Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

MODVAT Credit - Goods used in testing customised machines, part of manufacture - inputs eligible for MODVAT Credit: Supreme Court

INPUTS need not be physically present in the Final Products : It is trite to state that "manufacture" takes place when the raw materials undergo a series of changes and transformation that result in the formation of a commercially distinct commodity having a different name, character and use. It is equally well settled that physical presence of an input in the final finished excisable goods is not a pre-requisite for claiming MODVAT credit under Rule 57A of the Rules. It may very well be indirectly related to manufacture and still be necessary for the completion of the manufacture of the final product.

Income Tax

Whether when assessee acquires a running cement plant in a slump sale, if the price paid for the assets is more than book value of assets in the hands of the seller, the excess is to be attributed to goodwill

ASSESSEE Company started its business operation w.e.f. 01/11/99, i.e., the date on which it acquired the cement business of the TISCO, as a going concern. During the current year, it acquired cement manufacturing unit of Raymonds Ltd (RL). AO rejected the valuation report on the ground that the price of the plant and machineries were artificially jacked up in the report to the level of consideration paid by appellant, the valuer had adopted the ‘Net Replacement Cost' method which was nothing but the cost of brand new individual machinery or the cement plant, and the valuation report should have been prepared much prior to the date of Business Transfer Agreement.

AP Sales Tax

Hiring of Transit Mixers amounts to transfer of rights to use goods - liable to sales tax: High Court

THE tax is not on the delivery of the goods used, but on the transfer of the right to use goods regardless of when or whether the goods are delivered for use subject to the condition that the goods should be in existence for use; in the transaction for the transfer of the right to use goods, delivery of goods is not a condition precedent, but the delivery of goods may be one of the elements of the transaction; the effective or general control does not mean always physical control and, even if the manner, method, modalities and the time of the use of goods is decided by the lessee or the customer, it would be under the effective or general control over the goods

See our columns Tomorrow for the judgements