Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Central Excise – CENVAT Credit – Exempted and dutiable goods – reversal of credit is no substitute for payment of 8% (10% or 5%) - It is not open to an assessee to contend that some other method is also available and assessee has choice of claiming credit or reversing same. Big win for Revenue – CESTAT LB order in 2008-TIOL-1877-CESTAT -MUM-LB over-ruled: High Court

MERELY because an assessee contends and it may be factually true that in some instances the rule cannot be followed in the matter of maintaining accounts that cannot be said to be a tool of oppression to extract that amount which is beyond the remedial measure A power to give benefit, encompasses within itself, the power to put conditions and restrictions under which credit is available. Power to give benefit also carries with it power to take it back or withdraw it.

Income Tax

Indo-USA DTAA - Applicant enters into agreement with DRDO for commercialisation of defence-related technology - also enters into agreement with US-based University for providing technical and managerial services - Revenue treats consideration as 'fees for included services' - Since no technical knowhow 'made available' as per DTAA, payments are not liable to tax in India: Advance Ruling

WITH the Indian economy expanding and getting increasingly integrated to the global economy, hiring technical and managerial services from business entities abroad has become a common practice. But do all managerial and consultancy services qualify as technical services as per Sec 9(1)(vii) of the I-T Act or Article 12(4)(b) of the Indo-USA Double Taxation Avoidance Treaty (DTAA)? NO is the answer. What brings the payments made for availing such services provided by non-residents is the qualifying expression 'make available' as mentioned in the DTAA. Unless technical knowhow or skill or experience is made available to equip the service recipient to perform the same in future independent of the support of the non-resident, such considerations cannot be treated as 'fees for included services' as per the treaty and cannot be subjected to TDS u/s 195, nor as business profits as the non-resident has no PE in India.

Service Tax

Technical Testing – though test done in India, result sent abroad – export of service - CESTAT

CONSIDERATION of the service is received by the appellants only when they deliver the study report and the certificate of the testing and analysis of the clinical trials conducted by them. Thus, delivery of the report is an essential part of their service and the service is not complete till they deliver the report. The report is delivered outside India and the same is used outside India. This is not the disputed fact.

See our columns Tomorrow for the judgements