Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Income tax - Whether when property in SIM cards even after transfer to franchisee remains with telecom Co and franchisee has no free choice to sell them at own price, discount offered is liable to TDS as commission - YES: HC

THE issue before the High Court is - Whether when the property in the SIM Cards even after transfer to the franchisee remains with the assessee and the franchisee has no free choice to sell them at its own price, the relationship between the assessee and the franchisee is principal to agent and the assessee is liable to deduct tax on discount offered. And the High Court says YES.

Central Excise

Shunt (electrical) is correctly classifiable under CETH 9030 of the CETA, 1985 and not under CETH 8533.00 as resistor - Unit of measurement of shunts is ampere/millivolt while the unit of measurement of resistors is Ohms: CESTAT

THE dispute in this case is relating to the classification of the product “Shunt”. The appellants claimed classification under CETH 9030.00 whereas the department took a stand that the same should be classified under CETH 8533.00 of the Tariff.

No legal basis for assuming that since equipment has been leased out by Praxair and they operate and maintain the facility they have to be deemed as ‘manufacturers' – transactions are on principal to principal basis - in the absence of any evidence indicating that the transactions were not at arms length and there was additional consideration flowing, valuation cannot be doubted: CESTAT

THE facts of the case are - M/s Praxair entered into an agreement with M/s Vikram Ispat to manufacture pure/refined carbon dioxide out of the impure carbon dioxide arising in the manufacture of sponge iron by the latter. To enable Vikram Ispat to purify carbon dioxide in their factory, Praxair supplied plant and equipment on lease basis and also supplied personnel at the premises of Vikram Ispat. Vikram Ispat sold the entire carbon dioxide to Praxair at a contract price of Rs. 4.31 per kg. whereas M/s. Praxair sold the goods subsequently at a higher price. The department was of the view that Praxair are the real manufacturers of the pure carbon dioxide and hence they were liable to pay duty at the price at which they have sold the goods and accordingly two show-cause notices were issued, one demanding differential duty of Rs.43.35 lakhs and another demanding a differential duty of Rs.50.26 lakhs for the period from May to December 2000 and from January 2001 to June 2001 respectively.

See our columns Tomorrow for the judgements