Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Laying pipeline for transport of gas - Whether liable to Service Tax under category 'Commercial Construction Service' or does it stand excluded in view of definition of 'Erection, Commissioning and Installation Service' - Issue arguable - Prima facie case in favour on limitation- Pre-deposit waived and Stay granted: CESTAT

THE adjudicating authority concluded that the operation carried by assessee will not fall under the category of Commercial Construction service but would fall under the category of Erection, Commissioning and Installation service, which talks about charging of Service Tax liability for laying of pipes. However, since the entry refers to laying of pipes for transportation of fluids but not gases, the activity of the appellant is excluded from the said services, the original authority concluded while dropping the demand.

Income Tax

Whether when assessee takes accommodation on rent after paying huge security deposits for its CMD, FBT is leviable on notional interest payable on security deposits - No, rules ITAT

ASSESSEE Company provided residential accommodation to its chairman and accounted for the monthly rent in the return of FBT. During the course of assessment proceedings the AO observed that for this accommodation the assessee gave huge amount of security, observing this security the AO asked to explain why interest attributable to security should not be considered for FBT. In response, it was mainly stated that the security deposit was paid for taking the above said flat on lease basis which was provided to Chairman & Managing Director of the company. Therefore, no benefit was passed on to him. The AO, after considering the submissions, did not agree and observed that according to section 115WB(1), ‘fringe benefit' means any privilege, service, facility or amenity, directly or indirectly, provided by an employer, whether by way of reimbursement or otherwise, to the employees, and accordingly taxed the notional interest attributable to this security and taxed in the hands of assessee. The CIT(A) affirmed the order of the AO.

Customs

There is no provision of law where the future CENVAT credit admissible can be taken into account while calculating customs duty payable under Notification no. 94/96-Cus - Deduction of CENVAT credit amount while sanctioning refund is not correct - Prima facie case - Stay granted: CESTAT

THE appellant imported a machine on 11/11/1997 and paid duty approximately of Rs.3.33 Crores. Since the machine was found damaged it was re-exported and the appellant availed drawback of approximately Rs.2.26 crores. Thereafter, the machine was rectified and was re-imported and since there was a dispute regarding eligibility of the appellant for the exemption under Notification No. 94/96-Cus which provides for exemption of the goods to the extent of drawback received, the appellant paid full amount of duty and cleared the goods. The matter regarding eligibility of the appellant to benefit of the notification attained finality at the level of this Tribunal. Thereafter, the appellant filed a refund claim claiming benefit of Notification no. 94/96-Cus.

See our columns Tomorrow for the judgements