Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Marketing fees paid by appellant to foreign service provider and on which Service Tax liability is discharged by appellant on reverse charge basis - same is an input service as defined in rule 2(l) of CCR, 2004 - refund is available since appellant is unable to utilize credit - Appeal allowed: CESTAT

THE appellant is engaged in providing Renting of Immovable property services, Customized Software Development Services, etc. They are also paying service tax as recipient of Business auxiliary service. These services were used in providing software development services which was exported. As the appellants were unable to utilize the full CENVAT credit on these input services leading to accumulation of CENVAT credit, they filed a refund claim in terms of Rule 5 of the CCR, 2004 read with Notification No.5/2006 CE (NT) dated 14/03/2006.

Refund was rejected in respect of marketing fees paid by them to their foreign service provider whom they had engaged for promotion of their products abroad. On these services they had discharged service tax liability on reverse charge basis under business auxiliary service. The authority also rejected the refund claim of service tax credit on garden maintenance charges, gas filling and servicing charges, lightning toran for Navaratri festival.

Income Tax

Whether sum paid as owelty during course of partition to settle inequalities is deemed to be immovable property, and will not attract capital gains - YES: HC

THE issues before the Bench are - Whether a sum paid as owelty during the course of partition to settle inequalities is deemed to be immovable property, and will not attract capital gains; Whether a compensation paid by one party to another in a partition proceedings attracts invocation of principle of owelty and thus is not liable to tax and Whether any transfer of assets takes place in case group partition proceedings. And the verdict goes in favour of assessee.

Central Excise

Although there is an allegation of collusion, manufacturer-suppliers have not been made party to the proceedings - allegation not sustainable - since appellant has only taken credit of duty paid by suppliers, prima facie they have strong case for waiver of pre-deposit of dues - Pre-deposit waived and Stay granted: CESTAT

KNOCKING on the wrong door can have its surprises, as the Revenue would realize in the present case. A sorry sometimes does not suffice! The applicants are engaged in the manufacture of Organic Chemicals. The demands are confirmed after denying the CENVAT credit availed of the duty paid on intermediate products supplied by M/s Godrej Industries Ltd. and M/s. VVF Ltd. The case of the Revenue is that the applicants were required to follow the prescribed procedure under Notification No. 44/2001-CE (NT) dated 26.6.2001 as amended and should have procured indigenous raw materials duty free from the local supplier under Advance Licence/Authorization letter.

See our Columns Tomorrow for the judgements