Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Appeals - a typical case where at every stage of litigation irrelevant legal principles were pressed into service resulting in colossal waste of time of adjudicators including time of this Court: SC

TRIBUNAL instead of deciding the correctness of the conclusion went into the questions of law unwarranted by the facts of the case. Having regard to the paltry amount involved in the matter, the long and chequered history of the litigation and the resultant wastage of time of the various fora, coupled with the fact, the 1st appellate authority found some substance in the defence of the respondent, the Supreme Court was not inclined to interfere with the judgment under appeal.

Income Tax

Whether when assessee pays huge premium on investment in shares of its subsidiaries, same can be treated as disguised loan - Case remanded: ITAT

THE issues before the Bench are - Whether when the assessee had paid a huge premium on its investment in the share capital of its subsidiaries, the Revenue is justified to treat the amount of share premium as a disguised loan and Whether when the assessee had claimed section 10A exemption, and not excluded communication expenses incurred in foreign exchange in providing the technical services outside India, the Revenue is justified to reduce these charges from the export turnover and not the total turnover. The primary question is remanded to the AO.

Service Tax

Harvesting of sugar cane and transporting same to sugar factory for which labour is employed - activity is one of procuring and processing of goods belonging to client which is classifiable under BAS - appeal allowed: CESTAT

THE appellant is a private limited company whose share holders are mainly farmers. They entered into an agreement with M/s. Sanjivini SSK Ltd., for harvesting of sugar cane at the fields of member-farmers and transporting the same to the sugar factory. Remuneration for harvesting and transportation were paid on a tonnage basis i.e per ton of the sugarcane delivered at the factory. The department was of the view that the act of providing harvesting sugar cane and transporting the harvested sugar cane from the farmers' fields to the factory site is classifiable as ‘manpower recruitment or supply agency service' and is chargeable to service tax. Accordingly, a Service Tax demand of Rs.1,03,71,911/- was issued and confirmed by the CCE, Aurangabad.

See our Columns Friday for the judgements