Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Service Tax - transactions in lottery tickets are not liable to service tax; Superintendent's Letter quashed: HC

IN the light of Sub-Section (1) to Section 65B read with Sub-Section (44) thereof lottery is excluded from the definition of ‘service' being ‘actionable claim'; Even under Sub-Section (34) of Section 65B read with Sections 66B and 66D lottery stands excluded from the purview of service tax under the Finance Act, 2012 as being one in the ‘negative list'; The activity of the Petitioner comprising of promotions, organising, reselling or any other manner assisting in arranging of lottery tickets of the State Lotteries does not establish the relationship of a principal or an agent but rather that of a buyer and a seller and, on principal to principal basis in view of the nature of the transaction consisting of bulk purchases of lottery tickets by the Petitioner from the State Government on full payment on a discounted price as a natural business transaction and, other related features like there being no privity of contract between the State Government and the stockists, agents, resellers under the Petitioner.

Income Tax

Whether sum paid to financial consultant as Corporate Debt Restructuring fees for securing waiver of interest is to be treated as capital in nature - NO: HC

THERE was a payment of Corporate Debt Restructuring expenses to financial consultants in connection with waiver of loans. During assessment, AO had noted that assessee paid an amount to the financial consultant M/s. Brescon Corporate Advertisers Ltd., who provided their professional services in connection with the scheme of CDR by negotiating with the banks and financial institutions, which eventually helped the reduction of interest burden of the assessee. They were claimed to be the revenue expenditure aimed at reduction of recurring revenue expenditure of interest. The AO held that the assessee would derive benefit of enduring nature as a result of CDR exercise and, therefore, it was of the opinion that all the expenses are to be treated as capital expenditure and the same were needed to be disallowed and added to the income of the assessee. The issue before the Bench is - Whether sum paid to financial consultant as Corporate Debt Restructuring fees for securing waiver of interest is to be treated as capital in nature and Whether remission of loan amount taken can be taxed as a revenue receipt. And the verdict goes against the Revenue.

Central Excise

Exemption under Notification No.10/1996 CE to goods captively consumed in manufacture of Animal Feed - ‘Niacin' captively consumed for manufacture of ‘Niacin premix' - Exemption is not admissible to Niacin: CESTAT

THE appellant are manufacturing Niacin on job work basis which is again used captively for manufacture of Niacin Premix. "Niacin feed premix" classifiable under chapter heading 2309 90 90 of Central Excise Tariff Act, 1985 and liable to nil rate of duty and there is no dispute on this. However, since Niacin is used captively in the manufacture of goods which attract Nil rate of duty, revenue demanded duty on Niacin. It is the contention of the appellant that they are entitled for the benefit of exemption under Notification No 10/96 CE which exempted goods falling under Chapter 23 used captively for manufacture of Animal Feed. It is the contention of revenue that ‘Niacin feed pre-mix' by itself is not animal feed, but is added to Animal Feed. Hence the benefit of exemption under Notification No 10/96 CE is not admissible.

See our Columns Tomorrow for the judgements