Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Public facility means facilities owned by State or local government such as public building, structure or system, including those used for education, recreational or cultural purposes - Sports Stadium constructed for conducting Commonwealth Games is non-commercial construction - merely because some amount is charged for using facility, it cannot become commercial construction - prima facie, appellant not liable to pay Service tax - Pre-deposit waived and stay granted from recovery of adjudged dues of more than 20 Crores: CESTAT

THE appellant constructed a Sports Stadium Complex for Government of Maharashtra at Mahalunge, Balewadi, Pune and this Stadium is known as Shree Shiv Chhatrapati Sports Complex. This stadium was constructed on tender invited by the Government of Maharashtra.

The question involved is whether this construction undertaken by the appellant amounts to ‘Commercial or Industrial Construction' as defined under Section 65(25b) of the Finance Act, 1994. The said section defines the terms ‘Commercial or Industrial Construction Service' as construction of a new building or a civil structure or a part thereof which is used or occupied or engaged, primarily, for commerce and industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams.

The CCE, Pune-II observed that the facility constructed by the appellant for the State Government of Maharashtra is to be used by the public and others for a consideration for use of the facility and, therefore, the entire building structure is commercial construction and accordingly he confirmed the Service Tax demand of Rs.10,21,11,459/- u/s 73 and also imposed an equivalent amount of penalty u/s 78 of the FA, 1994.

Income Tax

Whether when transferor company sanctions dividend after date of amalgamation but before same was sanctioned by competent court, such payment can still retain character of dividend - NO: HC

THE issues before the Bench are - Whether when the refund application is not in proper format, it changes the character of the application seeking refund; Whether when the transferor company sanctions dividend after the date of amalgamation but before the same was sanctioned by a competent court, such payment can still retain the character of dividend and Whether tax paid on such dividend is liable to be refunded. And the verdict goes in favour of the assessee.

Central Excise

Rule 4(1) of CCR, 2004 - There is no time limit prescribed in CENVAT Credit Rules for taking credit - If manufacturer does not take credit as soon as inputs are received in factory, word “immediately” in rule 4(1) of CCR, 2004 does not mean nor is it intended to mean that benefit would be denied - If manufacturer has not taken credit immediately, it is affecting manufacturer, not Revenue - Order set aside & appeal disposed of: CESTAT

THE issue associated with the adverb “immediately” is as old as the credit rules when they first appeared on the horizon but this time there is a twist in the end. A twist which the assessee may find it difficult to unwind and the Revenue would be glad to twist further! Inasmuch as the appellant had taken credit of Rs.4.46 Crores during the period October 2006 to November, 2006 on the inputs which were received in the factory during the period April, 2004 to September, 2006. Similarly, they had taken credit of Rs.33 lakhs in the month of April, 2009 in respect of the inputs that were received during the years 2005-06, 2006-07 and 2007-08.

The Revenue representative after relying upon the findings of the lower authority submitted that in view of the delay in taking the credit it is not possible to verify whether the duty paid inputs are received in the factory and are used in the manufacture of goods cleared on payment of duty hence the demand is rightly made.

See our Columns Tomorrow for the judgements