Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Whether ‘Mithi River' is a river or not is a pure question of fact: CESTAT

APPELLANT claims that dredging activity undertaken by them is in a ‘drain' and not in a river and hence not taxable - even the agreement between the appellant and MMRDA describes the stream as ‘Mithi River' - it cannot be called otherwise merely by reason of the fact that rainwater or domestic sewage from the surrounding areas are also flowing into it or that industrial effluents are discharged into it – Prima facie appellant liable to pay Service Tax – Pre-deposit ordered:

Income Tax

Whether, if assessee engaged in business of cosmetics, incurs certain expenses on 'Testers', generally used by customers before purchase, such product promotional expenses are to be treated as capital in nature merely because it also promotes goodwill of company - NO, rules ITAT

THE assessee company, engaged in the business of cosmetics, claimed deduction on account of ‘testers' and ‘merchant display' including materials like spatula, lacquer and lip-gloss applicators, disposable sponges, etc. which were supplied free of cost to the retailers in order to promote product sales. According to the assessee, customers wanted to try the products before purchase. Moreover, the testers supplied to retailers, included the payment of customs duty and clearing and forwarding charges. However, not satisfied with the explanation, the AO held that the assessee had incurred these expenses to earn goodwill that would benefit the business in the long run and bring benefit of an enduring nature.

Central Excise

Conversion from DTA unit to a 100% EOU – reversal of CENVAT Credit – issue no longer res integra - Appellant entitled to carry forward CENVAT credit in view of decision in Sun Pharmaceuticals Industries: CESTAT

RULES did not contain any provision barring the 100% EOUs from availing CENVAT credit or utilizing the same for payment of duty on excisable goods removed to the DTA or for payment of duty on goods exported under claim for rebate. Also there exists no bar for a DTA unit carrying over inputs and the CENVAT credit balance in its accounts when it got converted into an EOU.

See our columns Tomorrow for the judgements