Jurisprudentiol – Tuesday's cases

By Vijay Kumar

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

Appeals - Commissioner (Appeals) should not have expressed an opinion different from the order of the High Court - AP High Court

THIS case as noted by the High Court has an interesting background. This challenges the order, dated 18.06.2014 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals-II), Hyderabad

The writ petitioner approached the High Court earlier seeking the relief to issue an appropriate writ, order or direction more particularly one in the nature of Writ of Mandamus declaring as arbitrary, illegal, indiscrete, high handed, discriminatory and affront to doctrine of legitimate expectations as well as doctrine of equity, fairness & reasonableness…

In spite of the directions of the High Court, the Commissioner (Appeals) refused to decide the appeal. The Commissioner should not have expressed the opinion differently to that of the opinion given by the Court. When the High Court has in clear terms ruled that appeal lies, the Commissioner under Article 227 of the Constitution of India, had no option, but to proceed with the hearing of the appeal on merit. Perhaps, this aspect escaped the notice of Commissioner.

Income Tax

Whether, for the purpose of claiming Sec 10B benefits, it is necessary to obtain approval of STPI authority - YES: High Court

THE assessee company, incorporated in 2003, was engaged in software development. It had started business operations from January, 2004. The assessee prepared accounts for the period 19.12.2003 to 31.3.2005. For the first time, in AY 2005-06, the assessee claimed deduction u/s 10B and filed return of income declaring total income of Rs.38,430/-. The said return was processed u/s 143(1) and subsequently, the case was taken up for scrutiny. The AO while dealing with the claim of deduction u/s 10B, found that the assessee had applied for registration as 100% EOU to Software Technology Parks of India (STPI) and obtained approval only in May, 2005; hence, as per Circular No.1 of 2005 dated 06.01.2005 of the CBDT, the assessee was not eligible for the benefit u/s 10B. Accordingly, AO disallowed the entire claim of deduction u/s 10B on the ground that the assessee had obtained approval from STPI only in May, 2005, which was after the end of the previous year relevant to the AY 2005-06.

The issue before the Bench is - Whether, for the purpose of claiming Sec 10B benefits, it is necessary to obtain approval of the STPI authority. And the answer goes against the assessee.

Service Tax

Services received of development, maintenance and installation of software systems etc. are IT Software services & cannot be said to be covered under BAS as 'customer care service' - Appeal allowed: CESTAT

A Service Tax demand of Rs.5.39 crores was confirmed against the appellant by the CCE, Pune-I by classifying the services received by them under ‘Business Auxiliary Service'. The period of demand is from 18/04/2006 to 15/05/2008.

The first part of the demand of Rs.3.76 crores is in respect of IT services received by the appellant from M/s. SKF, Sweden and the second part of the demand consists of an amount of Rs.1.63 crores in respect of various expenditure incurred by the appellant towards foreign currency purchase, professional management fees, group management programmes, engineering software support services, etc.

See our Columns Tuesday for the judgements