Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Repairing of transformers does not amount to manufacture - such transformers after repairs were cleared by reversing the CENVAT credit taken on inputs used in such activity - no cause for holding such payments as 'deposits' and proposing recovery u/s 11D of the CEA , 1944 - Revenue appeal dismissed: CESTAT

THE respondent repairs electrical motors manufactured by them within warranty period free of charge as well as those manufactured by other manufacturers on labour job basis. Whenever inputs, (on which CENVAT Credit) is taken, are used for repair work, they reverse the CENVAT Credit. All the clearances were made under challans and duty is paid only on the electrical motors manufactured by them. It was alleged against the respondent that they are doing job work and hence they are not liable to pay any duty, the credit taken on the inputs by them is liable to be reversed and the duty paid by them is to be treated as a deposit under Section 11D (1) of the Central Excise Act, 1944.

Income Tax

Sec 194H - Whether mere deduction of TDS and act of not depositing same in Govt account warrants disallowance even though assessee is not liable to TDS? - NO, says ITAT

THE issues before the Tribunal are - Whether mere deduction of TDS and the act of not depositing the same in the Govt account warrants disallowance u/s 40(a )( ia ) even though the assessee is not liable to TDS; and Whether discount on sale of airlines tickets allowed by the assessee is not liable to TDS u/s 194-H as there is no contract of agency at any point of time between the assessee and the intermediaries. And the final decision has gone against the Revenue.

Service Tax

Service Tax – ‘Piston rings in coil form' cleared on job work basis for chrome plating, received back in factory and service tax paid on job charges availed as input credit - Since section 93 does not make it mandatory for job workers to compulsorily avail Notification No. 8/2005-ST, Revenue's contention that availment of credit by principal of tax paid by job worker would be irregular, not sustainable - Prima facie case for full waiver of pre-deposit - CESTAT

THE appellant cleared ‘piston rings in coil form' under challans for chrome plating and received them back in factory after completion of job work. Incidentally the job worker paid an amount of Rs. 2 crores as service tax on the job charges collected for the activity of chrome plating. This amount was availed as CENVAT credit by the appellant. The lower authorities sought to deny the credit on the ground that the job worker was not liable to pay any service tax and ought to have availed the benefit of exemption Notification No. 8/2005-ST dated 01.03.2005. The demand was confirmed resulting in this appeal before CESTAT.

See our columns tomorrow for the judgements