Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Applicant supplying labourers to company and getting commission on which they pay Service Tax - Department seeking ST on gross salary paid to said employees - Pre-deposit ordered: CESTAT

THE applicant is a service provider and is registered under the category of “Manpower Recruitment and Supply Agency Services”. They supply labourers to M/s Paranjape Auto Cast Pvt. Ltd. and they get commission. On this commission, they paid the service tax regularly. The department was of the view that the gross salary paid to the employees has to be taken into account for paying the service tax. Accordingly, a Service Tax demand of Rs.3,43,795/- was issued and the same was confirmed against the applicant.

Income Tax

Whether when assessee remits commission fees to foreign agents for procuring export orders under UN-sanctioned 'Oil for Food Program', any disallowance of such expenditure can be made on alleged ground that such payments were illegal kickbacks - NO: ITAT

ASSESSEE exported tea to Iraq under the ‘Oil for Food Program', as sanctioned by the United Nations. Iraq was allowed to sell a limited specified quantity of oil, and sale proceeds of the oil were to be deposited in an escrow account, out of which a major portion of the sale proceeds could be used by Iraq for meeting its purchases of goods on humanitarian grounds. Assessment was reopened on the ground that the commission to agent ‘A' and ‘G' were illegal payments in the nature of kick backs, which were ultimately received by the Iraqi Authorities as per a Committee report and as the amounts paid by the assessee were illegal and prohibited by the law of the land, the same could not be allowed as expenses under the Act.

Central Excise

Cenvatted capital goods can be removed for export under bond - no cause for recovery of CENVAT credit under rule 3(5) of the CCR, 2004 - prima facie strong case in favour - pre-deposit waived and Stay petition allowed: CESTAT

IN the present case the appellant had availed CENVAT credit on capital goods and also put them to use. Later, they had cleared these capital goods for export under bond. The case of the Revenue is that the applicants are liable to pay duty while removing these capital goods as per the provisions of Rules 3(5) of CENVAT Credit Rules 2004.

See our columns Monday for the judgements