Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Renting of immovable property - Three individuals are co-owners of building and have rented out premises to person who issues different cheques to all individuals - Prima facie, each applicant would get benefit of SSI exemption as they are provider of service on individual basis - strong case in favour - Pre-deposit waived and stay granted: CESTAT

BENEFIT of SSI exemption Notification No 6/2005-ST dated 01.3.2005 as amended vide Notification No 8/2008-ST dated 01.3.2008, grants the benefit of exemption of service tax per year, provided that the assessee has not crossed the threshold limit of rupees ten lakhs in the preceding financial year. On perusal of the said notification, the said notification talks about the aggregate value of the taxable services rendered, should be considered for the purpose of exemption and in this case if individually all the appellants be considered as provider of such service, their aggregate value does not exceed the threshold limit. Prima-facie, the appellants have made out a case for waiver of pre-deposit of amounts involved. Accordingly, the applications for waiver of pre-deposit of amounts are allowed and recoveries thereof stayed till disposal of appeals."

Income Tax

Whether surcharge collected by landlord, along with municipal taxes, from tenants forms part of income from house property - YES: Calcutta HC

ASSESSEE company was having 1/3rd ownership in a property situated at Kolkata, prior to the AY 1997-98, and remaining 2/3rd portion was being owned by M/s. Poddar Udyag Ltd. Subsequently under the scheme of arrangement sanctioned by the High Court, the assessee acquired 50 per cent ownership of the said building from the AY 1997-98 onwards. Since the land and building were standing in the name of the Poddar Udyag Ltd. all formalities relating to municipal assessment were made in the name of Poddar Udyag Ltd and this company used to collect rent from tenants. THE issues before the Bench are - Whether surcharge received by the landlord, along with municipal taxes from the tenants forms a part of income from 'house property' and Whether when the surcharge collected by the landlord is not used for his own purpose and the same is paid to the municipal authorities, the same can be deducted from the total income. And the verdict goes against the assessee.

Central Excise

Benefit contained in Notification 22/2009-CE(NT) is to be allowed retrospectively - if credit of entire excise duty paid by an EOU is not allowed and same is restricted, it creates discrimination between units in DTA and those in EOU Zone: CESTAT

ONE is economic and the other is legal. First the economic reason CENVAT (value added tax) is an economic concept and the object is to minimize / eliminate the cascading effect of taxes. If this objection has to be realized, then full credit of the duties paid at the previous stage has to be allowed. Further, if credit of the entire excise duty paid by an EOU is not allowed and the same is restricted, it creates discrimination, between units in the DTA and units in the EOU Zone. That is to say, it will no longer be economically attractive to buy goods form the EOU because of lesser amount of credit that would be available. It also creates discrimination against the EOU vis-à-vis the imported goods. The CENVAT Credit scheme is not intended to create distortions in the market place and the law also should not be interpreted in such a way so as to create a distortion. It is an accepted legal principle that the law should be interpreted in a harmonious way so as to sub-serve the public policy.

See our columns Tomorrow for the judgements