Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Same member passing different orders on same issue; even a judgement of Supreme Court interpreted differently in two orders - palpable inconsistency; The Tribunal as a judicial body must follow principles of consistency when it decides cases. – High Court

THE High Court found palpable inconsistency on the part of the Tribunal in dealing with stay applications arising out of diverse appeals. The inconsistency is even more pronounced having regard to the fact that the same judgment of the Supreme Court in Leader Engineering Works has been construed differently by the same member of the Tribunal in the orders dated 11th September 2009 and 20th November 2009. The Tribunal, first and foremost, is duty bound by Article 141 of the Constitution of India to ensure that it follows binding precedent of the Supreme Court. The Tribunal as a judicial body must follow principles of consistency when it decides cases. The lack of consistency is clear on the face of record.

Income Tax

Assessee's parent company is US-based - specialises in developing hybrid seeds - sets up R&D unit in India - PE - Assessee's two-fold activities of R&D and sale of hybrid seeds are inter-connected and inter-dependent, and profits to PE to be attributed by following Arm's Length Price principles: ITAT

THERE exists a relation between a business of producing hybrid breeder seeds by the assessee non-resident company which yield profits or gains and the activity of providing result of research conducted by Branch office in India which contributes directly or indirectly to the earning of those profits or gains. There exists a PE in India , and the assessee company has a business connection in India . Thus, such part of profits or gains earned in USA as is reasonably attributable to the operations or activities carried out in India , shall be taxable in India .

Service Tax

BAS - Commission Agent in India for foreign client – Export of services – Over Thirty Crores Demand Stayed - CESTAT

INDIAN entrepreneurs engage foreign agents to canvass orders for their products which are exported against such orders. Such services are taxed when imported; the Indian recipient pays service tax under the reverse charge mechanism. When services are similarly provided to a foreign enterprise by Indian agents, it cannot be held that export of services is not involved. Therefore there is no logic in the view that in the instant case export of marketing services (BAS) was not involved. Remember on the same issue, the Delhi Bench of the Tribunal had held that the activity does not amount to export - Microsoft Corporation (I) Pvt Ltd Vs. Commissioner of Service Tax, New Delhi 2009-TIOL-1325-CESTAT-DEL?

Customs

Commissioner's ignorance of basic tenets of judicial discipline is, indeed, pitiable- CESTAT

LET the stand taken by the learned Collector be considered as an ignoble episode in the department's history. Let the nobility of judicial discipline be upheld as a vital ingredient of the rule of the law. We trust, the adjudicating and appellate authorities in the department will honour this great principle to avoid anarchy in the field of administration of law and justice.

See our columns Wednesday for the judgements