central Excise

CENVAT Credit - Service Tax paid on Air Travel Agent's Commission and Real Estate Consulting Services – issue arguable; Pre-deposit ordered by Tribunal

LESSER the quantum of duty or CENVAT credit involved in a dispute, more problematic the case is – you do not usually find a decision which has final say in the matter, there are contrary decisions given by the same Bench and the issue boils over to such an extent that as a humble assessee you feel it is better to pay the amounts and buy peace rather than spending astronomical sums and taking the matter to the Apex Court. In fact, they would prefer to plough back the probable litigation expenses into their business. No doubt, there are some assessees who can afford and who will or should we say, should take their case to the highest court – it is a matter or principles, not merely a pyrrhic victory.

But for revenue, a case is a case, whether it involves a rupee or a Crore and they are going to fight it out, rain or shine.

See our columns Tomorrow for the judgements