Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Refund - Notfn. 17/2009-ST - Supplier discharging service tax liability on ‘documentation charges' under category of ‘Clearing & Forwarding Agency service' - officers in-charge of appellant's factory (recipient of service) have no jurisdiction to deny refund claim on ground that ‘documentation charges' are not covered under 'C&F Agency service' - Appeal allowed with consequential relief: CESTAT

THERE is no dispute about the fact of service tax liability having been discharged on the documentation charges under the category of Clearing and Forwarding Agency. Suppliers invoice submitted by the appellant clearly reveals this fact and a copy of the same is available in the records of the case. If that be so, the officers in charge of the appellants factory (who is the recipient of the services) has no jurisdiction to deny the refund claim on the ground that the documentation charges are not covered under Clearing and Forwarding Agency Service. The denial of refund claim of the service tax paid on account of documentation charges to the appellant is not sustainable in law.

Income Tax

Whether when assessee incurs certain expenditure on an aborted business, to claim it as part of existing business, assessee is necessarily required to satisfy that new business had common elements like unified administration, resource sharing and common funding - YES: HC

THE issues before the HC are - Whether when the assessee incurs certain expenditure on an aborted business venture, to claim it as part of the existing business, the assessee is necessarily required to satisfy that the new business had common elements like unified administration, resource sharing and common funding - Whether when the new business was not even permitted and the JV partner is unknown, even then expenditure incurred in this connection can be claimed as expenditure of the existing business - Whether the liability arising out of the Provident Fund, ESI arrears etc can be allowed as deduction u/s 43B if the liability accrued in the AY though the mode and manner of payment was deferred. And the verdict partly goes in favour of the Revenue.

Central Excise

Kraft board - Notification 4/2006, sr. no. 90 as amended by notfn. 4/2008 prescribing Nil rate of duty is a conditional exemption and not an absolute one - assessee had before 01.03.2008 chosen to pay duty in terms of sr. no. 90 and after amendment paid duty in terms of sr. no. 93 as applicable to all goods - stay granted: CESTAT

THERE was a time when demands used to fly in the Central Excise formations for denying the benefit of an exemption notification claimed by a manufacturer. Those were the in the early nineties. In the recent past, since the month of May, 2005 to be precise, there is a change in this mentality - nowadays show cause notices are issued asking the assessee to avail the exemption notification and not to pay duty. Not that these SCNs are without any duty demands - they are, in fact, in double doses - first is the demand for denial of CENVAT credit availed and the second is in terms of section 11D of the CEA, 1944. Obviously, manufacturers choose to pay central excise duty by utilizing the CENVAT credit to recover the duties suffered on inputs!

See our columns Tomorrow for the judgements