Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Import of goods declared as stock lot of colour picture tubes - wrong tariff entry - whether mis-declaration - matter referred to Third Member: CESTAT

REVENUE entertained a view that description of the goods in the invoice is not correct as also the classification of the same under heading 8540 4000 is not correct. The goods are properly classifiable under heading 8540 0090 and chargeable to customs duty at the rate of 12.5%. Accordingly, the matter was taken up for adjudication by the Additional Commissioner of Customs, who observed that inasmuch as the wrong classification was claimed by the importer and the goods were not stock lot and were new goods as observed by the Deputy Commissioner, the same were also undervalued. He accordingly, enhanced the value of the goods on the basis of NIDB data. Accordingly, vide his order, he confiscated the goods with an option to the appellant to redeem the same on payment of redemption fine of Rs.3 lakhs and penalty of Rs.1.50 lakhs was also imposed upon the importer without any reference to the section of Customs Act under which such penalty was being imposed.

Income Tax

Whether it is imperative that in order to fall under residuary clause 'general public utility', charitable institution has to be funded by voluntary contributions - NO: Delhi HC

ASSESSEE is a 'Not-for-Profit' Society promoted by the Ministry of Commerce and Indian Industry, duly registered under the Societies Registration Act, 1860. It was registered as a charitable society in the year 1996 under the residuary clause of Section 2(15). It had prayed for quashing of the order passed by DGIT(E) denying them registration u/s 10(23C)(iv) and for issue of mandamus directing that registration/approval under the said Section should be granted. Department had not disputed the identity of the petitioner society founded and promoted by Department of Commerce, Ministry of Commerce and Industry, Government of India. The issues before the Bench are - Whether in order to discern whether an activity is business, trade or commerce, profit motive is determinative and a critical factor; Whether when the propelling motive of a concern is 'general public good', it can be said it is working for profit; Whether in case an assessee carries on charitable activity under the residuary head 'general public utility', it would be considered as business; Whether it is imperative that in order to fall under the residuary clause 'general public utility', a charitable institution has to be funded by voluntary contributions; Whether in case of charitable institutions, accumulation of funds is for business purposes only and Whether activity performed with the object of providing services to trade, commerce or business can be considered as of charitable nature. And the assessee's writ is allowed.

Service Tax

"Commercial training or coaching" - Education taxable irrespective of nomenclature or description of institute or establishment: CESTAT LB

A Division Bench of the Tribunal has referred for consideration of a Larger Bench, the issue pertaining to interpretation of "Commercial Training or Coaching", taxable service specified in Section 65(105) (zzc) of the Finance Act, 1994 (the Act). Section 65(26) defines the expression "Commercial Training or Coaching"; and Section 65 (27), the expression "Commercial Training or Coaching Centre". By Finance Act, 2010 an "Explanation" was appended to Section 65(105) (zzc), with effect from 1.7.2003.

The Division Bench prima facie doubted the vitality of reasons recorded in the decision in Magnus Society vs. C.C. & C.E., Hyderabad - (2008-TIOL-1812-CESTAT-BANG), which tried to mark a distinction between activities of an institution imparting a particular skill such as in computers, computer operations, spoken English or accountancy on the one hand and a proper format of education imparted by institutions imparting "higher learning" such as MBA, management, computer science and such other disciplines; and concluded that institutions imparting higher learning like MBA etc. cannot be characterized as commercial training or coaching centres; that institutions preparing students for entrance examination to various universities could be called commercial training or coaching centre; but not so institutions recognized by law.

See our Columns Tomorrow for the judgements