Jurispruden tiol-Tuesday's cases

By Vijay Kumar

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

Supplementary Invoice – Interest – when differential duty is payable, interest is liable – SKF decision followed - 2009-TIOL-82-SC-CX.

WHAT does differential price signify? It signifies that value, which is the function of the price, on the date of removal/clearance of the goods, was not correct. That, it was understated. Therefore, the price indicated by the supplementary invoice is directly relatable to the value of the goods on the date of clearance, hence, enhanced duty. This enhanced duty is on the corrected value of the goods on the date of removal. When the differential duty is paid after the date of clearance, it indicates short- payment/short-levy on the date of removal, hence, interest which is for loss of revenue, becomes leviable under Section 11AB of the Act.

Income Tax

Transfer Pricing - Sec 92 - assessee is captive unit of Switzerland-based company - determination of Arm's Length Price - selection of comparables - merely because a comparable is loss-making it cannot be excluded from list of comparables for computation of ALP: ITAT Special Bench

TRANSFER PRICING is a new piece of legislation in India, which revolves around the concept of computation of Arm's Length Price (ALP). And determination of ALP hinges on fair and right selection of uncontrolled comparables from the industry which helps in working out the unvitiated profits which can in turn be attributed to the transactions between the parent company and its associated enterprises. But, can loss-making companies be also chosen as a comparable? Should companies with extraordinary profits be excluded from the list of comparables? How strictly the parameter of FAR Analysis should be applied? There are many such questions which have been decided in the latest Special Bench decision of the Tribunal.

Customs

Valuation -Related person - Extra Duty Deposit of 1% - Assessment to be treated as provisional - Final assessment to be passed: High Court

THE grievance of the petitioner arises only on account of the fact that in the background of the order made long after the import, the respondents should have either made a final assessment without the demand for 1% EDD or alternatively with 1% EDD , it could only be a provisional assessment. Hence, with the collection of 1% EDD, the contention of the respondents that it is the final assessment clearly goes against the order dated 6.6.2008. In the circumstances, the collection of 1% EDD is totally unjustified. Hence, the petitioner has to be granted the refund of the said amount in terms of the order dated 6.6.2008 Circular 268/07 dated 10.12.2007 within the time frame as referred to in the provisions of the Act or otherwise pass the assessment and grant the refund to the petitioner.

State Excise

International Policy without Indian Legislation - Courts cannot interfere; State has a very wide discretion in selecting the persons or objects it will tax; Imported wines can be taxed higher : Bombay High Court

IN a long line of judgments, the Supreme Court has held that the State has a very wide discretion in selecting the persons or objects it will tax, and that exercise is not open to attack unless within the class chosen by the State, there is discrimination. Undisputedly, the State has wide discretion to impose higher taxes or levies. Several fiscal considerations are involved in the Government's decision to impose higher tax on certain items. The courts are therefore, not expected to interfere with the discretion of the State unless a very strong case of hostile discrimination is made out and unless the taxing statute operates unequally within the range of its selection.

See our columns Tomorrow for the judgements