Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Condonation of delay of 1236 days - Delay due to pursuing litigation before wrong forum is condoned - Tribunal by Majority

THE Appellant as a 'merchant exporter' claimed and obtained duty drawback amounting to Rs.67,42,724/- during the period June 2007 to September 2007.

The drawback sanctioned was objected to by the department and accordingly a SCN dated 20.08.2008 came to be issued. Subsequently, the Adjudicating Authority passed an o-in-o on 06.4.2009 confirmed the allegations leveled in the SCN.

Consequently, the appellant filed a Revision Application on 15.7.2009 before the joint Secretary who provisionally accepted the Applications.

Income Tax

Whether AO has powers u/s 37(1) to go into that aspect of relationships between assessee and auto dealers where commission paid is to be reduced every year merely because it was done in during initial years - NO: HC

THE assessee is engaged in the business of corporate insurance agency. It conducts business through extensive Maruti dealers' networks consisting of over 300 sales outlets and 400 dealer workshops spread throughout the country. It was a 100% owned subsidiary of Maruti Suzuki India Ltd, and had a business arrangement with National Insurance Co. Ltd as its licensed corporate insurance agent. It had filed a return for AY 2006-07 declaring an income of Rs.2,66,26,206/-. During assessment, AO issued notice u/s 143 (2) and the assessee filed its reply. The AO held that the assessee had debited Rs. 8,99,89,136/- as commission paid to Maruti dealers, on a total sum of Rs. 6,29,92,395/-. This amounted to 70% of the total receipts of insurance commission.

The issues before the Bench are - Whether the assessing officer has powers u/s 37(1) to go into that aspect of relationships between the assessee and auto dealers where the commission paid is to be reduced every year merely because it was done in the initial years and Whether the fact that the commission payable was 90% in the first year and reduced to some extent in the latter years, is a consideration for the AO to conclude that, it necessarily has to be reduced further in the succeeding year. And the verdict goes in favour of the assessee.

Service Tax

Value of goods and materials supplied free of cost by service recipient to provider of taxable construction service would be outside taxable value or gross amount charged - matter no longer res integra - Appeal allowed: CESTAT

THIS case has had an eight year journey but the day of 9th May proved lucky for the appellant. All the below mentioned orders were passed by the Bench on the same day.

Vide an order dated 18.07.2013 the appeal filed by the appellant in the year 2008 was dismissed for default.

By an application, they sought recall of this order. The Bench was satisfied with the cause shown and so after recalling the order, the appeal was restored to the file and the matter was taken up for hearing.

Incidentally, the appellant had also filed an application seeking stay of all further proceedings for realization of the adjudicated liability. The Bench observed that since the substantive appeal was being disposed of, the application is infructuous and so dismissed the same.

The facts are that the appellant had entered to an agreement with M/s National Thermal Power Corporation Ltd. (NTPC) for executing offsite civil works for a Super Thermal Power Project Stage II and SG area civil works package for the Super Thermal Power Project Stage I in Bilaspur District. The works executed by the appellant involved components falling within the ambit of taxable services classified as "commercial or industrial construction" service, defined in Section 65 (25b) readwith Section 65 (105) (zzq) of the Act.

See our Columns Tomorrow for the judgements