Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Composite services of shifting/transportation of materials where loading and unloading is ancillary to main activity of transportation are classifiable under GTA Services - pre-deposit waived & stay granted: CESTAT

THE Applicant had received various works contracts from M/s. Usha Martin Ltd.(UML) for unloading of ores at the Railway siding from the Railway rakes and shifting/transportation of the said materials from Tata Goods Shed(TGS)/Goods Dispatch Yard(GDY) at Tatanagar to the stacking yard in M/s. UML's works. The rate quoted is for the composite activity on per M.T. basis. In all these cases, necessary tools, tackles, labour, material handling equipment and vehicles were to be arranged by the Applicant and they are also liable to pay demurrage/wharfage charges on failing to unload/load goods within free time allowed by the Railway.

The SCN demanding Service Tax of Rs. 2,16,17,110/- from the Applicant under the category of 'Cargo Handling Service' was confirmed by the CCE, Jamshedpur along with imposition of penalties on the Applicant, the Partner of the applicant and M/s Usha Martin Ltd.

Income Tax

Whether when agreement which assessee entered into gets terminated, all expenses relating to such agreement is allowable as revenue expenditure - YES: ITAT

THE assessee is engaged in the business of Realtor and Contractor. It used to enter into agreements with parties in need of huge parcel of land for construction and development work, for aggregating small pieces and finally handing over to them. Assessee entered into an agreement with 'M' for sourcing and aggregating land to the extent of 52 acres. On the basis of this agreement, the assessee estimated his profit and included the same amount of profit in the original return at Rs. 3.46 crores. Subsequently a revised return was filed at Rs. 34.24 lacs. The return was revised on the basis that the sale agreement entered into between the assessee and has been frustrated and the agreement was not materialized in accordance with the terms of the agreement. Later on, the agreement itself was cancelled.

AO did not accept the revised return observing that as against the overall extent of 52 acres of land, the assessee has already procured 13.12 acres and therefore, the agreement was in full force and in such circumstances, a loss cannot be anticipated as argued by the assessee. Revised return can be filed only if the assessee discovers any omission or any wrong statement in the original return. There is no such omission or a wrong statement and therefore, there is no valid ground to file a revised return.

The issue before the Bench is - Whether when agreement which assessee entered into gets terminated, all expenses relating to such agreement is allowable as revenue expenditure. And the answer is YES.

Central Excise

Excess amount of CENVAT credit reversed by assessee is not a duty, therefore, provisions of section 11B of CEA, 1944 are not applicable - Assessee is entitled to take suomotu credit - no requirement of filing refund claim - Appeal allowed with consequential relief: CESTAT

THE appellant noticed that they have reversed excess CENVAT credit of Rs. 9,96,585/- during the period 05.09.1994 to 20.10.1994. Therefore, they suomotu took credit of the excess amount reversed by them.

Revenue found this out and issued a demand notice alleging that the appellant could not have suomotu taken the credit and ought to have followed the proper procedure of refund.

Both the lower authorities confirmed the demand and, therefore, the appellant is before the CESTAT.

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