Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Agreement with media house for providing services of media bookings, issue release instructions on their behalf, supervise production /programs for sponsored telecasts etc taxable under category of BAS – Pre-deposit of Rs. 85 lakhs ordered: CESTAT

CESTAT observed that the allegation against the appellant is based on the agreement entered by them with an electronic media house. As per the agreement, the appellants provide services of media bookings and issue release instructions on their behalf, supervise production such as programs for sponsored telecasts, negotiate rates, positions, payment terms and other such matters involving placement of advertisements with the media. In terms of the agreement, prima facie, the appellants are providing services to media under the category of BAS and liable to pay tax on the write backs and discounts received by them from media for advertisements.

Income Tax

Whether brand promotion expenses incurred by assessee belonging to a group of companies can be partly disallowed on ground that benefits also accrued to related parties - NO, rules ITAT

THE issues before the Tribunal are - Whether when the non-resident technology partner does not pass on proprietary right to assessee on transfer of knowhow, the royalty paid by the assessee under a knowhow transfer agreement is revenue or capital expenditure and whether brand promotion expenses warrant part disallowance on the ground that the benefit also accrued to other related parties. And the verdict goes against the Revenue.

Customs

When a 100% EOU claims benefit of notification issued by state government exempting sales tax, benefit of Notification No. 23/2003-CE for exemption of SAD not available: CESTAT

NOTIFICATION No.23/2003-CE granted exemption from payment of SAD on the condition that the goods cleared into DTA are not exempted by the state government from the payment of sales tax. In the instant case, since the appellants cleared the goods by availing the benefit of notification issued by the state government, they are not entitled for the benefit of Notification No.23/2003-CE.

See our columns Tomorrow for the judgements