Jurisprudentiol – Wednesday's cases

By Vijay Kumar

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

Used capital goods cleared by DTA unit to EHTP under CT 3 certificates without reversing credit - Demand on ground that CT 3 clearance is allowed only if goods are obtained directly from manufacturer - Revenue Appeal Dismissed: HC

THE assessee has a DTA unit and also an EHTP unit. The assessee cleared used capital goods and inputs from the DTA unit to the EHTP unit on the strength of CT 3 certificates by availing the benefit of Notification No 22/2003 CE. It is the case of revenue that the DTA unit is not entitled for the benefit of above notification as the goods were not directly cleared by the manufacturer.

Before the High Court, revenue contended that, as the assessee has not received the excisable goods directly from the factory of manufacture or warehouse, the condition stipulated in the Notification No.22/2003 is not fulfilled. In the instant case, the assessee has imported the impugned capital goods on which Cenvat credit has been availed and cleared without payment of duty to EHTP under the cover of CT-3 and therefore, the impugned order passed by the Tribunal is not legal and requires to be set aside.

Income Tax

Whether when assessee fails to produce PAN numbers of parties and also pays no interest on huge loans taken from them, it goes to establish that loan transactions were not genuine - YES: HC

THE assessee filed its return of income declaring loss. The return was processed under Section 143(1) of the Act and thereafter, a notice was issued under Section 143(2) of the Act, initiating scrutiny assessment proceedings. The Assessment officer assessed the loss at a lesser amount than the one returned by the assessee. Assessing Officer made additions of unsecured loans credited in the books of account of the assessee being income from undisclosed sources under Section 68 of the Act on the ground that the assessee failed to discharge the onus cast upon it to identify the persons and prove their creditworthiness of having advanced the loan to the assessee.

The issue before the Bench is - Whether when assessee fails to produce PAN numbers of parties and also pays no interest on huge loans taken from them, it goes to establish that the loan transactions were not genuine. And the verdict favours the Revenue.

Service Tax

Visual images of 'Bruce Lee' received by appellant from foreign service provider for which they pay royalty - property embodied in visual images falls within definition of copyright as ‘artistic work' and is excluded from IPR Service: CESTAT

BEFORE the CESTAT, the appellant submitted that they entered into a licence agreement with the Universal Studio Licensing LLLP, California, USA and as per the said agreement they were permitted to use the Universal property in the name and likeness of the legendary martial artist known as “Bruce Lee” as embodied in the visual images supplied to Licensee by Universal; that they used the said images in mobile games and for the right to use the said universal property, the appellant paid royalty to the service provider. It is further submitted that the property which are visual images come under the category of “Copyright” as defined in Copyrights Act and IPR services specifically excludes copyrights from its purview; therefore, the question of payment of any service tax on the copyrights received from abroad does not arise.

See our Columns Tomorrow for the judgements