Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Mere labelling does not amount to manufacture - AAR

THE activities that would be undertaken by the applicant in the warehouse are stated mainly to be assortment, packing and stickering (affixing of stickers) in relation to the goods purchased by the customers of the various merchants through the applicant's website. Legal fictions are created only for some definite purpose", and a legal fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field. It is clear that each and every case of fixing a label or a sticker cannot come within the purview of S. 2(f) (ii) and (iii).

Income Tax

Whether when AE pays higher rate of interest on delayed payment as compared to third parties, no fault can be found with AO for initiating reassessment for transfer of profits to assessee eligible for Sec 80IA benefits - YES: HC

THE issue before the Bench is - Whether when the AE pays higher rate of interest on delayed payment as compared to third parties, no fault can be found with AO for initiating reassessment for transfer of profits to assessee eligible for Sec 80IA benefits. And the verdict goes against the assessee.

Service Tax

Legal infirmity in revisionary order in demanding tax under a category of service different from one for which demand was initially issued - Service recipient has taken godown on rent from service provider itself - this has to be seen as case of tax planning rather than tax evasion: CESTAT

THERE is a legal infirmity that tax is demanded under a category of service different from the one for which demand was initially issued. There is also the issue that Clearing and Forwarding Service could be rendered using a godown made available by the service recipient. In this case, the service recipient has taken godown on rent from the service provider itself. So, this has to be seen as a case of tax planning rather than tax evasion. So, extended period of time could not have been invoked for demanding the impugned tax.

Central Excise

There is no evidence on record to show that applicants undertook any activity which amounts to manufacture after clearance from Customs - RSP is affixed before clearance from Customs area as mandated in terms of DGFT notification for discharge of CVD - Strong case in favour - Pre-deposit of 58.34 Crores duty waived and stay granted: CESTAT

IT is the case of the Revenue that applicants are affixing retail sale price on the imported cosmetic products and this activity amounts to manufacture in terms of section 2(f)(iii) of the CEA, 1944 w.e.f 01.03.2003 and, therefore, the applicants are liable to pay Central Excise duty.

The CCE, Thane-I confirmed the duty demand of Rs.58.34 Crores on the applicant and imposed an equal penalty and also interest.

See our columns Tomorrow for the judgements