Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Business Support Service - appellant managing business of distillery and country liquor division by undertaking manufacturing activity as well as sale - no evidence on record to show that appellant had received any amount for providing any service in relation to business or commerce or manufacture and distribution of products: Appeals allowed: CESTAT

THE appellants entered into an agreement with M/s. The Kolhapur Sugar Mills Ltd. for managing the business of distillery division and country liquor division.

The CCE, Kolhapur issued SCNs demanding service tax on the ground that the appellants provided "Business Support Service" to M/s. The Kolhapur Sugar Mills Ltd.

The adjudicating authority confirmed the demands of Rs.4,39,66,593/- and Rs.85,40,423/- respectively along with interest & penalties.

The appellant is before the CESTAT.

Income Tax

Whether production of steam can be construed as generation of power and Sec 80IA benefits cannot be denied even if such steam is utilised for internal manufacturing process - YES: ITAT

THE assessee is a public Ltd company. It is engaged in the business of manufacturing of paper boards and optic cables etc, it is also engaged in operation of wind mills at Tamil Nadu and generating powers. Assessee claimed deduction under section 80IA in respect of its power generating plant no 1-5 and also claimed deduction of 80-IA in respect of plant number 6 where the assessee was generating electricity with the help of steam. The AO denied the claim of the assessee vis-à-vis all the units mainly on the grounds that the power generated by the assessee was not sold to outsider and the units were captive power consumption based. Secondly, the generation of steam was not generation of power within the meaning of section 80-IA of the Act.

The issues before the Bench are - Whether production of steam can be construed as generation of power and Sec 80IA benefits cannot be denied even if such steam is utilised for internal manufacturing process and Whether market value of the goods transferred in cases, where provisions of section 80-IA(8) are applicable, has to be determined having regard to the price charged in uncontrolled transaction. And the verdict goes in favour of the assessee.

Central Excise

CENVAT - Non-mention of Registration number of Service providers on invoices on which credit availed - CCE, Raigad, as an adjudicating authority, unnecessarily chose to raise level of litigation by denying credit as if it is Tribunal's job to get verification done - he could have verified these details and arrived at a conclusion - Matter remanded: CESTAT

CENVAT credit of Rs.66.55 lakhs was denied by the Commissioner of Central Excise, Raigad Commissionerate on the ground that the credit was taken by the appellant on the strength of invalid/incomplete documents. Penalty and interest quantum have also been added in good measure.

It is submitted that the services were received by the Head Office which is registered as input service distributor and the Head Office issued ISD invoices for the availment of credit. The first contention is that there is no short coming as the Credit was taken by the appellant based on the ISD invoices issued by the Head Office and secondly during the course of adjudication proceedings, they had submitted a list containing the service tax registration numbers of all the service providers. Therefore, the department could have verified whether these service providers were registered with the department or not and the service tax amounts indicated in the corresponding invoices issued by the service providers were in fact paid to the exchequer or not. Merely for the technical lapse of non-mentioning of the registration number, the substantive benefit of credit cannot be denied or disallowed to the appellant.

See our Columns Tomorrow for the judgements