Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

If sale of goods takes place at a place other than depot or consignment agent's premises i.e. at customer's premises, such ‘premises' to be treated as ‘place of removal' and GTA service availed for transportation of finished goods to such ‘place of removal' to be treated as ‘input service' - Credit of service tax paid eligible as ‘input credit' even for manufacturer working under S.4A – CESTAT

THE assessee , engaged in manufacture of electronic consumer goods, sold the finished goods both at factory gate as well as depots and cleared the finished goods from factory gate/depots to customer's premises utilizing GTA service for outward transportation of finished goods upto ‘customer's premises'. The assessee paid the service tax thereon to the tune of Rs. 6.21 crores during the period October 2004 to February 2007 and availed the same as CENVAT Credit. Revenue initiated proceedings against the assessee for recovery of CENVAT Credit resulting in demand of ‘irregular service tax credit' with interest and for imposition of penalties. Incidental to this demand was initiation of proceedings for short payment of education cess. Commissioner confirmed the demands with interest and imposed mandatory penalties.

Income Tax

Sec 32 - Upgradation of Internet Server and software does not produce any benefits of enduring nature - allowable as revenue expenditure: ITAT

DEPRECIATION is a never-depreciating bone of contention in the Income Tax Act. Despite umpteen number of judicial pronouncements the word 'plant' has always been seen in a narrow compass and it inevitably leads to disputes. In the instant case, the issue is - Whether air-conditioner, refrigerator and office equipments are in the nature of furniture and fixture or plant and machinery, for the purpose of applying rate of depreciation allowable under the Act. Whether Software Expenditure & up-gradation expenses for server are recurring expenditure having no enduring benefit and therefore, the expenses are to be allowed in full as revenue expenditure. Whether expenditure on Repair and Maintenance of building are in the nature of capital expenditure so as to be disallowed.

Customs

When there is a clear finding by Commissioner in adjudication order that there is no collusion or willful mis-statement or suppression of facts so as to impose penalty u/s 114A of Customs Act, 1962, confirmation of Customs duty demand u/s 28 is illegal: CESTAT

ON 11.11.1995, acting on an information that the Gem and Jewellery units in SEEPZ have been mis-using the facility of imports available under exemption notification 177/94-Cus dated 21.10.1994 as amended by showing excess manufacturing wastage or loss than permissible under the above mentioned Notification causing shortage in physical stock, claiming it to be lying in the form of dust, the officers of the Mumbai Customs Preventive Commissionerate visited the premises of the said unit and verified the records from the period of inception of the unit and took the physical stocks of gold followed by detailed investigations which resulted in the detection of a shortage of 24020.550 gms of gold valued at Rs.1,07,61,206/- (CIF). The unit was found to have not been maintaining the wastage account register prescribed vide Public Notice no. 2/88 dated 28.7.1988.

See our columns Tomorrow for the judgements