Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

ST - Recruiting staff and supplying them to group companies to deal with activities undertaken by group companies - such an activity does not, prima facie, come under purview of Business Auxiliary services - Stay granted from pre-deposit of Rs.8.35 Crores: CESTAT

THE appellant was found to be engaged in recruitment and supply of manpower for the group companies and the cost of expenditure towards the salaries and other administrative expenses were reimbursed to them by other group companies on actual basis from May 2006 onwards. In addition to the reimbursement of the expenditure, the appellant also charged a sum of Rs.1.00 lakh every month for the services rendered by them and started discharging service tax liability on the said amount .

Income Tax

Whether when assessee avails benefits based on decision of Kerala HC, which was later over-ruled by SC, it cannot be granted waiver of penal interest merely because it is not located within jurisdiction of Kerala HC - NO, it can be: HC

THE issues before the Bench are - Whether when an assessee has genuinely availed benefits under the Income Tax Act, relying upon the decision of Kerala High Court, which was later overruled by the Supreme Court, it cannot be granted the waiver of penal interest u/s 119(2)(a), merely because the assessee is not located within the jurisdiction of the Kerala High Court; Whether the power of waiver of penal interest u/s 119(2)(a) can be exercised only in the perspective of the decision of the High Court or Supreme Court passed necessarily in assessee's own case and Whether the fact that the decision covers the field of Income Tax legislation, as may be applicable to any assessee, would not amount to a sufficient circumstance for reduction of waiver of interest - Whether the decision of the other High Courts have any persuasive value. And, the HC allows the assessee's writ.

Central Excise

CENVAT/MODVAT - Rule 6 of CCR, 2004/57CC of CER - Since chemicals have been used as inputs in manufacture of sugar i.e. dutiable product only and not in manufacture of Bio-compost, an exempted product, seeking recovery of 8% of price of Bio-compost is not legal and proper - Revenue appeal dismissed: HC

THE Revenue authorities seem to have developed a sweet relation with the Sugar industry. And this sweetness is more than exhibited by the innumerable demand notices they issue to this industry by invoking the provisions of rule 6 of the CENVAT Credit Rules, 2004.

See our Columns Tuesday for the judgements