Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Registration fee collected from clients-sameis adjusted to first purchase made and in case no purchase is made registration fee is not refunded -in view of fact that registration fee is not to be refunded as such, same is required to be added to gross value of taxable service - Revenue appeal allowed: CESTAT

THE respondents are registered as provider of "On-line information and data base access or retrieval or both".During the course of verification of records, it was observed that the registration fee collected by the respondent was not declared in the ST-3 returns filed by them. Taking a view that the registration fee formed part of the value of the taxable service, a SCN for the period July 2001 to July 2003 was issued demanding service tax of Rs.32,00,857/- and imposition of interest and penalties.The adjudicating authority confirmed the demand but the same was set aside by the Commissioner(A) on merits as well as on time barand hence Revenue is in appeal before the CESTAT.

The registration fee is not to be refunded as such, hence is required to be added to the gross value of taxable service on which the respondents are liable to pay service tax.

Income Tax

Whether when assessee makes huge investment for acquiring controlling stake in loss-making company, its expenditure warrants disallowance u/s 14A for lack of earning dividend income - NO: ITAT

ASSESSEE is a holding investment company. It had made huge investment in M/s Ambuja Cement Ltd., to acquire the controlling interest in it by purchasing their shares. Assessee under section 14A claimed expenditure for the A.Y. 2008-09 and A.Y. 2007-08. The AO noticed that the business of the assessee was not yet set up and started, therefore, disallowed various expenses claimed in its P&L A/c. The issue before the Bench is - Whether when the assessee makes huge investment for acquiring controlling stake in a loss-making company, its expenditure warrants disallowance u/s 14A for the lack of earning dividend income. And the verdict favours the assessee.

Central Excise

Goods supplied against International Competitive Bidding - clause (e) or clause (g) of clause 8.2 of FTP is relevant for granting deemed export benefit and has no relevance whatsoever for granting exemption under Notification 6/2006-CE: CESTAT

A show-cause notice was issued to the appellant in July 2010 demanding duty for the period 2006 to 2007 by denying the benefit of the Notification on the ground that the applicant suppressed the material facts with intent to evade payment of duty inasmuch as the Project Authority Certificate has been issued under clause 8.2 (g) of Chapter 8 of the Foreign Trade Policy and not under clause 8.2 (f) of the said Chapter/Policy.

Holding that the benefit of the exemption notification 6/2006-CE has been correctly availed by the appellant, the orders confirming the duty liability and imposing penalties and interest were set aside and the appeals were allowed.

See our Columns Monday for the judgements