Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Onsite services rendered abroad - CENVAT credit refund ineligible prior to 27/02/2010 as the same does not constitute exports as defined in Rule 3(2) of Export of Services Rules, 2005 – appellant's subsidiaries located outside India are independent entities and they are not their agents: CESTAT

M/s. Tech Mahindra Ltd. is engaged interalia in the business of “Information Technology Software Services” as defined in Section 65 (105) (zzzze) of the Finance Act, 1994 and they are providing these services mainly to their overseas customers.

These services are exported by M/s. TML to their overseas customers in two ways, i.e. by entering into a direct contract with its overseas customers or by entering into a contract with the overseas customers through its subsidiaries/branches located outside India. There are two components, namely, Offshore Software Development services provided by it from India and onsite Software Development Services provided by the subsidiaries located outside India.

M/s. TML are availing CENVAT Credit of tax paid on input services used in providing the output services. Since they are mainly exporting these services on a regular basis, they are not able to utilize the CENVAT Credit availed by them. Hence, in terms of Rule 5 of the CENVAT Credit Rules, 2004 read with the Notification No. 05/2006-CE(NT) dated 14/03/2006, they have been filing refund claims of the un-utilized CENVAT Credit from time to time.

Income Tax

Whether when reassessment proceedings are cancelled because of incorrect reasons recorded by AO, nothing prevents Revenue for initiating re-assessment again if it has adequate materials on record - YES: Bombay HC

ASSESSEE, an individual has filed a ROI for A.Y. 2006-07 declaring an income of Rs.1 ,05,275 /-. A notice was issued u/s 148 seeking to reopen the assessment on basis that the assessee had not filed its ROI for AY 2006-07. Further it was also observed that there were accommodation entries passed in the books of the assessee and its firm. During reassessment, the AO had passed an order of assessment, determining the total income of the Petitioner at Rs.40 ,11,390 /-. On appeal, CIT (A) had allowed the appeal and held that the reassessment proceedings were cancelled only because of the incorrect statement recorded by the AO and shall be free to initiate reassessment again if adequate material was available on the record. On further appeal before Tribunal, the issue was pending. Subsequently, a fresh notice was issued to the Petitioner seeking to reopen the assessment on the basis that there was a huge sum payable by the assessee to M/s. Pratik Sales Corporation in respect of current year transactions. These transactions were merely accommodation entries. Thus the assessment was reopened u/s 148. The assessee had filed objections to the reopening of the assessment which have been disposed of by the AO. It was contended by the assessee that the fresh notice had been issued on the same ground as the earlier notice. It was also argued that since the assessment proceedings were dropped on the earlier occasion by the CIT( A) and the Revenue was in appeal before the Tribunal, a fresh notice u/s 148 could not be issued.

Customs

Condition 5(3) of Handling of Cargo in Customs Areas Regulations, 2009 is not required to be satisfied by appellant as they are working on behalf of JNPT - appeal allowed: CESTAT

THE appellants maintain and operate the Container Freight Station (CFS) and Buffer Yard (BY) belonging to the JNPT. The appellants received imported and export goods at the CFS and BY and are kept in their custody till the goods are cleared for shipment, home consumption or are warehoused or transported.

By exercising the power u/s 45(1) of the Customs Act, 1962, the Commissioner of Customs, JNPT issued Notification No.16/2005 dated 31.12.2005 notifying the JNPT and the appellants to be the Custodian and Co-Custodian respectively of the imported goods received at the CFS, JNPT until the goods are cleared for home consumption or warehoused or transshipped in accordance with the provisions of Chapter VIII of the Customs Act, 1952.

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