Jurisprudentiol - Monday's cases

By Vijay Kumar

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

Inter-unit transfer of excisable goods consumed by recipient unit for further manufacture and clearance of goods to its own units - Valuation - Whether cost of material is 100% or 115%/110% - Matter referred to Larger Bench in view of conflicting views between Mumbai and Chennai Benches: CESTAT

THE appellant unit is engaged in manufacture of packing material which is supplied to its own units on payment of duty in terms of Rule 8 of the Central Excise Valuation (Determination of price of excisable goods) Rules, 2000. The raw material, i.e., paper and paper board required for manufacture of packing material is received from their Bhadrachalam unit. Bhadrachalam unit is paying excise duty on paper and paper board by adopting value at 115%/110%% of the cost of production. The appellant unit is also paying excise duty on packing material cleared to their own units by adopting the value at 115%/110% of the cost of production. While arriving at the cost of production of packing material, the appellant unit is adopting the cost of paper at 100% and it is the case of department that the cost of paper should be adopted at 115%/110% instead of 100%. In addition to this, the department also disputed the cost of production computed by the appellant unit by holding that the Intra-Division Service Charges raised by the Bhadrachalam unit are to be included in the cost of production and also the appellant has to include the unabsorbed overheads due to idle capacity have to be included in the cost of production.

Income Tax

Whether Delhi Sikh Gurudwara Committee has powers to create Trust or Society to run hospital, eligible for exemption u/s 12A - NO: Delhi HC

DELHI Sikh Gurudwara Management Committee had constructed a hospital at Gurudwara Bala Saheb. During the hospital's construction, the Committee's President proposed that the hospital be managed by an independent trust settled by the Committee, whose trustees would be decided upon by the Committee itself. The proposal was accepted, and accordingly, the Guru Harkishen Medical Trust, the respondent Trust, was created. A trust deed was drawn up, by which the Committee was described as the settler. The Deed also stated that the Committee was running a number of charitable institutions, and that it was interested in establishing a specialty hospital to provide medical services at affordable rates. The Deed further stated that the trust was being established to run and operate the hospital either by itself or in collaboration with other organizations with experience and expertise in this field. The deed also indicated that "to fulfil these objectives, a sum of Rs. 1 lakh had been settled to the trustees.

IN a major setback to the Delhi Sikh Gurudwara Management Committee the Delhi High Court has held that since the Act does not empower the Committee to create a new body like a Trust or a Society to run a hospital on its own or in joint venture, such a body cannot be allowed exemption u/s 12A.

Service Tax

ST - Levelling of area and preparing of courtyards, plantation of trees/shrub and laying pebbles and water fall around lake, maintenance of lawn, providing water supply arrangement and maintenance of trees and plants including trimming, removing grass shrubs etc. cannot be considered as advisory or consultancy or technical assistance so as to be charged to ST under category of Interior Decorator -: CESTAT

THE appellant undertook the activity of plantation of grass and trees, shrubs in factory area and also the work of maintenance of lawns etc. It is the allegation of the CE jurisdictional authorities at Pune that the appellants are directly or indirectly in the business of providing by way of advice, consultancy and technical assistance in respect of beautification of space and such service is covered under the definition of "Interior decorator" as mentioned in clause 59 of Section 65 of the Finance Act, 1994.

Tomorrow is a Holiday - Good Friday

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