Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Reference to Five Member Bench - Miscellaneous Applications by Commissioner (Service Tax), Delhi - These misc. applications are defended with more heat than light - more dogma than logic or law - Applications dismissed with costs: CESTAT.

NETIZENS may recall the order of Tribunal referring the issue of whether the composite contracts could be vivisected and taxed prior to 01.06.2007 in 2013-TIOL-1458-CESTAT-DEL.

The Commissioner (Service Tax), Delhi filed Misc applications pointing out certain mistakes in the above referral order and subsequent Misc order dated 05.05.2014. The Applications were filed inter alia on the following grounds:

The CESTAT erred in concluding the matter of the appellant L&T on the issue of vivisection of composite contracts involving transfer of goods and provision of services prior to 01.06.2007 under pre-existing taxable service categories such as "Commercial or Industrial Construction" or "Consulting Engineering" services and had referred the matter to the Larger Bench; that this amounts "virtually to an administrative decision" by the President, CESTAT while sitting in a Division Bench and hearing an application for stay filed by L&T. The application also avers that this order is in error since it does not "express any doubt alongwith reasons" regarding the correctness or otherwise of the Larger Bench decision of the Tribunal in BSBK Pvt. Limited - 2010 (253) ELT 522 (Tri. LB) - 2010-TIOL-646-CESTAT-DEL-LB and in failing to spell out reasons why the Bench found it difficult to follow the Larger Bench decision in BSBK (P) Ltd., "even if the Division bench were headed by the President, CESTAT",

Income Tax

Whether character of any stock-in-trade acquired by partners of firm changes into capital asset upon dissolution of firm, without presence of any agreement regarding such conversion - NO: HC

THE assessee is an individual. It had entered into an agreement of partnership at will with one Amruthben K Chedda on 1st Mar, 1982. The partnership deed was silent as to its assets or stock-in-trade. The said partners purchased two plots of land at Thane Dist. under a conveyance deed in their favor dated 2nd Apr, 1982 for purpose of its development. However, later they decided to dissolve the partnership and a dissolution deed dated 1st Apr, 1985 came to be executed whereunder the partners decided to treat the partnership assets as their co-owned plots of land and as their personal capital assets. Both the parties agreed that they will repay the loan that they had borrowed for the purchase of land out of their own resources.

The issue before the Bench is - Whether character of any stock-in-trade acquired by partners of a firm changes into a capital asset upon dissolution of the firm, without presence of any agreement regarding such conversion by the partners. And the answer is NO.

Customs

Once the warehousing period has expired, the goods are deemed to be improperly removed from warehouse and cannot be considered as warehoused goods and appellants are required to pay duty u/s 72(1)(b) of Customs Act, 1962 irrespective of fact that they want to abandon or relinquish title of goods - Appeal dismissed: CESTAT

THE appellant imported eight consignments of plant and machinery relating to acrylic fibre/polymerization/extrusion during October, 1994 to September, 1995. The said goods covered by six Bills of Entry were cleared and kept in a Bonded Warehouse while the goods covered by two other Bills of Entry were in Docks area. Later on, intelligence was received that the appellants are required to pay, to the supplier, in addition to the invoice value of the said plant and machinery, certain amounts relating to the technical knowledge fee.

See our Columns Tomorrow for the judgements