Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

VCES - Bank accounts of Rs. 1.22 Crores attached - Assessee files declaration under VCES - Release of attachment ordered on payment of Rs. 8 Lakhs: HC

THE petitioner has challenged the notice dated 1 October 2013 Issued by the Superintendent, Group X, Anti Evasion, Service Tax II, Mumbai (Respondent No.2) under Section 87(b) of the Finance Act 1994. By the impugned notice, the respondent No.2 has directed the petitioner bankers viz. Respondent Nos 5 to 8 banks not to allow any withdrawal from the account of the petitioner to the extent of Rs.1.22 crores as the same is due to the revenue from the petitioner

The Counsel for the petitioner states that so far as dues payable upto 31 December 2012 is concerned they have already made an application for availing of the benefit of the Service Tax Voluntary Compliance Encouragement Scheme (VCES). Further, under that scheme the petitioner's liability would be to pay only 50% of the outstanding liability by 31 December 2013. It is submitted that the entire amount of Rs.31,96,971 is payable in respect of dues prior to 31 December 2012. Therefore, at this stage nothing is payable by the petitioner to the revenue subject to petitioner's application for availing of the benefit of the scheme being accepted by the revenue.

Income Tax

Whether when assessee, subsidiary of foreign company, incurs certain expenses for acquiring shares from parent for allotting same under ESOP to employees, such expenses are to be allowed as revenue expenditure - YES: ITAT

ASSESSEE Company is primarily engaged in the marketing and distribution of healthcare products, specifically diabetes care products such as insulin formulations/other insulin products. It filed its ROI claiming deduction of certain expenses. The return filed by the assessee was selected for scrutiny. During the course of assessment proceedings the AO observed that employee of assessee Company had received shares of parent Company on discounted price and in this transaction the difference occurred in fair market price and discounted price had been paid by the assessee Company to its parent company and deduction of this difference had been claimed by the assessee as revenue expense. The issues before the Bench are - Whether when the assessee, a subsidiary of a foreign company, incurs certain expenses for acquiring shares from the parent for allotting the same under ESOP to an employee, such expenses, which represent the difference with the fair market value, are to be allowed as revenue expenditure and Whether expenses incurred for the benefit of third party are not allowable if the same are incurred on account of commercial expediency. And the verdict goes in favour of the assessee.

Central Excise

Brown Sugar is not an agriculture waste like Bagasse or Press Mud -it is residue of manufactured product viz. ‘sugar'- brown sugar is also marketed and used for human consumption - Appeal dismissed: CESTAT

THE appellants are engaged in the manufacture of sugar and availing CENVAT Credit on inputs. During the manufacture of sugar, a residue of manufactured product known as "Brown Sugar" remains. This residue sugar is brown in colour and sucrose content is less than normal/standard sugar. Most of the sugar-manufacturing units reprocess and convert the same into standard sugar and clear such sugar on payment of duty. However, sometimes, Brown Sugar is also sold which may be used for reprocessing and converting into normal sugar or used for normal consumption.

The appellant clears "Brown sugar" from the factory at NIL Tariff rate under Chapter heading 23.01 which covers "Residues and from food industries, including bagasse, other waste of sugar manufacture and oil cakes." Since the Appellant availed CENVAT Credit on various inputs but did not maintain separate accounts of inputs used in the manufacture of exempted "Brown Sugar", Revenue demanded an amount of Rs.93,484/- as 8% of sale price of brown sugar under Rule 6 (3)(b) of CENVAT Credit Rules, 2001.

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