Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

EPC Contracts for State Irrigation Projects - Taxable under WCS; all turnkey projects cannot be EPC projects but all EPC projects are turnkey projects: CESTAT

THE only items of works contracts specifically excluded from levy of service tax under Section 65(105)(zzzza) of the Finance Act, 1994 are roads, airports, railways, transport terminals, bridges, tunnels and dams. Irrigation canals do not find a place here. The mention of "dams" in the excluded category is of no aid to the appellants' case either inasmuch as these "dams" -- not a word defined or explained anywhere under the Finance Act, 1994 / Rules thereunder - have to be understood according to the common parlance. These are gigantic RCC structures built across rivers and are not to be confused with the earth dams/barrages/constructed by the appellants as part of some of the EPC projects for irrigation. The services provided by the appellants to the Government of Andhra Pradesh satisfy the statutory requirements of "works contract" defined under Section 65(105)(zzzza) of the Finance Act, 1994 inasmuch as (i) transfer of property in goods was involved in the transaction and VAT was paid on such goods, (ii) the contracts were for the purpose of carrying out irrigation projects of the Government through turnkey/EPC mode, and (iii) none of the contracts was in the excluded category of works contracts.

Income Tax

Whether when assessee has received 50% of sale proceeds of land, and rest sum, kept in scrow account, to be paid on final transfer but interest of same being received by assessee on monthly basis and State Govt agreeing to release land out of its acquisition notice, such deal amounts to effective transfer u/s 2(47) - YES: ITAT

THE CIT (A) granted the relief to the assessee by holding that the assessee did not have absolute and clear title over the land once it was under notification of acquisition by the Haryana Government. Once, a land had been notified for acquisition, the same cannot be sold/transferred unless and until it is released from the notification. Further, the MOU between the two parties clearly spells out conditions enabling return of land to the assessee and refund of the consideration, if the land would not be released from the acquisition notification. The assessee was not legally competent to transfer the land during the pendency of the notification and could not have got the conveyance deed registered in favour of the Tecumseh without necessary permission/approval of the Haryana Government regarding the acquisition. There was no transfer in terms of section 2(47) or otherwise and therefore, capital gains would not be attracted in this year.

Central Excise

Assessee could not get extension of stay due to non availability of Bench - Revenue initiates coercive steps - High Court grants relief till Bench is constituted and matter decided by CESTAT

IN the instant case, though the Tribunal was not even in session, by way of abundant caution, the petitioner has filed applications before the Tribunal seeking extension of stay already granted on 09.05.2011, which was due to expire on 09.11.2011, but, the said applications were not taken up due to non-availability of the Bench. Of course, on the expiry of stay, the respondent was empowered to act upon the impugned proceedings, but, at the same time, it was incumbent on his part to keep in mind the non-availability of the Tribunal and maintain status quo until further orders, but not to take advantage of the expiry of stay and no extension thereof, which were wholly due to non- availability of the quorum.

See our columns Tomorrow for the judgements