Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Training in biotechnology and pharmacy through software - vocational training – matter remanded - CESTAT

M/s. Bio Campus was found to have engaged in imparting education in the branches of biotechnology and pharmacy through software. The students who received the training and successfully completed the course had been issued certificates in “Protein Modeling & Rational Drug Design”.

The original authority found that Bio Campus had rendered taxable services classified under ‘Commercial Training or Coaching” during the period from 1.7.2003 to 30.9.2004 and had not followed the statutory formalities including payment of service tax due. He rejected the assessee's claim that the training imparted was “computer software training” exempted from payment of service tax under Notification No.9/2003-ST dated 20.6.2003. He confirmed the demand of Rs.7,40,200/- towards service tax due on services rendered during 1.7.2003 to 3.6.2004 and imposed penalties under Sections 76, 77 and 78 of Finance Act, 1994. He appropriated an amount of Rs.4,95,502/- paid by the appellants towards their tax liability for the period from 1.7.2004 to 31.3.2005.

Income Tax

Assessee returns an income of Rs. 300 – AO adds Rs. 2.85 Crores; On appeal, tribunal finds that addition should have been 9.5 Crores; Assessee makes a quick retreat and concedes. To protect at least part of the Revenue, AO's order upheld – ITAT Sp. Bench

Here is a strange case. The assessee is in appeal before the ITAT against addition of an income of Rs. 2.85 Crores. The Revenue also is in appeal against the Commissioner (Appeals) ordering this addition on receipt basis and not accrual. On a perusal of the accounts by the Tribunal, it was found that the addition should be over 9.50 Crores and not 2.85 Crores as decided by the AO.

What does the assessee do in such a case? RETREAT!. They quickly conceded all issues including Revenue appeal – It was better to taxed for an income of Rs.2.85 Crores than for Rs. 9.50 Crores!

But what can the Tribunal do? It cannot enhance the assessed income. To protect the Revenue's interest without going into the merits of case, the ITAT treated the Assessee's appeal as dismissed and treated the Revenue's appeal as allowed. Revenue simply lost the tax on about Rs. 7 Crores . The assessee had returned an income of Rs. 350/-; AO must have been excited when he made it Rs. 2.85 Crores, in the process forgetting Rs. 9.5 Crores.!

Customs

Allegation of mis-declaration and undervaluation of imported opal white polycarbonate sheets used in signage/advertising – Difference of opinion between two Members on applicability of evidences gathered by revenue to substantiate allegations – Matter goes to Third Member

The appellants imported ‘opal white polycarbonate sheets' for signage/advertising industry from Korea, Singapore, Hong Kong, UAE and Taiwan by declaring them as sheets made out of recycled or waste polycarbonates and cleared them on payment of appropriate customs duties at lower values. DRI conducted investigations and found that the appellants had mis-declared the goods as having originated from recycled polycarbonate thereby undervaluing the goods resulting in evasion of duty. Notices were issued to all the four appellants for demand of differential duties amounting to Rs. 19.35 crores in all from four appellants and imposition of substantial penalties on the importing firms and also individuals.

See our columns Tomorrow for the judgements