Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Appellant appointing Courier Agents outside India to delivery documents/articles -Revenue seeking ST on payment made to courier companies abroad under reverse charge mechanism - services rendered abroad completely - liability to pay ST u/s 66A of FA, 1994 does not arise - situation revenue neutral - Prima facie case in favour - Stay granted: CESTAT

THE appellant is engaged in rendering taxable services such as Courier Agency Services and Air Travel Agency Services. They are also engaged in the business of collecting documents and articles from customers located all over India and delivering them abroad. The company has appointed various Courier Agents outside India to deliver such items outside India. The Service Tax authorities noticed that in respect of the services of courier agents engaged by the company abroad, on the payment made to such courier companies, the appellant was liable to pay Service Tax under Reverse Charge Mechanism and they had not discharged the Service Tax liability during the period 2008-09, 2009-10 and 2010-11.

Income Tax

Whether when Medical Council's amended regulations prohibit freebies gifted to practitioners by pharma companies, any fault can be found with CBDT Circular disallowing expenditure incurred on such freebies - NO, validity of Circular upheld: HC

ASSESSEE is a confederation of pharma SSIs. It filed a writ against the CBDT Circular No. 5/2012 dated 1.8.2012 and prayed for its quashing. As per the Circular, the Medical Council of India in exercise of the powers vested in it under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 imposed prohibition on any medical practitioner or their professional associates from accepting any gift, travel facility, hospitality, cash or monetary grant from any pharmaceutical and allied health sector Industries. So, the Circular disallows all such expenses, which are incurred on providing freebies to medical practitioners in violation of the MCI's regulations. While arguing before the High Court, the counsel for the assessee contended that the Circular had gone beyond the section itself.

Central Excise

Rejected goods cleared as Scrap on payment of duty - Revenue seeking reversal of CENVAT Credit taken u/r 16(1) of the CER, 2002 when goods were received back in factory from customers - duty paid on Scrap not considered while raising demand - rate of duty applicable is almost the same on scrap as paid by applicant and the CENVAT credit as demanded by department - Prima facie strong case in favour - Pre-deposit waived and Stay granted: CESTAT

THE applicant is a manufacturer of motor vehicle parts, components of brass bars and electrical wiring accessories. They had received in their factory their own duty paid finished goods after rejection by the customers and on receipt of the said goods, the applicant availed CENVAT credit in terms of Rule 16(1) of the Central Excise Rules. Subsequently, these goods were cleared as ‘Scrap' on payment of duty. It is the contention of the Revenue that the applicant should have reversed the entire CENVAT credit availed by them u/r 16(1) of the CER, 2002 when they received the rejected goods. Accordingly, a demand of Rs.3,61,489/- was issued and confirmed by the lower authorities along with penalty & interest.

See our Columns Tomorrow for the judgements