Jurisprudentiol - Wednesday's cases

By Vijay Kumar

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

Measure of levy does not determine the nature of levy - It is not for maintenance or repair that appellant is making payments but for usage of software - Services would fall more appropriately under ‘Information Technology Service' - Stay granted: CESTAT

THE CST-II, Mumbai confirmed a service tax demand of Rs.30,79,501/- along with interest thereon against the appellant by classifying the service received by them under the category of ‘Management, Maintenance or Repair Service' for the period 18/04/2006 to 15/05/2008. Penalties were also imposed in adequate measure.

Before the CESTAT, the appellant submitted that they had entered into a software usage agreement with M/s. Lear Corporation of USA, as per which the appellant was allowed usage of specified software mentioned in the agreement. For the services rendered, the appellant was liable to pay Lear USA, proportionate amount of annual maintenance charges which Lear USA pays to various vendors of this software.

Income Tax

Whether when assessee acquires running business of AMC which is key income earning apparatus, AMCs are commercial rights to be categorised as 'business or commercial rights' for purpose of Sec 32(1)(ii) - YES: ITAT

THE Assessee Company acquired the running business of M/s. ECE Industries Limited. The Assessee had acquired the “Elevator Division” business of ECE Industries Limited which comprised of marketing, selling, erection, installation, commissioning, service, repair, maintenance and modernization including major repairs of products on slump basis. The Assessee had valued the business at Rs. 20,32,10,000, out of which the valuation for Maintenance division of ECE Ltd. alone was worked out to the tune of Rs. 18,34,74,000 which was reflected under the transfer and undertaking agreement. The balance consideration i.e. out of the total consideration of Rs. 20,32,10,000 which was Rs.1,85,44,612/- was separately shown in the balance sheet and was treated to be "good will" pertaining to the business. It was this value of "goodwill" which was claimed by the assessee as eligible for depreciation for the first time directly before the Tribunal.

The issue before the Bench is - Whether when the assessee acquires a running business of AMC which is the key income earning apparatus for the assessee, the AMCs are nothing but commercial rights to be categorised as 'business or commercial rights' for the purpose of Sec 32(1)(ii). And the answer is YES.

Customs

Exemption not claimed while filing B/E - Refund claim is not maintainable without challenging assessment of Bill of Entry: Tribunal by Majority

THE Bill of Entry was assessed and duty was paid accordingly. Later on, the appellant realised that they are entitled for exemption under Notification No. 11/97-Cus& were not required to pay duty on the imported goods. Therefore, they filed refund claim before the Dy. Commissioner of Customs, Mumbai who sanctioned their refund claim but the same was credited to Consumer Welfare Fund on the ground that the appellant failed to pass the burden of unjust enrichment.

See our Columns Tomorrow for the judgements