Jurisprudentiol-Monday's cases

By Vijay Kumar

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

Exemption for maintenance and repair of Navy Vessels - Just because appellant paid Service Tax on portion of gross receipts, exemption cannot be denied: CESTAT

THE decision of the Commissioner that appellant is not eligible for the benefit of notification just because they happened to collect service tax on a portion of the gross receipt and paid it to Government, renders them ineligible for exemption is totally unfair and incorrect. Just because an assessee shows some amount as service tax, collects the same and pays it to Government, if the whole activity is not liable to tax, just because he paid the tax would not render him ineligible for such exemption. Therefore the decision taking a view that exemption notification benefit is not available to the appellant in respect of services rendered to Indian Navy cannot be sustained.

Income Tax

Whether system software which enables assessee to conduct business more efficiently, forms part of profit-making apparatus and thus is capital expenditure - NO: ITAT

THE Assessee-company, engaged in the business of manufacturing of piston ring, casting ring, gaskets and semi finished plastics, furnished its return of income disclosing income. During the assessment proceedings, on a perusal of the Tax Audit Report, the AO found that an amount was shown as expenditure of capital nature, that out of the said expenditure a certain sum was added back to the total income of the assessee by itself and the remaining sum was claimed by it as revenue expenditure. After considering the explanation of the assessee in this regard, the AO held that the balance amount was capital in nature and could not be allowed as revenue expenses.

The issue before the Bench is - Whether system software forms part of the profit-making apparatus of the assessee where the business of the assessee was that of manufacturing of piston ring, casting ring etc. and the Software was an enterprise resource and it facilitated the assessee's trading operations or enabled the management to conduct the assessee`s business more efficiently or more profitably. NO is the answer of the Tribunal.

Central Excise

Rule 5 of CCR, 2004 - It is clear that it would not be possible for an assessee to get double benefit under new FTP 2009-14 - Appellant is entitled to claim refund of CENVAT credit accumulated & unutilised on export of finished goods which appellant was not able to utilise otherwise: CESTAT

THE appellant filed claims for refund of credit of duty paid on PTA & MEG used in the manufacture of PSF exported during the period July 2009 to December 2009 under Rule 5 of CCR, 2004.

A SCN was issued proposing rejection of the refund claim on the allegation of duty free imports and double benefits.

See our Columns Monday for the judgements