Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Captive mines have to be considered as part of factory only - Tyres get used in process of handling raw materials which is an integral part of manufacturing process - nothing in definition of "capital goods" or "inputs" provides for explicitly excluding tyres from either of the definitions - CENVAT Credit is available on tyres: CESTAT

THE appellants are manufacturers of Zinc and have availed CENVAT credit in respect of "tyres" for Low Profile Dump Truck ("LPDT" for short) used in the captive mines for transportation of ore.

Income Tax

Whether assessee is entitled to claim deduction 80IB(10) proportionately in respect of residential units where there is also commercial area constructed if all other conditions are satisfied - YES: HC

Assessee is engaged in the business of developing and constructing housing projects. A survey operation was carried out u/s 133A of the Act to verify the claim of deduction u/s 80-IB(10) claimed by the assessee. AO observed that the extent of commercial area in both the projects as per sanctioned the plan were at 974 sq.ft. and 1075 sq.ft respectively. It was further observed that directors of the assessee company also purchased flats which were merged to one flat with a total area of 1850 sq. ft. AO pointed out that after purchase, the purchasers had converted the flats into commercial establishments. In one building, there were no residential units, but three commercial units were built. AO viewed that the provisions u/s 80IB (10) had not been satisfied, thus, was not entitled for deduction.

Service Tax

Services such as legal services, market data, payroll processing, customer support activities etc. are essential in running output services namely "BAS" to customers located abroad - any service which has nexus with business activity has to be treated as 'Input Service' - appellant entitled to refund of ST paid on input services - Appeal allowed: CESTAT

THE appellant is engaged in providing Business Auxiliary Services to their customers who are located abroad. For rendering the aforesaid services, they used various input services such as legal services, market data, payroll processing, customers support activities etc. The appellant filed a refund claim for the service tax paid on input services under Rule 5 of CENVAT Credit Rules, 2004, on the ground that they are unable to utilize the credit inasmuch as all their output services are exported. The adjudicating authority rejected the claim on the following two grounds namely (i) there is no nexus between input services and output services and (ii) they have not submitted the invoices for the service tax paid on input services.

See our columns Tomorrow for the judgements