Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Service Tax - Money Transfer from abroad - whether Export or Service rendered in India - It is export of service - CESTAT by Majority (Third Member)

THE term "export" has not been defined either in Article 280 (l)(b) or in any of the article of the Constitution of India. There is no question of Export of Service Rules, 2005, being in conflict with Article 286 (1) (b) of the Constitution of India. There is nothing in Export of Service Rules, 2005 which can be said to be contrary to the principle that a service not consumed in India is not be taxed in India. What constitutes export of service is to be determined strictly with reference to the provisions of Export of Service Rules, 2005. Not doing so and leaving this question to be determined by individuals tax payers or tax collectors for each service, based on their deductive ability would result only in utter confusion and chaos. Money transfer service is being provided by the Western Union from abroad to their clients who approached their offices or the offices of their Agents for remitting money from to friends/ relatives in India. The service being provided by the agents and sub-agents is delivery of money to the intended beneficiaries of the customers of WU abroad and this service is "business auxiliary service", being provided to Western Union. It is Western Union who is the recipient and consumer of this service provided by their Agents and sub-agents, not the persons receiving money in India.

The destination has to be decided on the basis of the place of consumption, not the place of performance of service. Reimbursement of advertisement and sales promotion activities received from WU is not taxable as the same are for the services provided to WU, which are export of service.

Income Tax

Whether deeming fiction created u/s 50 with respect to depreciable assets would be confined for purpose of mode of computation of capital gains contained in Ss 48 and 49 and would not cover exemption u/s 54EC - NO: HC

FOR the AY 2003-04, the assessee had filed a return of income in which the assessee had claimed short term capital gain of Rs.40,99,947/- arising from the sale of assets included in the block of assets. With respect to such gain, assessee had claimed the exemption u/s. 54EC of the Act, for having made investment in the specified bond. The AO previously accepted the assessment u/s. 143(1) of the Act. However, subsequently on the basis that such exemption was not available to the assessee and therefore income chargeable to tax has escaped assessment, issued notice u/s. 148 of the Act of reopening of the assessment. In the assessment framed by the AO pursuant to such notice, he disallowed the claim of exemption of the assessee.

Central Excise

It was highly inappropriate on the part of the revenue authorities to enforce recovery by appropriating rebate sanctioned against demand confirmed when stay had been granted by Tribunal - Deputy Commissioner has shown complete disregard and contempt to orders of this Tribunal - Registry directed to forward copy of order to Chairman, CBEC for appropriate action - appeal allowed with consequential relief: CESTAT

THE New Year 2013 should not be that good for the Deputy Commissioner, Central Excise, Raigad as he is in the dock - the CESTAT has sought appropriate action against him. The appellant filed 10 rebate claims totally amounting to Rs.42,34,172/-. The Deputy Commissioner, Central Excise sanctioned the same but appropriated an amount of Rs. 38,63,600/- towards confirmed demands of Rs.24,36,000/- and Rs.14,27,000/- pending against the appellants, vide order dated 27/12/2011.

See our columns Tomorrow for the judgements