Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Completion and finishing services, repair, alteration or renovation and restoration or similar services provided, whether in respect of a new building or an "old"building would attract service tax liability under Section 65 (25b) - on the question of limitation, difference of opinion - Matter referred to Third Member: CESTAT

THE activity undertaken by the appellant falls under both clauses (c) and (d) of Section 65 (25b). Both these clauses do not specify that they should be undertaken in respect of a new building only and even if they are undertaken in relation to an old building, the provisions of these sections would apply. In fact repair, alteration, renovation or restoration or similar services would be mostly applicable to old buildings only. Therefore, the argument of the appellant that since the activities have been undertaken in respect of an old building and not a new building, service tax liability is not attracted would be ignoring the explicit provisions of law. Question of limitation referred to Third Member.

Income Tax

Whether even if assessee does not claim expenditure of interest liable to TDS u/s 194A, it cannot escape the rigour of Sec 40(a)(ia) - YES: ITAT

THE assessee is a Private Limited company. The AO noticed that the assessee had credited interest to its sister concerns without deducting tax at source u/s 194A. The AO treated the assessee as an ‘assessee in default' and raised demand u/s 201 equal to the amount of tax deductible at source. The AO has also levied interest u/s 201(1A). The CIT(A) dismissed the assessee's Appeal. The issue before the Bench is - Whether even if the assessee does not claim the expenditure of interest liable to tax deduction at source u/s 194A, it cannot escape the rigour of Sec 40(a)(ia). And the answer goes against the assessee.

Central Excise

Naphtha cleared under exemption to M/s RCF against International Competitive bidding for manufacture of fertilizers - "actual use" of goods is a post-clearance condition which is required to be fulfilled by the buyer/user and not appellant as they cannot be expected to ensure the precise use of the goods by M/s RCF - Duty demand untenable - Appeals allowed: CESTAT

THE appellant was supplying Naphtha in terms of exemption notification 6/2002-CE, 6/2006-CE to M/s. Rashtriya Chemicals & Fertilizers Ltd. against the International Competitive Bidding for use in the manufacture of fertilizers.

The jurisdictional authorities "found" that the Naphtha so supplied to M/s RCF was being burnt in the steam generation plant to generate steam which in turn was consumed by various plants like Urea Plant, Ammonia Plant, Turbo Generators, Chemical Group Plant and Heavy Water Plant. Steam generated is consumed in Turbo Generators for generating electricity and also used in S.M. Header for further distribution to Organic Chemical Plant and Heavy Water Plant.

So, it is the Revenue contention that in respect of Naphtha used for purpose other than manufacture of fertilizers, appellants are not entitled to duty free clearance and are required to pay excise duty on the said quantity.

See our Columns Tomorrow for the judgements