Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Valuation - Cost of secondary packing not to be included in assessable value (old valuation rules) – Supreme Court

THE test is whether the packing is done in order to put the goods in a marketable condition. Another way of testing would be to see whether the goods are capable of reaching the market without the type of packing concerned. Each case would have to be decided on its own facts.

Held: the cost of secondary packing in hessian cloth cannot be included in the value of the goods in terms of Section 4(4)(d)(i) of the Act for the purpose of assessment of excise duty.

Income Tax

Is a share-broker entitled to deduction of bad debts which could not be recovered from clients for transactions effected on their behalf - since brokerage receivable forms a part of debt, it does satisfy one of conditions of Sec 36(2)(i) - allowable: ITAT Special Bench

WHETHER the assessee, a share broker, is entitled to deduction for bad debts under section 36(1)(vii) read with section 36(2) in respect of the amount which could not be recovered from its clients in respect of transactions effected by him on behalf of his client besides the commission earned by him. And the answer is YES.

Service Tax/VAT

Providing food in trains is pure sale of goods; constitutional right of State Government to levy VAT cannot be denied just because Centre has collected Service Tax – Refund of Service Tax can be claimed – Delhi High Court

THIS is a VAT case, which held that Service Tax is not leviable on food supplied in the trains under outdoor catering service.

The petitioner is a Government company, providing services, including catering on board the trains run by Indian Railways, under identical contracts between the petitioner-company and Indian Railways. The petitioner has also sub-leased the contract in respect of some trains to various contractors. The consideration for these services is included in the fare charged by Indian Railways from the passengers and the petitioner-company is paid, by Indian Railways, for what it terms as the services, including catering provided by it to the passengers. The petitioner had in the past been paying VAT, in respect of the services on board the trains, including providing of food and beverages and the tax was paid up to 30th April, 2007.

See our columns Tomorrow for the judgements