Jurisprudentiol - Tuesday's cases

By Vijay Kumar

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

Appellant purchases goods from the village industry units for supply of same to PSUs - transaction is simple trading - trade margin of 3% is not in nature of commission - activity not Business Support Services so as to attract ST: CESTAT

THE appellant purchases various goods, such as, khadi, soap and detergents, etc. from various units situated in villages. These goods are purchased in bulk from village industries and sold by the appellants through their retail outlets. The appellant also sells these goods to various public sector undertakings.

As regards the supplies made by the appellant to PSUs, once the orders are procured from the PSUs, they are placed on the industrial units who are asked to supply the goods directly to the PSUs. However, the village industrial units raise invoices on the appellant and the appellant makes the payment to the village industrial units. In turn the appellant raises the bills on the PSUs and collects the sale proceeds of the goods supplied. The village industrial units, sometimes, give discount or trade margins of around 3% to the KVIC. The department was of the view that the activity undertaken by the appellant comes within the category of ‘support service of business or commerce' and therefore, on the trade margins collected by the appellant, service tax would be leviable.

Income Tax

Whether assessee is to be treated as assessee-in-default where assessee deducted tax payable by its employees but instead of remitting same in Govt account it appropriated same for its benefit - YES: HC

THE Assessee Company is engaged in the business and operating as a schedule passenger airline in India. A survey under Section 133A was conducted in the assessee's premises in order to verify TDS compliance. The survey revealed that the assessee was not remitting the taxes deducted by it at source to Government account within the due dates as prescribed in the Income Tax Act, 1961. During the course of verification, it was noticed that for the financial year 2009-2010 to 2011-2012 certain sums were deducted from the salaries paid to the employees and payments under other heads for the above mentioned assessment years but the same was not remitted to the Government Account.

The issue before the Bench is - Whether assessee is to be treated as assessee-in-default where assessee deducted tax payable by its employees but instead of remitting same in Govt account it appropriated same for its benefit. And the verdict goes against the assessee.

Customs

Appellants had approached the Settlement Commission and admitted their liability and also admitted allegations and charges levelled in SCN - in view of admission before statutory authority, Penalties correctly imposed - appeal dismissed: CESTAT

GOODS imported by M/s Sonu International were examined by the Customs authorities and it was found that the importer described the goods as unbranded whereas the goods were found to be of Philips brand. During investigation it was found that earlier four consignments of similar goods were imported by M/s. R.R. Exports. Enquiries were made from M/s. National Shipping Agency, Custom House Agent of M/s. R.R. Exports. Shri Manish R. Sangani, partner of the CHA, in his statement admitted that the goods imported by M/s. R.R. Exports were dealt with by them and all the documents for clearance were received either from Shri Shankarlal Sharma or Shri Manu Advani. The draft in respect of the customs duty was also deposited by Shri Shankarlal Sharma. The CHA also admitted that the goods were branded goods whereas the same were declared by the importer as unbranded. On this evidence, show cause notice was issued demanding differential duty of Rs.15,94,827/- and for imposition of penalties.

See our Columns Tomorrow for the judgements