Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Lump sum payment of USD 45 million made to SKODA towards technological fees for manufacturing 45,000 car kits is includible in Assessable Value as per Rule 9(1)(e) of Customs Valuation Rules - equivalent penalty and interest imposable: CESTAT

IN the order, the Commissioner of Customs (Import), Nhava Sheva has held that the agreements, viz. Technology Transfer and Trade Mark License Agreement dated 01.10.2001, supply agreement dated 01.10.2001 and importer agreement dated 26.09.2001 between the two companies are fraudulent and fabricated and have no relation to the real state of affairs . On this basis, the Commissioner decided that 45 million USD charged as Technology Transfer is attributable to pre-importation activity and, therefore, this amount has to be added and included in the assessable value, applicable to each imported car kit. Accordingly, he has confirmed a duty demand of Rs.97,15,00,054/- with interest as applicable. He has also imposed a penalty equal to duty under Section 114A of the Customs Act, 1962. He has also imposed a fine of Rs.10crores under Section 111 (m) of the Customs Act, 1962.

Income Tax

Whether before bringing any interest expenditure under ambit of Rule 8D(2)(ii), it is necessary for AO to prove that such interest is not directly attributable to any particular receipt - YES: ITAT

THE issues before the Bench are - Whether it is necessary for the AO to record satisfaction if he proposes to invoke Sec 14A - Whether before bringing any interest expenditure under the ambit of Rule 8D(2)(ii), it is necessary for the AO to prove that such interest is not directly attributable to any particular receipt. And the verdict goes against the Revenue.

Service Tax

As per definition, in respect of repair, alteration, renovation or restoration, it is specifically mentioned that it is in relation to building or civil structure - there is no mention of "part thereof" in sub-clause (d) of definition - applicant has prima facie strong case in favour - Pre-deposit waived and stay granted: CESTAT

THE applicant had undertaken interior work at 9th floor, State Bank Bhavan, Nariman Point, Mumbai. The Commissioner of Service Tax, Mumbai-II was mesmerized by the ‘kala' exhibited to such an extent that he demanded a ‘sagar' of Service tax of Rs.1.61 Crores from the applicant along with the accoutrements of interest and penalties. Not happy with the damaging interiors the demand would do to their balance sheet, the applicant is before the CESTAT.

See our Columns tomorrow for the judgements