Jurisprudentiol - Friday's cases

By Vijay Kumar

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

Multilevel Marketing Service Scheme - commission received by the appellants from FSL is the result of the marketing/promotion of FSL products by the appellants and constitutes a service (Business Auxiliary Service): CESTAT

THE appellants entered into an agreement with M/s Fashion Suitings Pvt. Ltd., Bhilwara Rajasthan for the purpose of selling the company's product as per the RCM Business Marketing Plan (RCM - Right Concept Marketing). According to terms and conditions of the agreement between the parties, FSL issues a scratch card having a password along with a standard product "Kit of the Products" by charging a price for it. Any person can submit an application through the internet using password and after acceptance becomes a distributor of the company for the purpose of selling the company's product under the RCM plan.

Income Tax

Whether income received by assessee by sub-leasing of leased out property and from maintenance and airconditioning hire charges has to be assessed as income from House Property or business income - HC partly rules against Revenue

THE issues before the Bench are - Whether the income received by the assessee by sub-leasing of already leased out property and from maintenance charges and air conditioning hire charges, is to be assessed as Income from House Property and not income from business; Whether when the rental income falls within the specific head of "income from house property", the mere fact of the assessee having business in letting out the property as stated in its memorandum, by itself, will not conclusively point out that the income is nothing but business income and Whether before invoking Section 22 of the Act, for the purpose of assessing the rental income as "income from the house property", the Revenue authorities must go into the question as to whether there was any exploitation of the property by their owner by giving it away for rent, before assessing such rental income as 'income from house property'. Verdict partly goes against Revenue.

Central Excise

Whether credit of ST paid on outward freight services in respect of MV parts cleared from factory and assessed in terms of s.4A of the CEA,1944 is available w.e.f 01/04/2008 - Pre-deposit waived and stay granted: CESTAT

SINCE as per the Rule 2(l) of the CCR,2004,"input service" includes outward freight only up to the place of removal and the place of removal is the factory, the department was of the view that the appellant is not eligible for the credit of service tax paid on outward freight incurred beyond the place of removal and accordingly sought to deny the credit availed by the appellant on such outward freight.

Though there is some merit in the Revenue's contention that w.e.f. 1-4-2008, in view of the amendment made in the definition of input service relating to outward freight and the decision of the High Court of Karnataka in the ABB case, CENVAT credit would not be available in respect of outward freight services, in appellant's own case in respect of their Hinjewadi Unit, the benefit of credit on outward freight services has been extended vide O-i-O NO. 15/CEX/2012 dated 23/4/2012 for the period after 1-4-2008. The same benefit cannot be denied to the Chakan unit of the appellant.

Customs

Misdeclaration - Human is to err - not really - Matter before Third Member

MISDECLARATION is one of the greatest crimes in Customs. It is human to commit an error - but not while declaring your product before Customs; if you do you will have to face the Customs terror. In this case even a departmental officer like the Commissioner (Appeals) felt that the Customs Act provided for rectification of a mistake. In the Tribunal Member (J) felt it was human to err, but Member(T) felt that there was deliberate misdeclaration and so the matter goes to Third Member.

See our Columns Tomorrow for the judgements