Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Service Tax - Tour operator - No tax on outbound tours - service tax is not tax on pursuit of profession of providing taxable service but is tax on provision of taxable service; Adjudication Authority seeking administrative advice disturbing: CESTAT

DO provisions of the Act have an extra territorial reach and operation? Qua the text and context of provisions of the Act, it is clear that service tax is a destination based consumption levy. The taxable event, in all events, qua the provisions of the Act, in particular provisions of Section 65, is on provisions of a taxable service. Thus, where a service is provided and consumed outside the territorial locus of the Act, the consideration received therefor would not be subject to levy of service tax, under the substantive and processual provisions of the Act.

Income Tax

Whether any payment made for transfer of copyright for perpetual period of 99 years is not royalty but transaction for sale - YES: Madras HC

THE assessee is a person carrying on business in the purchase and sale of Telugu films. The assessee filed return of income admitting a total income of Rs 33,10,829/-. The case was selected for scrutiny and a notice under Section 143(2) of the Income Tax Act, 1961 was issued on 24.08.2010. The assessment proceedings were completed under Section 143(3) of the Act and the order of assessment dated 29.12.2011 was passed. The Assessing Officer made various additions; The issue before the Bench is - Whether any payment made for transfer of copyright for a perpetual period of 99 years is not royalty but a transaction for sale. And the verdict favours the assessee.

Central Excise

If appellant has not included the amortized cost of dies or cost of drawings and designs developed for manufacture of excisable goods, consideration received would be includable in AV of goods manufactured- submission that dies are exempted from excise duty since captively consumed and hence cost not includible is wrong - Demand upheld: CESTAT

THE appellant is a manufacturer of motor vehicle parts, IC Engine etc. Investigation conducted revealed that the appellant received drawing and design/development charges from the various customers, by raising either debit notes or invoices, but did not include the value of the same on the goods manufactured with these drawings and designs for the purposes of payment of duty. The appellant also issued debit notes for charges towards technical study and assistance to develop an indigenous 10PO8 pressure die cast item at the request of the customer. The appellant did not include the cost of amortization in the value of castings manufactured using these dies.

See our Columns Thursday for the judgements