Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Rule 3(5A) of CCR, 2004 - Scrap of capital goods cleared during the period 2005 to 2009 without payment of duty - no evidence adduced by the appellant in support of their claim that no CENVAT credit had been availed in respect of such capital goods - Pre-deposit ordered of Rs.10 lakhs: CESTAT

CCE, Thane-I had issued a show-cause notice demanding more than Rs.83 lakhs of duty. The reason - the assessee was working under the CENVAT Credit Scheme and during the period 2005 to 2009 the applicants cleared the scrap of capital goods valued at Rs.5,09,85,377/- without payment of duty. On 11th March, 2010, the adjudicating authority confirmed the demand citing the provisions of Rule 3(5A) of the CENVAT Credit Rules, 2004 which provides that if the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value.The applicants failed to produce any evidence in support of their claim that no credit has been availed in respect of the capital goods of which scraps were cleared. Therefore, prima facie, no strong case has been made out by the applicants for total waiver of pre-deposit of the dues. However, in the facts and circumstances of the case and also the financial hardships as pleaded, the applicants are directed to deposit Rs.10 lakhs (Rupees ten lakhs) within a period of six weeks.

Income Tax

Whether in FCCB issue, disclosing identity of person, who has sole responsibility of subscribing issue, is sufficient disclosure warranted u/s 68 - YES: ITAT

THE assessee M/s Reliance Communications Ltd raised funds through three issues of FCCBs and the proceeds were received in Deutsche Bank, Singapore (DB) of USD 500 million; and JP Morgan New York and Hong Kong and Shanghai Banking Corporation of USD 1000 million. These FCCBs were subscribed to by the Lead Managers namely, Deutsche Bank Hong Kong (DB HK); JP Morgan Securities Ltd. U.K. and Hong Kong and Shanghai Banking Corporation. The assessee submitted all the details of the subscribers to the FCCB issue. The details of the bank in which the proceeds of FCCBs were parked in the foreign countries and from where these were transferred to Indian Bank, were also furnished. Along with the said reply, the assessee submitted copies of Offer Memorandum of the FCCBs issued, Global Certificate along with the Registrar's confirmation of entries of the Bondholder in Register, Foreign Inward Remittance Certificate and the details of FCCBs as per the Offer documents and Global Certificates.THE issues before the Bench are - Whether in FCCB issue, it is required to disclose the details of those subscribers other than the lead subscriber, even though they have no privity of contract under the subscription agreement and Whether in FCCB issue, disclosing identity of the person, who has the sole responsibility of subscribing the issue, is sufficient disclosure warranted u/s 68. And the verdict goes in favour of the assessee.

Service Tax

Applicant entered into an agreement for cleaning of the premises of D.Y.Patil Hospital & Research Centre - Revenue demanding ST under category 'Manpower Recruitment & Supply Agency services' - activity apparently is ‘Cleaning Services' and it is taxable if provided to any Commercial or Industrial Institution - as the service recipient is neither commercial or industrial institution, activity undertaken is not taxable - Pre-deposit waived and Stay granted: CESTAT

AS per the agreement, the applicants are engaged in the Cleaning services of D.Y.Patil Medical Hospital and Research Institute. As per the Section 65 (105) of the Finance Act, 1994, the Cleaning service is taxable, if provided to any Commercial or Industrial Institution. The cleaning activities have been provided by the applicant to D.Y. Patil Medical Hospital & Research Institute, which is neither commercial nor an Industrial institution. Therefore, the activity undertaken by the applicant is not taxable

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