Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Mutton masala packing machine presumed to be used for packing Pan Masala gutka - C.Ex duty demand of Rs.13.67 Crores confirmed on assumption and presumption - prima facie strong case in favour - Pre-deposit waived and stay petition allowed: CESTAT

THE case of the Revenue is that the applicants had not followed the procedure laid down under Rules. From the records, it is found that the applicants have filed necessary declaration on asking by the Revenue. In the declaration, the applicant specifically mentioned that there is no packing machine installed in their factory. In the forwarding letter also, the applicants intimated that no production of Pan Masala Gutka is being undertaken. There is no evidence on record to show that the applicants had manufactured Pan Masala Gutka. As per the information received under RTI, it was specifically informed that ShriMahajan, Inspector has not submitted any findings in relation to existence of any pouch packing machine for packing of Pan Masala and Pan Masala with Tobacco.

Income Tax

Whether when assessee carries forward business loss, same has to be necessarily set off against business profits and not income under other heads in subsequent year - NO: Delhi HC

ASSESSEE is carrying on the business of sale and purchase of properties and also earning rental and other income. The assessee set off the business loss brought forward against its income by way of rent; car and computer hire charges and commission income and declared a net loss. AO held that rental income was chargeable to tax under the head "income from house property" and that the hire charges and commission income was chargeable to tax under the head "income from other sources", therefore, the brought forward business loss was not permitted to be set off against the income shown under these two heads of income u/s 72(1). The relevant Section permitted adjustment of brought forward business loss only against profits assessed under the head "business".

Service Tax

Advertising Services - Amount of "Write backs" viz. amount retained by paying less to media than that received from client is prima facie chargeable to Service Tax - pre-deposit ordered of Rs.34 lakhs - ST prima facie not leviable on "Volume discounts": CESTAT

THE applicant undertook advertising work for their clients and which comprised of the following - (i) creation of advertising material and (ii) placement of advertising material in the media for display. For providing this service to their client i.eadvertising, they are getting certain commission and discharging the service tax liability. There is no dispute on that. The dispute is regarding the payments received by applicant for media cost. For example out of Rs.100/- billed to the client, Rs.85/- is as media cost and Rs.15/- as commission (which is taxable). Out of Rs.85/- only Rs.80/- is actually paid to the media/broadcaster. As the applicants are paying less amount to the broadcaster and keeping some amount with them which has been written off in the books of accounts as "write backs", a service tax demand was issued and the same has been confirmed under the category of "advertising agency service", the amount involved is Rs.1,36,84,668/-.

See our columns Tomorrowfor the judgements