Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Appellant is leasing out machinery/equipment and discharging VAT liability on consideration received - transaction involved is "transfer of right to use" which is a deemed sale and not "supply of tangible goods for use service": - Pre-deposit waived and stay granted: CESTAT

THE appellant is inter alia engaged in renting of earthmoving equipment such as Caterpillar, Excavators, etc. to various customers. The appellant did not discharge any service tax liability on the said activity. The department was of the view that the activity of renting of earthmoving equipment would come under the purview of service tax under the purview of service tax under the taxable service category of "business auxiliary service" for the period prior to 16-5-2008 and under the category of "supply of tangible goods for use" with effect from 16-5-2008 and accordingly issued a notice demanding service tax amounting to Rs. 2,13,10,930/- for the period 2005-06 to 2009-10. The CCE, Nagpur confirmed the demand of service tax under the category of "supply of tangible goods for use" for the period from 16-5-2008 amounting to Rs. 67,39,694/- along with interest and penalties.

Income Tax

Whether pendency of civil suit is a bar on writing off bad debt when assessee is of opinion that probability of recovery is not even remote - NO: HC

THE issues before the Bench are - Whether pendency of a civil suit is a bar on writing off the debt, even if in the opinion of assessee its probability of recovery is remote and Whether in order to claim a bad debt, mere writing off the same in assessee's books is a sufficient compliance of section 36. And the verdict goes in favour of assessee.

Central Excise/CENVAT Credit

Reversal of entire "Input Service" Credit taken along with interest amounts to non-availment of credit and suffices for purpose of Rule 6 of CCR, 2004 - no cause for payment of any amount in terms of rule 6(3) of CCR, 2004 - however penalty imposable u/r 15(3) : CESTAT

THE appellant are manufacturers of material handling equipment and avail CENVAT credit. Vide Notification No. 25/2008-CE dated 29.4.2008 some of their products viz. Jumbo Electric, Jotruk, Jowalk and electrically operated vehicles were completely exempted from payment of Central Excise duty. The appellant says that they were unaware of this exemption notification and continued to pay duty @8% adv. till 31.07.2008. Thereafter, they started clearing the impugned goods under exemption. Since they were manufacturing dutiable goods also, they maintained separate record of "inputs" used in dutiable as well as exempted goods.

See our Columns Tomorrow for the judgements