Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Appellant, a sugar factory renting a part of their premises to Bank, BSNL and the Department of Post for setting up a post office - Bank and BSNL are commercial organizations and if appellant has rented out their premises to them, it amounts to furtherance of business or commerce - claim of SSI benefit under notification 8/2005-ST not considered by lower appellate authority - Matter remanded: CESTAT

THE appellants manufacture Sugar and other excisable goods and are registered with Central Excise department as such. They rented out part of the premises to Bank, BSNL and Post Office.

The department took the view that the appellant has to discharge the Service Tax under the category "Renting of immovable property". Accordingly, a notice was inter alia issued for the period 1.6.2007 to 31.3.2010 for recovery of Service Tax of Rs.53,867/-.

Income Tax

Whether provision made for performance warranty and other contractual liability as per AS-7 cannot be said to be an ascertained liability and accordingly not allowable as deduction - Partly allowed: ITAT

THE issues before the Bench are - Whether provision made for the performance warranty and other contractual liability as per AS-7 cannot be said to be an ascertained liability and accordingly not allowable as deduction; Whether such provision is also not allowable while computing the income of the assessee u/s 115JB of the Act; Whether the disallowance u/s 14A for the years prior to A.Y. 2008-09 has to be made on some reasonable basis and Rule 8D cannot be applied to those assessment years and Whether the mobilization and other advances received by the assessee by raising progress billings cannot be said to represent income of the assessee at the time of raising the progress bills and the same therefore had no effect whatsoever on the income of the assessee, which was recognized by following consistently a well recognized method of percentage of completion. And the verdict partly favours the assessee.

Customs

CHALR, 2004 - in a situation where urgent or immediate action is necessary, and waiting for outcome of a pre-decisional hearing will defeat public interest and obstruct or impede proper functioning of a Customs Station, it would be open to Commissioner under Regulation 21 to pass an immediate prohibitory order for a limited period and to afford to CHA, in meantime, an opportunity of being heard: HC

BY an order dated 12 September 2012, the Commissioner of Customs (General), Mumbai under Regulation 21 of the CHALR, 2004 prohibited the Petitioner from transacting CHA business in Zones I, II and III of the Mumbai Commissionerate on the ground that its continuance was considered prejudicial to the interest of the Revenue warranting immediate action. The allegation relates to the export of cheap material such as soap stone powder in the names of exporting firms by mis-declaring it as high value bulk drugs and their intermediates.

See our Columns Monday for the judgements