Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Valuation - Appellant is purchasing raw material from market for manufacture of packaged drinking water and same is cleared to M/s. ABCTC. u/s 4A of the CEA, 1944 who further sell to their customers - ABCTC is not an institutional consumer so as to necessitate valuation u/s 4 of CEA,- Pre-deposit waived and stay granted: CESTAT

TO garner more Revenue and avoid valuation issues prevalent u/s 4, Section 4A of the CEA, 1944 was inserted in the statute w.e.f 14.05.1997 and which provides for valuing the notified excisable goods on the basis of the Retail sale price. Unfortunately, the departmental officers without understanding this ideology have time and again sought to value the notified excisable goods in terms of section 4 of the CEA, 1944 when the assessee values it u/s 4A and failed miserably…but for the sheer thrill or otherwise they continue on their mission!

Income Tax

Whether when parties are inter-related in land transaction, forfeited sums form part of sale consideration for purpose of computing capital gains - YES: ITAT

ASSESSEE, a company had filed its ROI showing a loss of Rs.34,44,373. Later, the AO reopened the assessment on the basis that certain capital gains have escaped assessment. The assessee filed a revised return in response. The AO noted that in its balance sheet, under the head "Current Liabilities", the assessee had shown receipt of an amount of Rs.15,76,26,000/- as advance against 'sale of property'. AO observed that, it was clear that the entire amount including the advances paid by the original developers of the same group, was nothing but the sale consideration for the said land. The AO further noted that the claim of the assessee, that possession of the said land was not given up to 28.02.2008, was not correct. He mentioned that having received full sale consideration, the irrevocable POA assumed the character of regular sale deed. It was further noted that the purchaser had taken the possession of the property immediately and started construction of a multi-storeyed building thereon. With these observations, AO held that there was a clear transfer of the said property within the meaning of sec 2(47).

Service Tax

Scientific and Technical Consultancy Service - Two units jointly providing service to overseas client under joint agreement - Amount for rendering service is routed through one unit to another unit - Demand of service tax on amount received by appellant unit from another unit by treating them as sub-contractor - Prima facie case has been made out for waiver of pre-deposit as service provided by appellant has to be treated as export of service: CESTAT.

SINCE the service of scientific and technical consultancy covered by Section 65(105) (za) is service in relation to business and is covered by a Rule 3(1)(iii) of the Export of Service Rules and the same prima facie has been received by the overseas clients for the use in their business, the payment for which has been received in foreign currency, the service provided by the appellant has to be treated as an export of service and hence, in terms of Rule 4 of the Export of Service Rules, no service tax would be chargeable. Thus, prima facie, the impugned order does not appear to be sustainable and as such, the appellant have prima facie case in their favour. The requirement of pre-deposit of service tax demand, interest thereon and penalty is, therefore, waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal.

See our Columns Tomorrow for the judgements