Jurisprudentiol - Thursday's cases

By Vijay Kumar

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

Refund - Categorical finding of fact recorded by Commissioner (A) that respondent assessee has collected duty of excise as per commercial invoice and have not collected higher duty as indicated in excise invoice - Refund admissible, Revenue appeal dismissed: CESTAT

THE respondent is engaged in the manufacture of generic and patent & proprietary medicaments and clearing the same to M/s Phyto Marketing Pvt. Ltd. Some of the Directors of the respondent company and of the said Phyto Marketing Pvt. Ltd. were relatives. The respondent paid duty on the value at which the goods were sold by Phyto Marketing Pvt. Ltd. in the market as per their own appreciation of law. In the commercial invoice of even date (which contains reference of the excise invoices) the goods have been valued at the actual sale price and thereupon have added Sales Tax.

Subsequently, the respondent on its understanding and so advised that it has wrongly determined the assessable value at a higher amount and have paid excess excise duty, filed refund claim with the Revenue.

Income Tax

Whether insurance premium paid by one brother on life of other can be considered as legitimate business expenditure when brothers execute common power of attorney in favour of each other, mutually authorizing other to, in his absence, take care of business activity - NO: ITAT

THE assessee is engaged in the business of manufacturing of cloth in his proprietary concern. His brother runs his proprietary business in the same trade from the same business premises. Both the brothers executed a (common) power of attorney in favour of each other, mutually authorizing the other to, in his absence, take care of the business activity, including acts incidental thereto. Keyman Insurance policy stood taken by each on the life of the other, treating him as an invaluable resource (person) for and a 'deemed employee' of his business, claiming the same as 'business expenditure'. In view of the Revenue, however, the two brothers were running their independent businesses, with no business connection with that of the other.

The issue before the Bench is - Whether insurance premium paid by one brother on the life of other can be considered as legitimate business expenditure when the brothers execute a common power of attorney in favour of each other, mutually authorizing the other to, in his absence, take care of business activity. And the verdict goes against the assessee.

Service Tax

On reimbursements of Courier, fax and telephone charges, electricity charges and stationery charges, packing material, Genset and cool room expenses, service tax is payable along with interest as these charges have been incurred as part of C&F agency function: CESTAT

THE appellant entered into a C&F agency agreement and also a warehousing service agreement with M/s. Abbot India Ltd. The warehousing agreement was for storage of goods and the clearing and forward agency agreement was for the purpose of handling, carrying forwarding and shipping of the products. Service tax liability was discharged on the warehousing rent and also on the C&F agency charges.

In addition to the above, the appellants made certain payments on behalf of the service recipient by way of freight charges, octroi, sales tax and licensing fees, courier charges and telephone charges, electricity charges, DFC unloading charges and statutory charges, packing material, octroi, etc., Genset and cool room expenses and they got reimbursement of the expenses incurred from M/s. Abbot India Ltd.

See our Columns Tomorrow for the judgements