Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Spoken English Course - Liability to Service Tax - Appeal Dismissed: CESTAT

THE appellant is a Professor with a string of degrees namely, MA, LLB, DEPS, MTS [London]. He started an academy of English language in the year 1998. The faculty members include his family members who too are qualified and proficient in English language. There are many courses being conducted viz. Spoken English/Business English/Advanced Communication skills/IELTS Training etc. The fees vary from Rs.3000 to Rs.5500 per student depending upon the course.

In January, 2004, the Professor got himself registered with the Central Excise department for payment of Service Tax under the category "Commercial Coaching & Training Services". He paid a total Service Tax of Rs.1,40,180/- for the period from January 2004 to October, 2004.

Subsequently, in the month of November, 2004, he filed a refund claim on the ground that ‘Coaching in Spoken English' comes under the category of ‘Coaching in Foreign Languages' and is exempted from Service Tax vide Notification no. 9/2003-ST.

Income Tax

Whether when holding company transfers its shares to wholly owned subsidiary at book value, same can be taxed under provisions of Gift Tax - YES: Madras High Court

THE issues before the Bench are - Whether holding and subsidiary company are different entities; Whether in case the facts are quite clear, there is any necessity of lifting the corporate veil and Whether when the holding company transfers its shares to its wholly owned subsidiary at book value, the same can be taxed under the provisions of Gift Tax. And the verdict goes against the assessee.

Central Excise

Amount of 5%/10% paid by manufacturer in terms of rule 6 of CCR, 2004 is ‘recovered' from customers - Revenue taking a view that the said recovery should be treated as "additional consideration" and again the 5%/10% should be paid under rule 6 on the said amount - Difference of Opinion: Matter referred to Third Member: CESTAT

THE appellant,a PSU, manufactures mechanical, electrical & electronic equipment.They also avail CENVAT credit and manufacture both dutiable and exempted final products but do not maintain separate accounts/inventory of inputs used for the aforesaid purpose. Therefore, in terms of the provisions of Rule 6(3) of the CCR, 2004 they were paying amount equal to 5%/10% of the sale value of the exempted final products at the time of their clearances. However, in the invoices to the customers, the amounts of 5%/10% of the sale price were being mentioned as " CENVAT Credit reversal", and these amounts were being recovered from their customers.

The Department was of the view that the amount being recovered from the customers has to be treated as "additional consideration" for the goods sold and as such, the same would be part of the sale price. And that the manufacturer should pay 5%/10% on these amounts of 5%/10% collected!

CENVAT - Appellant manufacturing goods as well as providing output service - Credit availed on Input services utilized for payment of CX duty - once credit is admissible it forms part of common pool and manufacturer can utilize Credit for both, ST on output services or CX duty -Appeal allowed: CESTAT

THE appellants are engaged in the manufacture of excisable goods as well as in providing taxable output services of 'Erection and Commissioning'. The applicants availed CENVAT credit of service tax on services like labour, erection, installation etc. which are in relation to providing output services. This credit has been utilized for the payment of Central Excise duty at the time of clearance of manufactured excisable goods.

It is the contention of the Revenue that this cross utilization of CENVAT credit availed on Input services used for providing output services is not permissible.

Resultantly, a demand notice was issued demanding CENVAT credit of Rs.1,28,02,575/- and the same was confirmed by the CCE, Pune-I along with imposition of penalty and interest.

Wishing You

See our Columns Monday for the judgements