Jurisprudentiol – Thursday's cases

By Vijay Kumar

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

Notfn. 97/2004-Cus - Appellant importing machinery under EPCG scheme but installing same in mines of M/s. KJS Ahluwalia and renting out same to them for consideration -actual user condition violated: CESTAT

THE appellant imported one new One New Nordberg Track Mounted (Cone Type) Crushing Plant and One New ExtecS5 Ft Double Screen respectively through Mumbai port claiming benefit of Notification No. 97/2004-Cus dated 17/09/2004 under an EPCG licence. Investigation conducted by the DRI revealed that the machines imported by the appellant under the EPCG scheme were actually installed and being used in the mines of M/s. KJS Ahluwalia at Nuagaon Iron Ores Mines, Guali, Keonjhar.

Alleging that there has been a violation of the conditions of Notification No. 97/2004-Cus and EPCG, the said machines valued at Rs.5,89,29,208/- were seized u/s 110 of the Customs Act.

Income Tax

Whether merger & acquisition can be mode of acquiring assets and whether such acquisition amounts to 'transfer' as per law - verdict favours assessee: Delhi HC

THE issues before the Bench are - Whether assets acquired by the merged entity pursuant to scheme of amalgamation u/s 394 of the Companies Act falls within the meaning of term ‘transfer' of the Income Tax Act; Whether merger and acquisition can be one of the modes of acquisition of an asset; Whether imported cars originally purchased between 1st March, 1975 and 31st March, 2001, but transferred to the merged entity after the cutoff date of the merger i.e. 1st April, 2001 is entitled to depreciation and Whether bar/prohibition in clause (a) to proviso to Section 32(1) would apply on such imported cars acquired pursuant to a scheme of merger. And the verdict goes against the Revenue.

Service Tax

Service tax has to be paid on gross amount charged for supply of SIM cards: CESTAT

WHAT emerges from the decisions of the Kerala and A.P. High Courts is that SIM cards/ Recharge Coupons are not “goods” but service and service tax alone can be levied on the supply of such cards/coupons. While considering the case of Vodafone India Ltd. by the Bombay High Court, these decisions of the Kerala and A.P. High Court was not brought to the notice of the Court and therefore, the said decision has to be considered as “per incuriam”. In view of the above factual and legal position, it is held that the benefit of Notification No.12/2003-ST will not be available to the appellant and service tax has to be paid on the gross amount charged for the supply of SIM cards. Therefore, the demand of Service Tax confirmed by the adjudicating authority is sustainable in law.

See our Columns Thursday for the judgements