Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Whether for computing the aggregate value of taxable services, receipts in respect of BAS which is exempted in terms of notfn. 14/2004-ST is to be taken - in view of Explanation “B” to paragraph 3 of SS notification, applicant has prima facie strong case in favour - Pre-deposit waived & Stay granted: CESTAT

PROCEEDINGS were initiated by issuing a SCN demanding service tax in respect of ‘Business Support services' as well as of ‘Renting of Immovable property' services.

The adjudicating authority dropped the SCN. However, the Commissioner (Appeals) allowed the Revenue appeal and held that the applicants are not entitled for the benefit of the Small Scale exemption notification. Inasmuch as he held that for the purpose of computing the aggregate value of taxable service the receipts in respect of exempted service are also to be taken into consideration.

Income Tax

Whether franchise fee remitted to non-resident for simply using trademark 'Dominos' is required to be partly treated as capital expenditure - NO: HC

THE assessee is carrying on business of manufacturing and sale of pizza from its retail outlet. The assessee had entered into an agreement with M/s Dominos Pizza International, Inc. USA which was paid a lumpsum consideration of $200000, which was capitalised and was not treated as revenue expenditure. The AO treated 25% of the franchise fee as capital expenditure. On appeal, the Tribunal held that 25% of the payment made was capital in nature, while balance 75% was revenue expenditure in the hands of the Indian assessee.

The issue before the Bench is - Whether franchise fee remitted to non-resident for using trademark 'Dominos' is required to be partly treated as capital expenditure. And the High Court says NO.

Central Excise

Appellant should not suffer for dereliction of duty by Revenue-Appeal Allowed for this.- CESTAT

NORMALLY, for the failure of the Revenue, the assesse is punished and the Department not prone to irritants like accountability often get away with it.

Not always. Not this time.

This case is before the Tribunal in its second round.

The Show Cause Notice neither questioned genuineness of the transaction nor use of the goods in manufacture. The invoice disclosed the name and address of manufacturer consignor instead of second stage dealer. Revenue's charge is that the particulars of excise duty were not furnished by the appellant.

See our Columns Tomorrow for the judgements