Jurisprudentiol – Monday's cases

By Vijay Kumar

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

Notfn. 12/2003-ST - Since respondents are showing deemed sale of materials to extent of 60% and 40% towards labour charges and not indicating value of goods and materials actually sold, cost of materials is not excludible: CESTAT

THE respondents are undertaking the activity of retreading of tyres. The activities are covered under the Management Maintenance & Repairs Service. The Respondents were paying service tax only on the labour charges towards retreading the tyres excluding the cost of the rubber utilized towards retreading.

The adjudicating authority confirmed the service tax demand with interest and also imposed penalties.

Income Tax

Whether where partnership deed itself makes it clear that an immovable property is being contributed as an item of capital as objective of firm is to carry on business in real estate, such an asset can be considered as a stock in trade - YES: HC

THE assessee-firm was constituted through a partnership deed and comprised of three partners S, R and A. Before the constitution of the firm, the mother, S, and two sons, R and A, had equal shares, in an item of immovable property, being a house. Another item was an open land, in which two brothers had equal shares. Both the properties were pooled into assets of the firm towards the respective shares of the partners. The firm was dissolved and on dissolution, the entire house was allotted to the share of S, whereas the entire landed property was allotted to the share of R. A appears to have been allotted either cash component, or other properties.

The issues before the Bench are - Whether where the partnership deed itself makes it clear that the property is being contributed as an item of capital as the objective of the firm is to carry on the business in real estate, such an asset can be considered as a stock in trade and Whether the market value of the property has to be taken into consideration for determining the value of property, which is allotted to the respective partners on dissolution. And the verdict goes in favour of the Revenue.

Central Excise

S.4 of CEA, 1944 - Import Parity Price is not an artificially fixed price - It is an actual price at time and place of import which is also place for sales effected by Refinery or OMC to another OMC - Import price cannot be influenced by marketing companies situated in India - Revenue appeal dismissed: CESTAT

THE Commissioner (A) had set aside the order of the adjudicating authority and accepted the assessable value declared by the appellant based on the transaction value with the Oil Marketing Companies (OMC) as per the Memorandum of Understanding (MOU) reached based on the direction of the Government and also by holding that appellant and other oil marketing companies are not related persons and even if they are considered as inter-connected undertaking, the transaction value would prevail .

See our Columns Monday for the judgements