Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Appellant employing personnel belonging to parent company - 75% salary paid by group company in Germany and thereafter debit notes raised on appellant - method of disbursement of salary cannot determine nature of transaction - it is not Manpower Supply - Appeals allowed: CESTAT

THE appellant employed personnel belonging to their group company in Germany for a specific period. During this period, the appellant entered into agreements with the personnel for their employment. Since the personnel employed were foreign nationals, about 25% of the salary was paid in India in Indian currency and the balance 75% was paid by the group company in Germany to the credit of accounts of the personnel employed and thereafter, debit notes were raised on the appellant by the foreign entity towards reimbursement of the salary paid in Germany. For the income earned in India by the personnel, the appellant also discharged the Income Tax liability showing the personnel employed as their own employee.

The Central Excise department was of the view that the transaction involved comes within the purview of ‘Manpower Supply or Recruitment Agency services' and for the amount remitted to the German entity for payment of salary to the personnel employed in India, a show-cause notice was issued demanding Service Tax thereon.

Income Tax

Whether a notice for reassessment once issued and accepted voluntarily, can later be challenged on technical ground - NO: HC

ASSESSEE is a Company engaged in the manufacturing and sale of Pan Masala. During assessment, it was informed by the Central Excise Authority that search and seizure operation was conducted by them at the business premises of the assessee and its sister concern, during which, books of accounts and other relevant documents were impounded. On the basis of incriminating material, it appears that there was a suppression of production and clandestine/ unaccounted sale. Thus, AO had issued notice u/s 148, which was duly served on the assessee. The assessment order was passed u/s 143(3)/147, where various additions were made. The issues before the Bench are - Whether a notice for reassessment once issued and accepted voluntarily, can later be challenged on technical ground; Whether in case assessee itself is guilty of misstating facts, relief under constitutional remedy can be granted; Whether participation by assessee is sufficient for accepting the validity of a notice served and Whether a technical mistake would render any proceeding invalid per se. And the verdict goes in favour of the Revenue.

Central Excise

Entire case of Department against Respondent relies upon the evidence with regard to fictitious nature of transactions of M/s. Pasondia Steel regarding the supply of CR Sheets by showing their bogus productions and bogus sale - however this evidence is of no relevance to present case where claim of respondent is they have purchased HR Coils - no infirmity in order -Revenue appeal dismissed: CESTAT

THE respondents are manufacturers of Dense Phase Pneumatic Conveyor System, and the inputs being used by them are HR Coils, MS Plates, MS Channel, MS Angles etc. on which they availed CENVAT credit.The dispute in this case is in respect of HR Coils which according to the respondent, were purchased by them during the period from 27.04.2004 to 04.11.2005 from two registered dealers M/s. Rishav Trading Co. and M/s. Bansal Structural.

See our Columns Monday for the judgements