Jurisprudentiol - Monday's cases

By Vijay Kumar

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

As Electricity is goods chargeable to duty under CE Tariff as well as under Maharashtra Value Added Tax Act, 2002 supply of electricity to tenant amounts to sale of goods and not supply of service: CESTAT

THE appellants are the owner of premises which have several units and were given on rent to various persons. On this rent collected, the applicant is paying Service Tax under the category of 'Renting of Immovable Property Service'. They are also involved in the activity of maintaining and repairing of the building and the applicant are paying Service Tax on this activity also. The department is more than happy to receive these Service Tax payments on time.

However, the CCE, Pune-III has an objection to another activity which the applicant does - objection to the fact that the applicant is not diligent in including the following charges collected from their tenants while paying Service Tax on the activity of 'Renting of Immovable Property'. Inasmuch as the applicant is under an obligation to supply electricity to their tenants and for that a common electricity connection has been taken by the applicant from MSEB and separate meters have been installed in each of the premises and on the basis of reading in the meter the applicant is charging electricity charges from the tenants. Further, when electricity is not being supplied by MSEB, the same is supplied through DG set to the tenants and on that also they are charging electricity charges from the tenants.

It is the Revenue view that electricity charges recovered from their tenants is to be part of the service of 'Renting of Immovable Property Service' in view of the provisions of Rule 5 of Service Tax (Determination of Value) Rules, 2006 and, therefore, Show-cause notices were issued to the appellants demanding Service Tax running into crores of rupees and seeking imposition of equivalent penalty and interest.

Income Tax

Whether provisions of deemed dividend extend to related parties also - NO: HC

THE question before the Bench is - Whether the provisions of deemed dividend extend to related parties also. And the answer is NO.

Customs

One-sided adjudications based upon allegations made in show cause notice needs to be avoided as same shakes public confidence in administration of justice: CESTAT

HOLDING that the order has been passed in gross violation of principles of natural justice, without expressing any opinion on the merits of the case, the Bench deemed it fit to set aside the same and remand the matter to the Commissioner for de novo adjudication.

See our Columns Monday for the judgements