Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Service received by foreign Head office of company having branch in India, from service providers abroad. Is branch in India liable to pay ST? Matter referred to Third Member: CESTAT

THERE is no dispute that:- the service providers i.e. the CRS Companies are located abroad and they do not have any office in India; the agreements for providing service are between the Appellant's head office at Bangkok and the CRS Companies; and the payments for the services rendered by the CRS Companies have been received by them directly from Thai Airways, Bangkok and as such the entire payments for the services, in question, have been made outside India.

The dispute is only on the point as to whether the Appellant- the branch office of Thai Airways, Bangkok in India, can be treated as the recipient of the service provided by the CRS Companies and on this basis subject to service tax under reverse charge mechanism of Section 66A.

Income Tax

Whether role of Audit parties is to point out factual mistakes and not to advise AO on legal matters - YES: ITAT

THE issues before the Bench are - Whether role of the Audit parties is to point out factual mistakes and not to advise the AO on legal matters and Whether, if an AO, reopens the assessment on the legal advice of the audit party, it cannot be held as the formation of an independent opinion for the purpose of section 147. And the verdict goes against the Revenue.

Customs

Import under Notfn. 21/2002-Cus: Customs ((Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996: Interest is chargeable because of provisions of Rule 8 and not because of Section 28AB - Rule 8 applies by its own force and on its own strength – Petitioner liable to pay interest – Writ Petition dismissed: HC

RULE 8 does not incorporate Section 28AB. Rule 8 also does not make the pre-conditions mentioned in Section 28AB, part and parcel of the said Rule. Levy of interest for short levy of duty is prescribed by Rule 8 itself. Interest is chargeable because of the provisions of Rule 8 and not because of Section 28AB. Pre-conditions or the conditions mentioned in Section 28AB do not get incorporated in Rule 8. Rule 8 applies by its own force and on its own strength. Reference to Section 28AB in Rule 8 is only for the purpose of rate of interest. The rate of interest payable under Rule 8 was/is the rate of interest fixed by the notification issued under Section 28AB. It is to or for this limited extent, reference is made to the notification issued under Section 28AB. Clearly, therefore, the petitioner was liable to pay interest under Rule 8 at the rate as was fixed by the applicable notification under Section 28AB.

See our Columns Wednesday for the judgements