Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Artificially Created Light Energy - ACLE, not goods - covered under Service Tax and not VAT - To levy tax on same aspect under both legislation is impermissible - Attempt to disobey SC Judgement viewed seriously - Karnataka Government directed to pay costs: HC

ACLE is not seen by the subscriber/consumer. It never comes to the market for it to be bought or sold. It is unknown in the market. It is not capable of abstraction, consumption and delivery by subscriber/customer. Therefore, it does not possess the characteristic of "goods" as understood in law and there is no sale of such goods involved in a telecommunication service.

Income Tax

Whether when assessee compensates non-resident to settle dispute over alleged infringement of registered patents, such payment is akin to penalty and thus not allowable expenditure u/s 37(1) - NO, it's allowable: HC

ASSESSEE, incorporated in the year 1984, was engaged in the business of manufacturing of environmental control system such as Rotors, Heat Recovery Wheels, Desiccant Rotors, etc. During assessment proceedings AO noticed that assessee had debited an amount of Rs. 3.13 crores on account of compensation paid towards settlement of dispute. The issue before the Bench is - Whether when the assessee compensates a non-resident to settle a dispute over alleged infringement of registered patents, such payment is akin to penalty and thus not allowable expenditure u/s 37(1). And, the verdict goes in favour of the assessee.

Central Excise

Refund - Credit Note issued after two years of duty payment - No refund: SC

SECTION 12 of the Central Excise Act becomes relevant which indicates that the party who is liable to pay excise duty on any goods, has to file the sales invoice and other documents relating to assessment at the time of clearance of the goods itself. Therefore, when at the time of clearance no such document was filed and what is sought to be relied upon is a document issued after two years, the same raises a doubt and cannot be accepted as a reliable document.

Procedure under Chapter X - Strict compliance necessary: SC

DETAILED procedures have been laid down in Chapter X so as to curb the diversion and misutilisation of goods which are excisable. The matter is remitted to the Tribunal for fresh consideration de novo of the dispute in accordance with law.

See our columns Tomorrow for the judgements