Jurisprudentiol - Friday's cases

By Vijay Kumar

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

CENVAT - Mere discharging 10% of price of exempted goods due to non-availability of data at beginning of Financial year, would not disentitle manufacturer from exercising their option later during same financial year under clause (ii) of Sub-Rule (3) of Rule 6 of CENVAT Credit Rules, 2004 - Prima facie case in favour - Stay granted: CESTAT

THE applicants are engaged in the manufacture of finished goods viz. Coke. In the manufacture of the said finished goods, various inputs were used on which they avail CENVAT credit. During the process of manufacture of said finished goods, exempted products viz. Coal Tar and coke oven gas also emerge. Since the applicants were not able to maintain separate accounts of the inputs used in or in relation to the manufacture of dutiable products i.e. coke and exempted products viz. Coal Tar and Coke Oven Gas, they were paying 8%/10% of the price of the exempted goods as per sub-rule (3) of Rule (6) of CENVAT Credit rules, 2004.W.e.f. 01.04.2008, the Rule 6 of CCR, 2004 was amended, and under clause (i), the earlier position has been continued. But, under Clause (ii), the assessee is given an option to pay an amount equal to the CENVAT Credit attributable to the input and input services used in or in relation to the manufacture of exempted finished goods by following the procedure prescribed under Sub-rule (3A) of said Rule 6 CCR, 2004.

Income Tax

Whether any TDS liability arises on payments made towards leasehold rights acquired by SEZ developer for further sale and not for its own use - NO: ITAT

ASSESSEE paid lease premium to CIDCO in order to acquire various lands lying at Navi Mumbai on lease basis. By virtue of said lease deed(s), assessee had acquired leasehold rights in the land for the purpose of developing, designing, planning, financing, marketing, developing necessary infrastructure, providing necessary services, operating and maintaining infrastructure administering and managing "SEZ". Assessee had also acquired the rights to determine, levy, collect, retain, utilize user charges fee for provision of services and /or tariffs in accordance with terms and conditions provided in the Development Agreement and the lease deed (s). Assessee had also acquired sole rights for marketing of the NMSEZ and the AO stated that no deduction of TDS had been made by assessee for any of such payments as lease premium fell within the ambit of section 194-I of the Act.

The issue before the Bench is - Whether any TDS liability arises on payments made towards leasehold rights acquired by the SEZ developer for further sale and not for its own use. And the answer goes against the Revenue.

Service Tax

Advance Ruling - Marketing and sales support in India to a firm in China and USA - Amounts to export of services: AAR

THE place of provision of service would be determined by rule 3 of Place of Provision of Service Rules, 2012 and the place of provision would be the location of the service recipients. The location of the applicant is within the taxable territory as its business premises are at Bengaluru, Karnataka. The recipients of service are located outside India. The service proposed to be provided by the applicant does not figure in the negative list specified in Sec. 66D of the Act. In terms of Place of Provision of Service Rules, 2012, the place of provision of service is outside India. The applicant would be receiving payment in convertible foreign exchange. The applicants, as well as the recipients of service, are independent legal entities, and not merely establishments of a distinct person, as evidenced by the certificates of incorporation under the respective laws, copies of which have been furnished by them. The provision of service by the applicant to the two recipients will amount to export of service within the meaning of Rule 6A of Service Tax Rules, 1994.

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