Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Manpower Recruitment and Supply Services - when farmers and transporters have entered into agreements directly with sugar factory, by no stretch of imagination appellant could be considered as a person responsible for supply of manpower to sugar factory, temporarily or otherwise - Strong prima facie case in favour - Pre-deposit of ST of Rs.2.21crores waived and Stay granted: CESTAT

THE appellant is a Trust (Sanstha) consisting of farmers and transporters. The farmers undertake harvesting of sugar cane and the truck owners undertake transportation of these from the farmers' fields to the factory of M/s Dudhganga Vedganga Sahakari Sakar Karkhana Limited, Bidri, Kolhapur. The bills for the service rendered to the sugar factory are routed through the Sanstha and the payment is received from the sugar factory to the Sanstha for further distribution to the farmers and the transporters.The department took a view that the activity undertaken by the appellant falls under the category of ‘Manpower Recruitment and Supply Services' and accordingly a Service Tax demand of Rs.2,21,20,788/- for the services rendered during the period 2005 to 2008 was made on the appellant.

Income Tax

Whether relinquishment of vested rights in an immovable property can be considered as 'transfer' within meaning of Section 2(47) even if sale deed was not executed - NO: HC

THE assessee is a registered society and had registration u/s 12A(a) since 1977. Objects of the assessee, inter alia, were to promote sports of motorcar and motorcycle and conduct motor races, competitions, etc. During the scrutiny proceedings, for A.Y 2009-10, the A.O. sent a proposal to the DIT(E) recommending cancellation of registration granted to assessee u/s 12A(a). In the opinion of DIT(E), the motor sports were for the purpose of promotion of business of sponsors. The sponsorship proceeds were commercial receipts in the hands of the assessee. The DIT(E) was of the opinion that assessee was hit by proviso to Section 2(15) inserted from 1.4.2009. Therefore, according to him, the objects and activities of the assessee could no more be considered charitable in nature. In this view of the matter, he cancelled registration granted to the assessee u/s 12A(a).

Central Excise

Interest under Section 11AB of CEA, 1944 is payable on duty paid under Section 11A(2B) under supplementary invoice on price differential on account of retrospective price escalation received by assessees - since interest is "sum due to Government", which is recoverable u/s 11 of CEA, 1944 it has no limitation period - SCN issued u/s 11A has to be treated as communication for recovery of interest u/s 11 - Revenue appeals allowed and assessee appeals dismissed: CESTAT

IN all these cases, the assessees had supplied excisable goods to their customers against contracts with Price Escalation Clause. At the time of clearance, the duty had been paid on the provisional price, though the same was subject to variation in terms of the Price Escalation Clause. In none of these cases, the assessees had opted for provisional assessment in terms of the provisions of Rule 7 of the Central Excise Rules, 2002 and the duty had been paid at the time of clearance on the provisional price. Subsequently, there was upward revision of price from back date and the assessees received the escalation amount from their customers against the supplementary invoices raised by them and all that time, the assessees paid the duty on the price differential. However, while paying duty, they did not pay interest on the same as per provisions of Section 11AB of the CEA, 1944. The department was of the view that since the price had been revised upward from the back date and on account of such upward revision of the price, the appellant had received the differential amount, while paying duty on such price differential, they should also have paid the interest on the duty under the provisions of Section 11 AB.

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