Jurisprudentiol – Friday's cases

By Vijay Kumar

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

Amounts of Rs.1210 Crores and Rs.283 Crores given by M/s RCOM to appellant -When such payments have been made to appellant before firm came into existence, it is not understood as to how this amount can be treated as consideration received for services rendered by appellant: CESTAT

THE DGCEI received intelligence that M/s. RIL has been providing infrastructural support services to M/s. RCOM since April 2007 and though M/s. RIL were in receipt of sums from their service recipient towards charges for the service so rendered, they were not discharging their service tax liability. Investigation conducted revealed that M/s. RIL had entered into a master service agreement dated 10/04/2007 with M/s. RCOM. In this agreement, apart from the nature of the services to be provided by M/s. RIL and the service charges payable, it was specifically mentioned that financial support also would be provided by the service recipient to M/s. RIL as advances or customer credit which should be settled by way of set-off against the service charges payable to M/s. RIL.

Information technology service was brought under the service tax net with effect from 16/05/2008 -Consequently, the activity of testing and analysis of IT software was also brought into tax net by amending definition -testing and analysis of IT software would be leviable to service tax only with effect from 16/05/2008 - Revenue appeal dismissed: CESTAT

THE appellants were engaged in providing services relating to testing and analysis of computer software for their clients located in India and abroad during the period 01/07/2003 to 31/03/2008. However, they did not take any service tax registration nor did they discharge any service tax liability.

The CCE, Pune-I dropped the demands on the ground that testing IT software was not part of the Technical testing and analysis service until 2008 and the activity of development of IT software itself was excluded from the scope of service tax until 2008 and, therefore, the service tax demand cannot be sustained. Not ready to let go of such huge demands, the Revenue wanted to test the merits of the order before the CESTAT.

Income Tax

Whether when assessee fails to receive her alimony and then she settles her past and future claims for certain lumpsum amount, such receipt is to be treated as capital receipt -YES: ITAT

THE issues before the Bench are -Whether when the assessee fails to receive her alimony and then she settles her past and future claims for certain lumpsum amount, such receipt is to be treated as capital receipt and Whether accumulated monthly installments of alimony can be taxed u/s 56(2)(vi). And the verdict goes against Revenue.

Central Excise

CENVAT -Bagasse arising during manufacture of sugar and molasses -no need to pay amount of 5%/10% on ground of common Inputs/Input Services: CESTAT

THE applicants are engaged in the manufacture of sugar and molasses. For the manufacture of sugar, sugarcane is crushed and ‘bagasse' is generated as waste in the course of manufacture of sugar. Revenue is of the view that the applicant has availed credit in respect of common inputs used in or in relation to manufacture of final product cleared on payment of duty as well as without payment of duty. The applicant had not maintained separate record regarding inputs, therefore, the applicants are liable to pay 5% / 10% of the price of ‘bagasse' which was cleared without payment of duty.

See our Columns Tomorrow for the judgements