Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Small Scale Exemption - Whether the goods manufactured under loan licence agreement by other manufacturers are to be clubbed with goods manufactured in factory of loan licencee - Matter referred to Third Member for deciding stay: CESTAT

THE issue involved is about clubbing of clearances for the purpose of deciding eligibility of small scale exemption under Notification No 8/2003 CE. The appellant is manufacturing ophthalmic and liquid orals falling under Chapter 30 of the Central Excise Tariff at his only factory located in Allahabad and is availing small scale exemption under Notification No 8/2003 CE. In addition, the appellant is also getting the goods manufactured at different factories on loan licence agreements / job-work basis. The goods manufactured under such agreements are cleared on payment of duty by those manufacturers on payment of duty. It is the case of revenue that the goods manufactured by other manufacturers on job-work basis are to be clubbed with the value of clearances of the Allahabad unit of the appellant to decide the exemption limit under Notification No 8/2003 CE.

Income Tax

Whether when TDS credit is reflected in 26AS, AO is expected to give credit even without waiting for an application u/s 154 and also sanction refund if any - YES: HC

ASSESSEE filed return of income claiming refund of Rs. 2.11 lakhs. Return was processed at centralized processing unit in which TDS credit was not given of Rs. 3.78 lacs resulting into demand of Rs. 1.67 lacs. An application was made u/s 154 pointing out the mistake. However, since no reply / communication was received and no rectification was made, assessee went in writ. The issues before the Bench are - Whether when the TDS credit is reflected in 26AS, AO is expected to give the credit even without waiting for an application by the assessee u/s 154 and also sanction refund if any and Whether in an electronic regime, Revenue is expected to be more proactive in facilitating refunds of TDS Credit reflected in 26AS. And the verdict favours the assessee.

Service Tax

ST - the foremost and key pre-requisite to qualify as taxable service is that franchisee should have been granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor: CESTAT

THE department could not show that any logo or hallmark belonging to the appellant has been put on the packages manufactured/marketed by the sub-licensees. A laptop containing a label of ‘windows', only denotes that the processor or the operating system/software, as the case may be in the said laptop and by putting such label, the laptop manufacturing company does not represent ‘Microsoft' or become the franchisee of ‘Microsoft'. Admittedly, in a franchisee transaction the franchisee loses his individual identity and represent the identity of franchisor to the outside world, as in the case of ‘McDonald' the customers are not concerned with who owns the ‘McDonald's restaurant (franchisee). The customers identify it with ‘McDonald (the franchisor).

The department failed to show that the appellant (the franchisor) granted representational rights to franchisee to sell or manufacture or provided service identified with them (the appellant i.e. the franchisor).

See our Columns tomorrow for the judgements