Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

It is open for the importer to claim exemption under any one of categories 1,2 and 3 consequent to setting up of hospital - Rejection of such request by DGHS is set aside: High Court

NOTIFICATION No.64/1988-Cus dated 01.03.1988 exempts equipment, apparatus and appliances etc required for use in any hospital subject to approval by the Government of India in the Ministry of Health and Family Welfare, or by the Directorate General of Health Services to the Government of India. The Notification has four categories of Hospitals specified. The fourth category is “ Any such hospital which is in the process of being established and when it starts functioning, it should be relatable to a hospital specified in categories 1,2 or 3”.

Income Tax

Whether when non-resident partner of JV does not transfer right of technical knowhow, even partly, for manufacture of products, royalty payment as per agreement is to be construed as revenue expenditure - YES: High Court

THE issues before the HC are - Whether when the non-resident partner of the JV does not transfer the right of technical knowhow, even partly, for manufacture of products, royalty payment as per agreement is to be construed as revenue expenditure and whether any disallowance can be made with respect to brand promotion expenses. And the verdict goes in favour of the assessee.

Service Tax

Adjustment of excess payment of service tax on GTA service - Imposing another tax burden of equal amount along with interest and heavy penalties under three different Sections of law cannot be approved of: CESTAT

THE assessee is a State Government undertaking, manufacturing newsprint etc. They pay service tax on Goods Transport Agency Service as a recipient of service. According to the Service Tax Rules, 1994, the service tax liability for the month of March should be paid by 31 st March. As a matter of abundant caution, the assessee paid service tax in excess of their estimated liability for the months of March 2005 and 2006 and later, in the month of April next, adjusted the excess payments. Revenue took an objection to such adjustment and issued Show Cause Notice for recovery with interest and proposal to impose penalties. The Adjudicating Authority decided the issue in favour of the assessee. The Commissioner, however, passed a revision order confirming the tax, interest and penalty. On appeal, the assessee got relief from the Tribunal.

Central excise

CENVAT Credit - Input services utilized at depots storing goods of many factories of appellant company - Invoices issued as Input Service distributors and credit availed by Borivali plant - whether credit is admissible for services availed in respect of other plants - Tribunal as a judicial body must follow principles of consistency when it decides the cases - since in appellant's own case for earlier period benefit allowed by Bench, pre-deposit waived and stay granted: CESTAT by Majority

FOUR show-cause notices were issued to the appellants wherein it was alleged that the appellant had availed CENVAT credit on the basis of invoices issued from their various depots/offices as input service distributors for the services received by the depots in respect of various services namely, loading/unloading, telephone, outward transport, handling charges, clearing & forwarding remuneration, etc. for the goods received at their depots situated at various locations in India; that since the depots were storing and selling the final products not only manufactured at Borivali plant but also at their other plants the services used in relation to the final products manufactured at other than Borivali plants cannot be termed as ‘input service' for the Borivali plant.

See our columnsTomorrow for the judgements