Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

CENVAT credit eligibility is to be determined with reference to taxability of service on date of receipt of capital goods - CESTAT

THE issue involved is regarding eligibility of CENVAT credit on Air Compressors purchased and received in the factory premises on 05/05/2005.The appellant was providing the following service viz. "Commercial and Industrial Construction Services (Pipeline Services)" which were brought into the tax net from 16.6.2005.

The adjudicating authority held that the CENVAT credit could not be availed of the duty paid on such Air Compressors though it is capital goods as the said capital goods were received in the premises of the service provider i.e. respondent before the services were held to be taxable under the Finance Act, 1994.The first appellate authority after considering the submissions set-aside the O-in-O and held in favour of the assessee.So, now the Revenue is aggrieved and is before the CESTAT.

Income Tax

Whether when assessee requests other companies to pay for scientific research and makes payment to them in subsequent year but claims deduction in return, such benefits u/s 35(1)(ii) can be denied by Revenue - NO: HC

THE issues before the Bench are - Whether when assessee requests other companies to pay for scientific research and makes payment to them in the subsequent year but claims deduction in return, such benefits u/s 35(1)(ii) can be denied by Revenue; Whether deduction sought in respect of the expenses made towards designing and lay out as well as other temporary partition and construction made for making the office functional is capital in nature; Whether when the assessee is in negotiations with the parties in respect of consultancy charges and professional fees, for reducing them, and finality on the quantum could not be reached even at the time of closing the accounts, whether the assessee is entitled to make a provision for the same based on the original claims made by those parties and Whether provision can be made for the entire amount of liability, although it is contingent in nature and negotiations are ongoing with the third party. And the verdict goes against the Revenue.

Central Excise

Digital Local Telephone Exchange Equipment (DLTEE) System assembled by BSNL is leviable to excise duty under CETH 85.17 -demand on BSNL upheld.:CESTAT

THE dispute is whether the Digital Local Telephone Exchange Equipment (DLTEE) assembled by BSNL with the various components supplied by the vendors would amount to manufacture, whether such goods are excisable, marketable and are chargeable to central excise duty. This case perhaps will have wide ramifications, as BSNL might be assembling such systems at many places. The appellants (BSNL) argued against the demand on various grounds, but the Tribunal held that the resultant assembly is goods, excisable and marketable and upheld the demand.

See our Columns Tomorrow for the judgements