Jurisprudentiol - Friday's cases

By Vijay Kumar

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

MODVAT/CENVAT Credit on capital goods - Amendment vide Notification No 25/1996 CE(NT) dated 31.08.1996 is only clarificatory and has retrospective application - CESTAT order denying credit on goods falling under CETH 84.74 is set aside: HC

THE issue involved in the appeal is admissibility of MODVAT credit on goods falling under CETH 84.74 for the period from 23.7.1996 to 31.8.1996. For the period prior to 23.7.1996, there is no dispute on admissibility. However, with effect from 23.7.1996, after the insertion of new definition of capital goods under Rule 57Q, goods falling under CETH 84.74 were specifically excluded from the eligibility in sub-clause (a) of Rule 57Q(1). Also with effect from 31.8.1996, vide Notification No 25/1996 CE(NT), the definition of capital goods was amended again and goods falling under CETH 84.74 became eligible for credit. So this dispute is limited to the period from 23.07.1996 to 31.8.1996.

Income Tax

Whether when CIT has not disposed off application of assessee under section 12AA within period of six months, registration would be deemed as granted to trust - Issue goes to Larger Bench of HC

ASSESSEE was created by an enactment of UP urban planning and development Act for the objects of planning, Development and Improvement of cities, towns and villages for general public utility. Assessee applied for registration u/s 12A but the same was not disposed of within the time prescribed under Section 12AA(2). Assessee claimed exemption u/s 11 & 12 and exercised the option under clause (2) of Explanation to section 22(1) for the receipts / income remained unutilized during the previous year. The only issue before the Bench is - whether when the CIT is yet to decide the application filed u/s 12AA, the registration would be deemed as granted to the trust. And the issue goes to the Larger Bench.

Service Tax

Appellant collecting development and maintenance fees from flat buyers to discharge payments towards local taxes, water and electricity charges - appellant was acting as pure agent and was performing custodial functions - demand of ST under 'Management, maintenance or repair services' not sustainable - Stay granted: CESTAT

THE appellant is also engaged in construction of residential flats on which they discharged service tax liability. However, they collected maintenance charges/deposits from the flat buyers which are used for payment of property tax, electricity charges, water charges, security charges and other maintenance expenses till such time the flats are actually handed over to the Housing Co-operative Society found by the buyers of the flats. The department was of the view that such charges/deposits recovered from the flat buyers are taxable under the category of ‘Management, Maintenance or Repair Service' and accordingly, demanded service tax amounting to Rs.1,21,54,570/- during the period 16/06/2005 to 30/09/2007.

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