Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Suspension of Importer-Exporter Code (IEC) - Joint Director of Foreign Trade not being 'Adjudication Authority' had no power and authority or jurisdiction to pass impugned order suspending IEC: HC

THE Deputy Director General of Foreign Trade (Respondent No. 4), after issuing show-cause notice to which the petitioner had replied and was not found to be satisfactory, and after giving an opportunity of personal hearing, to which the petitioner did not respond, had passed an order under Section 9 (4) and Section 11 (2) of the Act and under Rule 10(b) of the Foreign Trade (Regulation) Rules , cancelling the license of the petitioner and directing payment of customs duty and interest and imposing fiscal penalty - the respondent no.4, passed the order directing imposition of penalty and the Joint Director General of Foreign Trade, the respondent no.3, under Section 11(4) had passed the order of suspension of Importer-Exporter Code (IEC) of the petitioner for non-payment of penalty - Respondent No.3 not being "the Adjudication Authority" had no power and authority or jurisdiction to pass the impugned order suspending the Importer–Exporter Code - as before passing the order of suspension of Code the petitioners were not given an opportunity of hearing - as before the suspension of Code the "consent" of the Board (BIFR) was not obtained as the scheme for revival of the company is referred to BIFR - the impugned order suspending IEC is without jurisdiction and illegal.

Income Tax

Whether when a newspaper offers trade discount to advertising agencies, such discount constitutes commission, liable to tax deduction at source u/s 194H - NO: HC

ASSESSEE is engaged in the business of printing and publishing newspapers. Assessee had been giving 15% trade discount to accredited advertising agency and trade discount of 10% to 15% to non-accredited advertising agency as per Rules and Regulations of INS for last several years. In survey proceedings the Revenue issued notice to the assessee that it had failed to deduct tax at source u/s 194H on the payment received from advertising agencies after allowing 15% trade discount, which was as well a deemed commission. Assessee contended that the relationship of the assessee with the advertising agency was principal to principal and not as principal to agent. AO passed the order u/s 201(1) holding the assessee as an assessee in default for non deduction of tax at source on the discount given to the agent which is a deemed commission to the agent and raised a liability u/s 201(1) and the interest u/s 201(1A).

Service Tax

Value of SIM card to be included in assessable value for payment of ST - Amount paid as sales tax on SIM card cannot be considered as sufficient compliance of s. 35F of the CEA, 1944 read with s.83 of the Finance Act, 1994 – Tribunal has no power to adjust payment of Sales Tax against Service Tax: CESTAT

THE applicant is a service provider under the category of telecommunication service and providing mobile phone services. To perform this activity, the applicant provides SIM cards to their customers through their dealers. When the applicant is clearing SIM cards to their dealers, they pay sales tax/VAT and for providing telephone services/mobile services they charge activation charges on which they are paying service tax.

The Revenue is of the view that SIM card is an instrument which provides services only for activation of mobile phone without which the mobile phone cannot function. Therefore, the sale of SIM card is a part of service. Therefore, a show-cause notice was issued to the applicant to include the value of the SIM card in the assessable value for payment of service tax.

See our columns Tomorrow for the judgements