Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Modvat- Deemed Credit - Assessee not responsible if supplier had not paid correct duty; Assessee not expected to verify with Department whether supplier had paid duty - Supreme Court

IT is perceivable from the factual matrix that the only allegation is that at the time of MODVAT verification it was found that the supplier of the inputs had not discharged full duty liable for the period covered under the invoices. This lapse of the seller is different and not a condition or rather a pre-condition postulated in the notification. The proviso postulates and requires “reasonable care” and not verification from the department whether the duty stands paid by the manufacturer-seller. When all the conditions precedent have been satisfied, to require the assessee to find out from the departmental authorities about the payment of excise duty on the inputs used in the final product which have been made allowable by the notification would be travelling beyond the notification, and in a way, transgressing the same. This would be practically impossible and would lead to transactions getting delayed.

Income Tax

Whether when Revenue had issued notice for reassessment on ground that Sec 10B deduction had resulted in underassessment of income, and deduction on account of deferred revenue expenditure was inadmissible, it amounted to tangible material which had live link to validate formation of opinion - NO: Delhi High Court

THE assessee company is engaged in the business of manufacture and sale of optical and magnetic storage media. The assessee had two units in Noida and Greater Noida, both of which were export oriented units and eligible for deduction under section 10B. The assessee had claimed deduction under section 10B in respect of the profit derived from its unit in Noida, but not claimed any such deduction in respect of its Greater Noida unit on account of the unit being in loss.

THE issue before the Bench is - Whether when Revenue had issued notice against the assessee for reopening of assessment on the ground that deduction under Section 10B had resulted in underassessment of the assessee's income, and the deduction on account of deferred revenue expenditure being expenditure on technical know-how, was inadmissible and should have been disallowed, it amounted to tangible material which had live link to validate a legitimate formation of opinion. And the verdict goes against the Revenue.

Service Tax

Franchisee Service - CESTAT upholds demand against Delhi Public School Society under normal period of limitation: CESTAT

THE appellant, The Delhi Public School Society is engaged in entering into agreements with different entities interested in establishing schools in different areas. As per the agreements, named as ‘Education Joint Venture', the appellant (assessee) permits, allows and grants a revocable license to the party to the agreement to use the name DPS, its Logo and motto for the purpose of the school to be established. The school shall be established, managed and run by a Board of Management (BOM) consisting of members nominated by the assessee and the parties. The parties are required to pay the consideration, in advance commencing from the year the school starts functioning.

It is the case of revenue that the consideration received by the appellant is taxable under the category of Franchisee service and confirmed the demands under extended period. The appellant are before the CESTAT challenging the demands.

Tomorrow is a holiday - Janmashtami

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