Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Appellant was not importer but somebody played fraud by using their name to import goods and which were confiscated and penalty was imposed on appellant - Commr(A) exonerated appellant from penalty but observed that further action may be taken to find whether appellant colluded/connived in fraud - as Commr(A) exceeded his jurisdiction by making such observations, this portion of order set aside - appeal disposed of: CESTAT

M/S UPS Jetair Express P. Ltd., Mumbai filed one bill of entry in the name of the appellant M/s Tata Consultancy Services Ltd. as importer. The Customs authorities at CSI Airport, Mumbai held the goods liable for confiscation and accordingly the same were confiscated and allowed to be redeemed on payment of fine. Penalty was also imposed on the appellant.

When the said order of adjudication was received by the appellant, the appellant was shocked as they had not imported any consignment through M/s UPS Jetair Express.

Therefore, they filed an appeal before the Commissioner (Appeals) on the ground that as they are not the importer and somebody had played a fraud by using their name in importing the impugned goods the penalty be waived.

Income Tax

Whether, for purpose of benefits u/s 80IB(10), area of rear courtyard enclosed by walls of residential unit is to be taken into account to compute built up area - NO: Bombay HC

THE assessee concern had submitted its return of income declaring a total income of Rs.53,620/- on 30.10.2006. An order was passed u/s 143(3) on 21.11.2008 on the returned income. Thereafter, CIT invoked its jurisdiction u/s 263 and set aside the order passed u/s 143(3) with a direction to AO to examine the relevant facts in connection with the claim of deduction u/s 80-IB(10). After examination, AO concluded that the assessee was granted permission on 07.07.2003 by the Margao Municipal Council for construction of row villas with built-up area of 1500 square feet comprising of ground floor and first floor and the compound wall in the property situated at Fatorda,Margao. The AO noted that the assessee had not fulfilled the conditions specified u/s 80-IB(10) essentially on the ground that only flats or apartments constructed on the land will have common areas sharing with other residential units and as such since the construction of villas/bungalows/row houses were independent and do not share common areas, the assessee did not fulfill one of the conditions specified u/s 80-IB(10) and as such invited the objections of the assessee.

The issues before the Bench are - Whether the area of the rear courtyard enclosed by walls of a residential unit is to be taken into account to compute built up area for the purpose of Sec 80IB(10) benefits; Whether in case there is no construction activity on the area of the courtyard which is open to the sky, it can still be included to compute the built-up area u/s 80IB and Whether the Tribunal can inquire into and get measured the courtyard which is not included in the built-up area and which is not the lis between the parties. And the verdict favours the assessee.

Service Tax

CENVAT - Rule 2(l) of CCR, 2004 - ST discharged by Recovery agents on seizing charges under BAS is an Input service for appellant registered as Banking and Financial Service provider prior to 01.04.2011 as it is an 'activity related to business' - Pre-deposit ordered of Credit taken post 01.04.2011: CESTAT

THE appellant is engaged in providing Banking and Financial Service and Insurance Auxiliary Service. They are also in the business of lending money for purchase of vehicles to their customers. When the customers who have taken the money default in repayment of loan, they have the right over the vehicles and they take possession of these vehicles by engaging the services of recovery agents. These recovery agents seize the vehicles and handover the same to the appellant and recover seizing charges.

The recovery agents discharged Service Tax on seizing charges under the category of Business Auxiliary Services. The appellant took CENVAT Credit of the service Tax paid on the seizing charges during the period 2007-08 to 2011-12 amounting to Rs.95,25,997/-.

The Revenue was of the view that CENVAT credit of the Service Tax paid on the seizing charges is not permissible under the law inasmuch as the seizing of vehicles is not an input service for the lending activity undertaken by the appellant.

See our Columns Tomorrow for the judgements