Jurisprudentiol – Friday's cases
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Goods procured under Notification No 22/2003 CE and 52/2003 Cus by EOUs and cleared in DTA - Whether benefit of exemption under Notification No 6/2006 CE is admissible - Matter referred to Larger Bench in view of conflicting decisions : CESTAT
THE appellant being an EOU, had imported and procured locally inputs for manufacturing of goods for export, by availing benefit of Notification No. 22/2003-CE and 52/2003-Cus. There is a proviso in the said notifications, which requires an assessee to discharge or return back the amounts of customs duty forgone by the department if the goods are cleared in DTA, without payment of duty. In the cases in hand, the appellant has availed benefit of exemption Notification No. 06/2006-CE.
The appellant has placed reliance on the decision of the Tribunal in the case of M/s. Synergies-DoorayAutomative Limited & Ors , wherein the very same notifications were interpreted and it was held that no duty can be demanded on the imported inputs, if there is DTA clearance claiming exemption. Revenue relied on another judgment wherein diagonally opposite view has been taken by the Tribunal.
Income Tax
Whether when assessee is born out of restructuring of Electricity Board, expenditure incurred on IT support to LAN, upgradation of bandwidth and for coordination with BSNL for better connectivity is to be treated as capital in nature - NO: High Court
THE assessee company is engaged in the business of generation, transmission and distribution of electricity in the State of Gujarat. The erstwhile Gujarat Electricity Board in a process of restructuring was demerged into seven different companies. Gujarat UrjaVikas Limited [GUVNL] was assigned the function of bulk purchase and sale of power. The return of income filed by the assessee for the A.Y 200607 declaring Nil income and the book profit was shown which was revised later on account of some error in computation and the same was reduced. Return was processed under Section 143 (1) but later scrutinized. In scrutiny assessment, income and book profit under Section 115JB of the Act was computed. The Assessing Officer was of the opinion that an expenditure claimed under "Legal & Professional Fees" pertained to re-organization of the business of erstwhile Gujarat Electricity Board by way of demerger and also included expenditure pertaining to issue of allotment of shares; expenditure pertaining to Internet Bandwidth, supply and installation of software, legal and professional fees in respect of restructuring, etc. These expenses according to the Assessing Officer were not the business expenditures, but, were capital in nature, hence were disallowed.
The issue before the Bench is - Whether when assessee is born out of restructuring of an Electricity Board, the expenditure incurred on IT support to LAN, upgradation of bandwidth and for coordination with BSNL for better connectivity is to be treated as capital in nature. And the answer goes against the Revenue.
Service Tax
ST - There cannot be a service tax levy on supply of goods - Prima facie view is that the cost of goods supplied while rendering a repair service cannot be subjected to levy of service tax - Pre-deposit waived & stay granted: CESTAT
THE appellants had entered into an agreement with the principal for repair of containers used for transportation of goods by sea. During the process of repair, they use raw materials and consumables and also labour for the repairs undertaken. On labour charges and consumables, they had discharged the service tax liability. On the raw materials used in the repair of the containers on which VAT/sales tax liability accrued, appellant did not discharge service tax liability on the ground that the said activity amounts to supply/deemed sale of the goods. It is their contention before the CESTAT in the second round of proceedings that they are eligible for abatement of the value of the goods supplied under Notification 12/2003-ST or 1/2006-ST.
Until Tomorrow with more DDT
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