Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

CENVAT – Sales Commission Services are not Input Services - If there is any conflict between jurisdictional High Court and CBEC circular, the decision of jurisdictional High Court is binding on department rather than CBEC circular: HC

THE Respondents had availed CENVAT Credit on Sales Commission Services obtained by them.

The adjudicating denied this credit but the Commissioner (A) allowed the appeal of the assessee accepting their contention that sales commission paid is an activity relating to their business incurred before the clearance of goods and that on the basis of orders procured by the commission agent, clearances are made.

In appeal before the CESTAT, the Revenue submitted that the 'sales commission services' cannot fit into the definition of 'Input service' u/r 2(l) of CCR, 2004 in view of the Gujarat High Court decision in the case of M/s. Cadila Healthcare Ltd. - 2013-TIOL-12-HC-AHM-ST.

Income Tax

Whether Sec 10A benefits are available in case a partnership firm gets converted into company with partners becoming shareholders and dissolution of firm involves no transfer of assets - YES: HC

THE assessee is engaged in the business of exporting software having its Unit at Software Technology Park. The assessee-Company had filed return of income claiming 100% exemption under Section 10A of the Act. The Assessing Officer verified the records and found that the assessee was originally a partnership firm formed on 29-11-1993. Subsequently, it was reconstituted in the year 1995 as well as in the year 1997. The name of the firm was changed from M/s. Foresee Software Consultant to M/s. Foresee Information Systems on 22-08-1995. From the year 1995-96, the firm was exporting software to the US based company M/s. Effone Software Inc., and it had claimed deduction under Section 80HHE from the assessment year 2000-01 and continued up to 2002-03. On 24-07-2001, the Partnership Firm was converted into a Company and the same business was continued after conversion of the Firm into company.

THE issue before the Bench is - Whether Sec 10A benefits are available in case a partnership firm gets converted into a company with partners becoming shareholders and dissolution of firm involves no transfer of assets. And the verdict favours the assessee.

Customs

Boric Acid imported for non-insecticidal purpose - in view of Sect 38 of Insecticides Act appellants are not required to obtain any permission from Ministry of Agriculture - Accordingly, they are entitled for benefit of DGFT Notifn 2/2006 and eligible for benefit of DFIA Scheme: CESTAT

THE appellant imported a consignment of Boric acid under DFIA scheme and claimed duty free benefits. As per the provisions of DGFT Notification no. 2 (RE-2006)/2004-2009 dated 07.04.2006 boric acid for non-insecticidal purpose falling under Chapter 2810 0020 is freely importable subject to production of an import permit issued by the Central Insecticide Board and Registration Committee under the Ministry of Agriculture.

As the appellant failed to produce such permission, therefore, goods were confiscated and were allowed to be redeemed on Redemption Fine and Payment of duty. Penalty of Rs. 2 lakhs was also imposed.

The said order was challenged by the importer and the Commissioner (Appeals) reduced the Redemption Fine and penalty but rest of the Adjudicating Authority's order was confirmed.

See our Columns Tomorrow for the judgements