Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Appellant and M/s BWIL agreed to integrate and jointly carry out day-to-day functions in both companies in various areas and to share jointly the activity cost for rendering executory services - no evidence that appellant gave consultancy to M/s BWIL in various fields of management - no cause for demand under ‘Management Consultancy Services' - appeal allowed: CESTAT

THE appellant M/s Glaxo Smithkline Pharmaceuticals Ltd. entered into an agreement dated 19.1.1999 with M/s Burroughs Welcome India Ltd. Both the companies had decided to merge with each other and prior to such merger, they decided to integrate and jointly carry out several day-to-day functions. The department was of the view that the appellant was rendering ‘Management Consultancy Services' to M/s Burroughs Welcome India Ltd. and accordingly issued a show-cause notice demanding Service Tax of Rs.1,29,19,615/- for the period 1.1.2002 to 31.12.2002.

Income Tax

Whether settlement amount paid to Microsoft for violation of copyright can be termed as penalty - NO: ITAT

THE AO pointed out that though the assessee had paid Rs.34,95,441/- to the faculty members being professionals for their services but the TDS had not been deducted u/s 194J. The CIT(A) held that what was paid to the faculty members was salary and the TDS was not liable to be deducted u/s 194J.The assessee had paid Rs.5 lakhs as assessee's share of the legal settlement due to Microsoft for violation of copyright Act. The AO has disallowed the same. The CIT(A) treated the payment as business expenditure.

The issues before the Bench are - Whether salaries paid to part time teachers can be professional fees for the purpose of invoking the provision of section 194J when a perusal of Form NO.16 clearly shows that what was paid by the assessee was only salary and Whether settlement amount paid to Microsoft for violation of copyright can be termed as penalty. And the verdict goes in favour of assessee.

Central Excise

In case additional customs duty is adjusted from DEPB no benefit of CENVAT or duty drawback is eligible - in view of clear provisions of EXIM policy CENVAT has been rightly denied - Appeals dismissed: CESTAT

THE issue in the present case is whether the appellant is eligible to take credit in respect of the CVD paid by debiting in the DEPB as per the provisions of Exemption Notification NO. 45/2002-Cus. This issue is specifically dealt with by the Larger Bench of the Tribunal in the case of Essar Steel Ltd . The Tribunal held that mere debit in DEPB pass book is not sufficient for eligibility of Modvat credit availed on the strength of Bills of Entry wherein importers availed benefit of Notification NO. 34/97-Cus which exempts duties of customs when duty leviable on goods debited to DEPB.

See our Columns Monday for the judgements