Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Valuation - Non-declaration of collection of Digital and Pulsation Study (DPS) charges from customers in RT-12 returns cannot be held against appellant as they could have entertained a bona fide belief that same is not includible in AV as it is done only in respect of few customers - appellant has made a case for setting aside demand on point of limitation - Appeal allowed: CESTAT

THE appellants were engaged in the manufacture of LPG Compressors and CNG Compressor and spares thereof and availing CENVAT Credit. During the course of scrutiny of their records, it was revealed that the appellants had provided "Digital and Pulsation Study" to their customer and collected the charges for the same from their customers. The "Digital and Pulsation Study" is carried out as per customers request, it is a sort of study where operational conditions of particular package are simulated in computer, findings are noted and the study is complied. The study report is furnished to customers prior to actual dispatch of product/ package and that is an ongoing project that to start/carry out the study, certain input/feed back is necessary from the customer end like their piping layout etc and that "Digital and Pulsation Study" is aimed at providing 100% perfection in project/package application.

The department viewed that the said charges recovered from the customers are includible in the assessable value.

Income Tax

Whether while computing sum allowable u/s 40(b)(v) as partners' remuneration, net profit includes income from other sources also and not income from business alone - YES: HC

ASSESSEE is a partnership firm. Four assessments were completed u/s 143(1)(a). AO issued notice u/s 154 for all the years alleging that assessee had claimed excessive deduction on account of partners' remuneration stating that income by way of consultancy fees, interest on bank deposit, profit on disposal of assets and interest on advance tax which had been shown as income under the head ‘other sources' could not be considered as part of the book profit for computation of allowable partners' remuneration. Assessee objected to reopening of the same raising the question of jurisdiction, as the point raised in the notice was debatable and arguable. AO did not accept the appellant's contention and passed the orders. The CIT (A) also rejected the appeals of the assessee. ITAT also disallowed the appeal of the assessee.

Service Tax

Appellant engaged in promoting, marketing and distributing various medical equipment manufactured by Viasys International Corporation, US of A, in India for which they are receiving commission - prima facie, for period from March, 2005 onwards activity is not "Export of Service" - as per GATT on which is based Export of Service Rules, only when the user and use of services are located outside India, transaction amounts to export and not otherwise - Pre-deposit ordered of Rs.25 lakhs: CESTAT

THE appellants are exclusive distributors of various medical equipments manufactured by M/s. VIASYS International Corporation, Pennsylvania, USA. Intelligence received by the DGCEI, Mumbai unit, indicated that the appellant was engaged in promoting, marketing and distributing the various medical equipment manufactured by VIASYS, in India, for which they are receiving commission and this service appeared to be liable to service tax under the category of ‘Business Auxiliary Services' w.e.f. 01/07/2003.

See our columns Tomorrow for the judgements