Jurisprudentiol - Friday's cases

By Vijay Kumar

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

BAS - Applicants are acting as an agent on behalf of cane growing farmers for providing service to sugar factory - activity undertaken by commission agent in relation to sale and purchase of agricultural produce is exempted as per Notification no. 13/03-ST - prima facie case in favour - pre deposit waived and stay granted: CESTAT

IT is contended by the applicant that they are engaged in the activity of cutting, harvesting and transportation of sugar cane. Earlier, a show cause notice was issued to the appellant on the ground that the applicants were providing Manpower Supply Agency service and the Tribunal in their own case had held that the activity undertaken by the applicant is not classifiable under manpower supply service and more appropriately covered under Business Auxiliary Service.

It is further submitted that the present demand is in respect of the amount received from the sugar factory over and above the amounts which they received in respect of cutting, harvesting and transportation of sugarcane; that it is the contention of the Revenue that applicant had procured the goods or services which are input for the client i.e. sugar factory; they are acting as intermediary or agent, and, therefore, the said services are classifiable as Business Auxiliary Service.

Income Tax

Whether initiation of reassessment proceedings cannot be faulted with if there is evidence indicating less than full and true disclosure of facts during normal assessment - YES: HC

THE assessee company had filed its return declaring total income as Rs.52.96 crores. During assessment, AO determined the assessee's income at Rs.53.12 crores. Later on, a notice u/s 148 was issued to the assessee and the reasons for reopening the assessment beyond the end of four years from the relevant assessment year furnished to the assessee against which the assessee had filed its objections and in particular submitted that the notice was without jurisdiction as there was no reason to believe that the income chargeable to tax had escaped assessment nor there was any failure to fully and truly disclose the material facts necessary for assessment.

The issue is - Whether initiation of reassessment proceedings cannot be faulted with if there is evidence indicating less than full and true disclosure of facts during normal assessment. And the answer goes against the assessee.

Central Excise

CENVAT - Appellant taking credit on inputs purchased by job workers without receiving goods in their premises was provided by erstwhile CER, 1944 - similar provision is implied from rule 4(5)(a) inasmuch as if final products are allowed to be cleared from job worker's premises u/r 4(6) of CCR, 2004 it implies that job worker could procure part of raw materials which are required for completion of manufacturing process: CESTAT

THE appellants are manufacturers of Hydraulic Pumps, Cylinders, Valves and Power units. They procured critical components such as, hydraulic pumps, heat exchanger, filters and filter elements, electric motor, etc. and undertook partial processing and then these components, either as such or after being processed were sent to various job workers for fabrication of structure and assembly as per the drawings and designs provided by the appellants. The job workers also sometimes procured components as such pipes, fittings, etc. After the fabrication work was completed, the goods were inspected and tested by the appellants and thereafter, despatched from the job worker's premises to the various buyers of the goods on payment of appropriate excise duty.

See our Columns Tomorrow for the judgements