Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Refund - Payment deduced by client for failing to supply specified quantity of goods during a specified period - whatever amount the appellant had received less from the buyer they are entitled to take refund of the duty component involved in the deducted amount - Appeal allowed: CESTAT

THE appellant manufactured and cleared transformers to M/s. U.P. Power Corporation Ltd. on payment of duty. In terms of the agreement the appellant was required to supply a particular quantity during a particular period at a particular price. But there was a clause in the agreement that if the appellant failed to supply the particular quantity during a particular period, the buyer shall have a right to deduct or required to pay lesser amount as per the agreed price. As the appellant failed to supply the specified quantity during a specified period, therefore, the payments were deducted by M/s. U.P. Power Corporation.

Consequently, since the appellant had not received full payment against the invoice raised for the clearance of the transformers, they filed a refund claim of the duty component involved in the less amount received from M/s. U.P. Power Corporation.

The lower authorities rejected the claim on the premise that since the appellant had paid duty on the invoice price the same is to be taken as agreed price and no deduction shall be allowed thereafter.

Income Tax

Whether provisions of Sec 41(1) come into play only when there is cessation of a liability - YES: ITAT

ASSESSEE derives income from construction of civil work of commercial and residential buildings. AO found that there are sundry creditors amounting to Rs.25.92 crores as on 31st March, 2009. It observed that in respect of four creditors, no transaction took place since 1.4.2008 to 31.03.2011. In respect of 19 creditors, notice was issued u/s 133(6) which return back as unserved. Thus, AO presumed that the liability in respect of four persons and 19 persons to whom notice u/s 133(6) sent which return back, ceased to exist and applied the provisions of section 41(1). In four cases, where reply was received there was difference in confirmation and thus, the addition was made for the difference.

The issue before the Bench is - Whether provisions of Sec 41(1) come into play only when there is cessation of a liability. And the answer is YES.

Service Tax

Support services provided by appellant to run business of their clients by way of assistance in marketing, in obtaining loans from financial institutions, liaisoning with government agencies for getting various permissions, training of their personnel. do not fall within category of 'Consultancy Service' let alone 'Management Consultancy Service' - Appeal allowed: CESTAT

FROM a perusal of the agreements entered into with various clients it is seen that the appellant is rendering administrative support services. They do not give any advice or consultancy as to how to run an organization. The services rendered by them mainly relates to support services to run the business of their clients by way of assistance in marketing assistance, in obtaining loans from financial institutions, liaisoning with the government agencies for getting various permissions, training of their personnel and so on. These services which are support services for the business do not fall within the category of “Consultancy Service” let alone “Management Consultancy Service”.

See our Columns Tomorrow for the judgements.